Source Claims “Domain Can Be a Leader in Australia” as CoStar Pursues Acquisition

CoStar continues to be the biggest story in our industry as it pursues an aggressive M&A strategy across global markets.

After acquiring and scaling Homes.com in its domestic American market—and backing it with a hefty marketing and advertising budget—CoStar entered the British market with the purchase of OnTheMarket (OTM) in December 2023, with Group boss Andy Florance saying he is willing to be patient to take market share away from the British market leader Rightmove as part of a ten-year-plus strategy.

Now CoStar is embarking on a similar strategy in the lucrative Australian market, with Domain an ideal target at an attractive price after several years of underperformance.

And a source close to CoStar says the company believes Domain has the potential to be a leader in the Australian online residential market as an ambitious acquisition process gets underway.

The source, who asked not to be named, says last week’s takeover bid will be backed up by “the necessary investments” to challenge REA Group’s realestate.com.au vice-like grip on the Australian market.

CoStar submitted a takeover bid for Domain worth $1.7bn last week and the source told Online Marketplaces that the American company has taken a bullish approach to Australia and believes Domain has the potential to be a leading marketplace for homebuyers and sellers.

“CoStar is confident they have the team, experience, and resources to be successful,” the source told Online Marketplaces.

Domain is an attractive target as a profitable company with strong brand awareness and a strong legacy—having been founded before its rival Realestate.com.au.

Yet despite its profitability and secure market position, Domain’s fortunes have not matched those of realestate.com.au, which has more than outpaced Domain for several years. 

The reality of a takeover is that CoStar will need to significantly up the ante if the company is serious about creating a competitive duopoly in Australia, where realestate.com.au (backed by the Murdoch-owned REA Group) is a dominant, comfortable market leader and the envy of many portals worldwide.

A leadership vacuum also presents an opportunity for CoStar—new interim CEO Greg Ellis was appointed a few days before news surfaced that CoStar had started buying Domain shares, and months after previous CEO Jason Pellegrino announced his imminent departure.

The source's claim that CoStar is confident it has the "team, experience and resources" to compete in Australia will need to be backed up by a strong hiring process. CoStar boss Andy Florance is on the record saying his company enjoys acquiring talent as part of the Group's M&A strategy, yet Domain doesn't have a settled management team in the same way OTM did when CoStar bought the British challenger; boss Jason Tebb had been in situ for two years before CoStar came along on top of a career's worth of experience at the coal face of the real estate industry.

As with any acquisition, the bottom line is key. Domain will be charged with significantly improving performance if it is to stop REA from disappearing over the horizon. Domain's company revenue grew by 13% in the 2024 financial year, while REA Group's revenues in Australia alone grew by 22% for the year.

Looking back further, REA Group has achieved average revenue growth of over 10% since 2017, while Domain has struggled to break 2.5% growth in the same period.

Meanwhile, REA Group announced updated web traffic figures earlier this week, boasting an "extended audience leadership" with a record 12.4 million web visits in January 2025—and, it claims, circa 5.5 million more than Domain.

Assuming CoStar shareholders are willing to be patient, the Australian portal represents an opportunistic investment that could pay dividends in the long run; whether it snatches the crown from REA Group, or not.