REA predicts AI to drive new wave of home sales

While names like Atlassian, Canva and Afterpay are well-appreciated tech stars, the dramatic transformation of this local company has been relatively overlooked.

REA chief Owen Wilson speaking at the ASX, celebrating 25 years since the company first floated. Picture: Jane Dempster.

Digital real estate company REA Group has emerged as one of the country’s quiet technology success stories. While local names like Atlassian, Canva and Afterpay are well-appreciated tech stars, the dramatic transformation of the company best known for its property portal has been relatively overlooked.

The company – majority-owned by New Corporation, publisher of The Australian – made a splash last week, delivering record results as long-time chief executive Owen Wilson flagged his departure in the second half of this year.

The move sparked questions about whether his exit was prompted by REA’s thwarted play for British rival Rightmove last year.

Mr Wilson said this was not the case, telling investors that he could not have even considered leaving unless the REA business was firing and pointing to a trajectory that will see it become even more deeply enmeshed in serving property buyers, sellers and agents.

The company’s deep investment in technology, as well as a push into financial services, has seen it uncouple from the ups and downs of the Australian residential property market and become a fast-growing but broader services company.

REA has also built up operations around the globe, ranging from its fast-growing India operations, where it competes for eyeballs on mobile apps, to an exposure to a Donald Trump-spurred US property market.

But its core remains its growth in Australia, where it is taking an ever deeper approach to capturing and engaging with customers as they seek out and then trade or rent properties. Mr Wilson said the focus was now on driving the next generation of customer experiences and bringing new higher value products to market.

REA has moved to uncouple its fortunes from the ups and downs of the Australian residential property market.

REA is relying on both its own technical know-how and closeness to users to develop these more advanced products, which will see it take an even larger role in how real estate is financed and transactions occur. It is developing products for buyers and renters, as well as real estate agencies, banks and other data users. Mr Wilson sees boosting user experiences as supporting a new wave of growth for the company.

While he will exit later this year, Mr Wilson sees REA’s ­future as “incredibly bright” and said the group had delivered strong yield growth in a healthy listing environment in the last half. “We saw a more balanced property market during the half as buyer demand kept pace with growth in listing volumes,” he said.

He highlights the company’s new wave of products, which will offer more new features for consumers, and help grow its audience and leadership over rival Domain.

REA’s membership model, which allows users to claim and track properties, is also spurring potential buyers to chase more properties.

With 11.9 million Australians visiting its platforms each month, Mr Wilson said the move to more personalised owner experiences was changing the game.

He said 4.2 million properties were now tracked by owners on REA’s platform, and around 45 per cent of all seller leads were generated through these owner experiences. This was paying off as vendors were also using more advanced products that the company is offering.

“Our membership strategy underpins our consumer experience and is key to unlocking additional value for customers,” Mr Wilson told investors. “Now, owner experience is key to the delivery of quality leads.”

Chief executive Owen Wilson says REA has been building up its interactions more closely with customers.

“While I can’t give too much away, it will unlock new customer value with more immersive and personalised consumer experiences and deeper financial services integration,” he told ­ investors.

REA is also benefiting from the sheer weight of demand for property in Australia, with Mr Wilson saying the market has moved on from a long-running structural decline in listings, which once hung over it.

He said that with interest rate cuts to come the market was in the best shape he had seen, and a far cry from when he started as chief executive and REA’s share price was sitting at $72. Six years later it is at $262.12.

Mr Wilson took on leading the company after the royal commission into financial services, and was then hit by the ructions of the pandemic. “We didn’t blink during that time. We just kept to our course and kept investing,” he said. “We have transformed that entire consumer experience.”

Mr Wilson says REA was already interacting more closely with customers. “And there’s another wave coming, this whole personalisation using AI,” he said, adding the company would “go to another league” in servicing customers.

That’s not to mention the growing data business, which is critical to powering customer experiences, or the rising Indian business.

“In 10 years from now, if we’re the No.1 in India, people are going to say, ‘wow, look what you’ve done’,” he said. “We are arguably the most successful property portal in the world, both in terms of revenue, size and profitability.”

Macquarie said Mr Wilson’s retirement plans came as a surprise but noted he suggested that the Australian property market was the healthiest he had seen, with analysts noting the value that the firm was generating for customers.

REA ended the last half with $338m net cash and analysts believe that capital management could be next on the agenda for the prop-tech company.

Originally published as REA predicts AI to drive new wave of home sales