From garage startup to ASX giant

Thu 04 July 2024
3 MIN READ

Ajita Tynan

Manager, Listed Company Services, ASX

How REA Group went from an idea to a S&P/ASX 100 Company

REA Group Limited (ASX: REA) is one of the Australian Securities Exchange’s (ASX) true success stories. Its humble beginnings trace back to 1995 in a garage in the Melbourne suburb of Doncaster, where husband and wife team Karl and Carmel Sabljak, along with Karl’s brother Steve and co-founder Martin Howell, had a visionary idea: what if they leveraged a burgeoning technology, the internet, to revolutionise the property market? With an ambition to do just that, this business idea led to the creation of the online classifieds portal, realestate.com.au.

Fast forward four years, to 1 December 1999, realestate.com.au made its debut on the ASX with an issue price of 50 cents per share. The stock had a remarkable first day’s trading and closed at $1.33 – giving REA a market capitalisation just under $23 million compared to a notional market capitalisation of $8.6m based upon the issue price. Had an investor put in $1 at that time, their investment on a total return basis would be worth an astonishing $508 today. This significant growth is a testament to the company’s resilience and innovative strategies.

However, the journey was not without its challenges and the business has proved incredibly resilient. The early 2000s saw the burst of the dotcom bubble, causing REA Group to lose approximately 90 percent of its value. During this turbulent period, News Limited (now News Corp Australia) acquired a 44 per cent shareholding in the company in February 2001, providing a cash injection and advertising support.

Celebrating 25 years on the ASX

Over the years, REA Group’s growth trajectory has been nothing short of phenomenal. Celebrating 25 years as a listed entity, the company now boasts a staggering market capitalisation of over A$26 billion and is the 20th largest company by quoted market capital on ASX. Its operations have expanded well beyond Australian borders, with significant footprints in Asia and North America.

The company’s portfolio includes a range of residential, commercial and property-share real estate websites catering to diverse aspects of the real estate market. These include realcommercial.com.au, dedicated to commercial property listings, and Flatmates.com.au, which focuses on share accommodation. Additionally, REA Group has invested in innovative property-related technologies and services, enhancing the digital property experience for users globally.

Strategic growth and adapting to change

REA Group's strategic acquisitions and investments have been instrumental in its growth. The company has acquired several key players in the real estate and technology sectors, including PropTrack, a provider of property data analytics and insights, and Mortgage Choice, a mortgage broking franchise. These acquisitions have broadened REA's service offerings, providing comprehensive solutions targeting every stage of the property journey.

The company’s success is also attributed to its ability to adapt to changing market dynamics and consumer behaviours. REA Group has consistently leveraged data and technology to offer personalised and intuitive user experiences. The integration of artificial intelligence and machine learning into its platforms has enabled the company to provide more accurate property valuations and insights, making it an indispensable tool for buyers, sellers, and real estate professionals alike.

Looking ahead, REA Group is well-positioned to continue its growth trajectory. The ongoing digital transformation of the real estate sector presents numerous opportunities for innovation and expansion. With a strong foundation and a clear vision for the future, REA Group remains at the forefront of the digital property evolution, setting new benchmarks in the industry.

From its inception in a Melbourne garage to becoming a multi-billion-dollar enterprise, REA Group’s journey epitomises the transformative power of technology and vision. As it celebrates its 25th anniversary on the ASX, the company stands as a beacon of success and a model for aspiring tech startups worldwide.