REA rides high on premium product

09 Aug 2016

REA Group announced a 20-percent increase in revenue to AUD$629.8 million ($480.9 million U.S.) in its full-year results (to June 30), and attributed the growth to expansion in Southeast Asia and the continued push toward premium-product listings in its Australian residential business.

REA Group CEO Tracey Fellowes warned, however, that the volume of residential listings had slumped in the second half of the financial year, due to economic uncertainty created by the Australian federal election. In July this year listings were down 11 percent from July 2015, and Fellowes predicted a knock-on effect in next year’s results, with revenue growth set to slow already in H1 of FY2017.

REA’s acquisition of the iProperty Group in Southeast Asia also had some impact on net profit. However, despite losses from associated companies, and the cost of the iProperty acquisition, net profit was up 20 percent y-on-y to AUD$253.3 million.

“This year was marked by global expansion with our acquisition of iProperty Group, which gave us a foothold in Southeast Asia, and the extension of our operations to span four continents,” Fellowes said. “We also launched a global property network giving consumers access to more than three million listings from 56 countries.”

In Australia revenue growth mirrored overall growth at 17 percent, delivering revenue of AUD$555.2 million. The number of agent clients of the Group’s Realestate.com site increased by 7 percent. Realestate.com.au, the Group’s flagship site, currently boasts a 94-percent share of all residential property listings in Australia, and 17 percent more than its nearest competitor, The Domain Group.

REA Group’s determined strategy of concentrating on premium listings is also paying dividends. Fellowes said the success of the site’s Premiere All product, which encourages customers to use the site’s top-tier product for all listings, helped deliver a 19-percent increase in residential business.

And this, in a market in which listing volumes were “relatively flat”. Property analysts foresaw this trend, as the market heads toward full saturation.

Other results supporting the premium-product strategy include a 26-percent increase in listing-depth revenue to AUD$406.8 million, and a 20-percent increase in media and developer revenue. Here revenue was driven by the introduction of new products, such as Project Profiles, a tool helping property developers to present their large developments to prospective buyers.

Globally, REA Group reported an overall 11 percent increase y-on-y in revenue of its European sites to AUD$50.7 million, driven by new-product launches and technological innovations in the Italian market. Casa.it, REA’s Italian site, saw its listing volume grow 8 percent y-on-y.

REA’s Asian businesses, iProperty and Myfun.com in China, together delivered AUD$23.9 million in revenue, with iProperty achieving 13 percent growth in listing volumes. In the U.S., where REA has a 20-percent share in Move Inc, there was a 27-percent increase in revenue to $357 million U.S..

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Kate Lyons

Kate Lyons has worked as a business, marketing and finance journalist for over 25 years. Formerly news editor and deputy editor of advertising weekly B&T, as well as editor of Australian Small Business magazine and Franchising Magazine, she has written for all major metropolitan newspapers in Australia, including The Australian Financial Review, The Australian, The Sunday Telegraph and The Sydney Morning Herald.