REA Group keeps ‘garage culture’ alive to catch the Artificial Intelligence wave

The digital real estate company expects AI to help draw more people into the property markets it operates in around the world.

REA Group chief executive Owen Wilson speaking at the ASX to celebrate 25 years since the company was floated. Picture: Jane Dempster

Online digital behemoth REA celebrated 25 years as a listed group on Tuesday.

With a market capitalisation of more than $24bn and its shares closing at $183.22, it’s one of the biggest players on the local sharemarket and a linchpin of the country’s property landscape, with News Corporation, publisher of The Australian, holding a majority stake.

The media business, which ­famously backed the fledgling property portal with $10m and then supported its growth, now has a stake of around 61 per cent. But REA harks back to its beginnings as a listing site in a garage in the Melbourne suburb of Doncaster in the mid-1990s, ahead even of the dotcom boom.

While the company founders are long gone, the “garage culture” is critical to how the company runs today – and how it plans to ride the coming AI revolution. REA is already a very different beast to what its founders could have envisaged.

From the group’s Cremorne headquarters in Melbourne, it has grown into a multifaceted technology company with arms ranging from real estate listings, data collection and analysis to international investments and financial services.

Under the eye of chairman Hamish McLennan, chief executive Owen Wilson has led the company through the corona­virus crisis and into the next phase of its growth, which increasingly resembles a truly digital enterprise, rather than a company tethered to the Australian housing market.

Although it now counts staff in the thousands, the company’s “hack days” to come up with new ideas are still part of its culture. “There have been occasions – and more than one – where we’ve gone from the hack on finishing on the Friday to a product on Monday,” Mr Wilson said.

“It is that kind of garage start-up mentality.”

This kind of innovation is required to keep its double-digit earnings growth on track, with new markets and fresh products.

REA Group’s persistent target is double digit growth for the company. Picture: Getty Images

“The mindset is if it’s not going to help that double-digit kind of growth, it’s probably not interesting,” Mr Wilson said. “That expectation means that people don’t see it as an impossible hurdle to get over; it’s something that we just do as part of the way we think and act.”

REA is best known for its dominant property websites, but the next stage of its growth will require a leap into big data and financial services.

“The way we think about it, anything in the property ecosystem – and if there’s a problem to be solved – then that’s a business opportunity for us,” Mr Wilson said. He adds that demand for property data is prevalent, ranging from real estate agents and mortgage brokers right through to the RBA.

“We’ve just got the best data in the country in terms of property, but the unique data we have is our demand data,” he said.

The group already has propensity models allowing it to predict listings before they occur. “And then with AI, as the next wave of innovation, your imagination is the only limit,” Mr Wilson said.

Finance is another area for expansion as REA goes from writing one in 20 mortgages to its ambition of hitting one in 10, backed by its digital products.

REA differs from most Australian companies in that it has successful international units. “We’re in the largest and the fastest growing economies,” Mr Wilson said. While the US is the largest, and Southeast Asia is promising, India is the big play.

“India is the one that is the most exciting,” he said. “It’s the fastest-growing trillion dollar economy in the world,” he said. “So to be the No.1 portal in that country in five, 10 years time is going to be an amazing position for our shareholders.”

REA brings its own advantages in technology and a unique customer experience to the market. The company has kicked off an AI project to boost personalisation on its sites.

“Every single person will get a slightly different experience based on what they’ve been doing in the past and then where we think you might be headed,” Mr Wilson said. “We think consumers will love it. It’ll be much more engaging. And we’ll get more leads and more value from it.”