REA Group chief executive Tracey Fellows has ruled out any takeover of Australian real estate listings sites as News Corp and REA Group purchase US-based property listings business Move.
Domain chief operating officer Tony Blamey said the REA Group have had its eye on the US market since Trulia was purchased by competitor Zillow for US$3.5 billion in July.
Mr Blamey said from a Domain point of view the purchase does not affect its strategy at all.
“I’m a bit surprised by the announcement, but I understand the REA had its eye on Trulia prior to the merger with Zillow, and REA has definitely stated publicly it has an intense interest in the US,” Mr Blamey said.
“Move is quite a way behind Trulia, which is very advanced on the consumer offering and a rich experience.”
Speaking to Residential Property Manager's sister title, Real Estate Business, Ms Fellows said the US digital real estate market is at a much earlier stage than that of Australia and the market is in the midst of a shift to online. Compared to Australia, according to Ms Fellows, the US has 14 times as many internet users and 10 times as many houses sold each year, and yet online real estate advertising currently represents only a small proportion of US real estate marketing spend.
“We plan to contribute our deep digital real estate expertise to improve Move’s performance, particularly in the areas of product innovation, consumer audience and engagement,” Ms Fellows said.
“Move is in a great position to be a major player in the US market and we believe the combination of our digital real estate experience and News Corp’s content, marketing and distribution strengths can accelerate Move’s performance.
“The US is a very attractive market given its size, the proportion of real estate advertising yet to go online, and recent industry consolidation. Our investment in Move will provide an entry point to this market and an opportunity to participate in its growth.”
Ms Fellows ruled out any takeover of Australian listings sites such as homely.com.au, and fledgling site Squiiz will instead focus on working with agent partners to work on return on investment and engagement.
Move is responsible for property portals realator.com, seniorhousing.net and moving.com. Move has the exclusive rights to operate realator.com, the official site of the National Association of Realtors.
Through an all-cash tender offer News Corp will pay approximately US$950 million. REA’s share will be acquired for approximately US$200 million. Realestate.com.au will take a 20 per cent stake and the rest will be held by News Corp.
News Corp chief executive Robert Thomson said the US market has room for robust growth in coming years and is still in the early days of its transition to the digital space.
“According to Euromonitor, there are 259 million internet users in the US, nearly five times that of the UK and 14 times that of Australia,” Mr Thomson said in a statement to Nasdaq.
“We’re buillish about Move’s prospects since more marketing is directed online and realtors require state of the art software to maximise their returns."
According to Mr Thomson, there are approximately two million estate agents and brokers in the US that generate approximately US$60 billion of commission income annually.
“We believe there is much room for that percentage to grow because the market is in the midst of a secular shift to digital advertising as real estate agents seek to reach homebuyers where they are spending their time and searching for homes - online.
“In addition to boosting Move’s subscription, advertising and software services, this acquisition will give News Corp a significant marketing platform for our media assets, which will benefit from the high-quality geographic data generated by real estate searches,” Mr Thomson said.
The acquisition is expected to close by the end of 2014.