Fund Manager Summary
The fund managers believe that the outlook for Rea Group Ltd remains cautiously optimistic despite recent challenges. In their opinion, the company has shown robust performance leading to strong results, yet they express concern over the valuation appearing stretched, currently at a standard deviation above historical averages. Additionally, the unexpected CEO resignation has introduced a level of uncertainty that could impact future performance. As a result, the fund managers have opted to reduce their position in REA Group, reflecting a strategic move to mitigate risk while remaining watchful of the company’s developments.
Source: Trading View
Commentary From The Managers
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Ten Cap
30 Sept 2025
$231.06
Summary
- Ten Cap continues to hold REA Group due to its dominance in property advertising.
- Structural growth is evident, supported by cyclical recovery potential.
- Anticipation of improved housing activity as monetary policy eases.
- This easing is expected to reinforce REA’s earnings trajectory.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Ten Cap
30 Sept 2025
$231.06
- Ten Cap continues to hold REA Group due to its dominance in property advertising.
- Structural growth is evident, supported by cyclical recovery potential.
- Anticipation of improved housing activity as monetary policy eases.
- This easing is expected to reinforce REA’s earnings trajectory.
Summary
Selector Funds Management
31 Aug 2025
$243.21
- Selector Funds Management highlights REA Group as Australia’s leading online property portal, attracting 6.4 million exclusive monthly visitors.
- Internationally, REA operates Housing.com in India and holds a minority stake in Move, Inc., enhancing its global footprint.
- For FY25, REA Group reported strong financial results, with a record 12.1 million monthly visitors and a 55% increase in seller leads.
- Following the sale of a 17.2% stake in PropertyGuru, REA has repaid all external debt, strengthening its financial position.
- CEO Owen Wilson has retired after ten years, leaving a legacy of strong company culture and a net cash balance sheet exceeding $400 million.
- New CEO Cameron McIntyre aims to maintain the company’s cultural integrity amidst increasing competition.
- Competitor CoStar Group has entered the market, posing a challenge to REA’s dominance with aggressive strategies.
- Selector Funds Management notes REA’s cautious approach towards acquisitions, especially given past international losses.
- REA India is undergoing a strategic cleanup under new CEO Praveen Sharma, focusing on core business operations.
- With a pristine balance sheet and sensible capital management, REA is well-positioned to navigate market challenges.
- Outlook includes structured guidance for lower residential buy listings and double-digit yield growth.
- REA Group's market capitalisation stands at $29.0 billion.
Summary
DS Capital
30 June 2025
$240.49
- DS Capital notes a 22% increase in REA's share price over the year.
- Despite a challenging listings environment, REA achieved earnings growth through price increases, premium products, and cost control.
- Recent updates indicate REA is on track for an attractive 20% earnings growth this year.
- Significant growth observed in REA India, which is nearing a material contribution.
- There was notable corporate activity in the sector, including multiple unsuccessful bids by REA for Rightmove.
- Both REA and Rightmove are similar yet structurally different, with different pricing models.
- Market multiples for both companies vary significantly, leaving the door open for potential future bids.
- The acquisition of Domain by CoStar has led to speculation about its impact on REA.
- DS Capital believes that incumbency is difficult to disrupt, as evidenced by CoStar's recent acquisition.
- REA has received a letter from the competition regulator expressing concerns about competition in the sector.
- Initial assessments suggest that the impact of regulatory concerns will not be material, but monitoring will continue.
- Despite some uncertainties, REA is regarded as one of the best real estate portals globally and remains a core holding.
Summary
Seneca Financial Solutions
30 June 2025
$240.49
- Seneca Financial Solutions has included REA Group (REA) in their portfolio.
- The stock is currently trading nearly 20% below its year-to-date high.
- This decline follows an ACCC investigation into REA's pricing practices and market dominance.
- Seneca Financial Solutions views this uncertainty as an opportunity to acquire a high-quality business.
- The investment is supported by cyclical tailwinds from a declining interest rate environment.
- Seneca Financial Solutions considers REA Group to be at a rare and attractive valuation.
Summary
Hyperion Asset Management
31 May 2025
$240.28
- Hyperion Asset Management notes that REA Group Ltd. (REA) reported a 12% increase in revenue and 12% increase in EBITDA for 3Q25.
- Listings for the quarter remained flat compared to the prior period.
- Revenue growth was driven by a 15% increase in yield, despite a 3% negative impact from revenue deferral.
- REA continues to strengthen its market position with 12.6 million visitors in March, including 6.4 million exclusive visitors.
- The platform provides significant value to real estate agents, enhancing its role in the property buying and selling process.
- As a result of the added value, REA has implemented price increases in the high single-digit percentage range.
- Despite annual price increases in property classifieds, the overall industry take rate relative to property transaction prices has not materially changed over the past decade.
Summary
Montgomery Investment Management
12 May 2025
$241.49
- Montgomery Investment Management updates its investment thesis on REA Group, citing resilience amid a softer listings outlook.
- Q3 FY25 results show a 12% year-on-year revenue growth to A$374 million, aligning with market expectations.
- EBITDA (excluding associates) increased by 12% to A$199 million, slightly below consensus estimates.
- Free cash flow rose 19% year-on-year to A$132 million, reflecting strong cash generation capabilities.
- Listings activity was flat nationally, with Sydney up 4% and Melbourne down 3%.
- April listing volumes dropped 11%, indicating challenges ahead, particularly in Q4.
- Management anticipates full-year listings growth of 1-2%, likely marking Q4 as the weakest quarter of FY25.
- Yield remains strong, with residential buy yield growth accelerating to 15% in Q3, up from 13% in Q2.
- Guidance for FY25 yield growth is maintained at 13-15%, showcasing REA's pricing power.
- Historical yield growth has compounded at approximately 20% CAGR over the past 15 years, a key driver of shareholder value.
- Core operating expenses grew 9%, with total group opex up 12%, reflecting strategic reinvestment.
- Looking ahead, revenue growth is expected to moderate to around 11% in Q4, with cost growth easing into low single digits.
- Analysts may adjust FY25 forecasts slightly lower due to recent trends, but consensus remains around 15% revenue growth for Australian residential.
- The introduction of AMAX packages is expected to contribute an additional 3-4% to buy yield growth in FY26.
- In India, revenue grew 28% year-on-year, but core housing revenue faced challenges from competition.
- Management expressed confidence in REA's market position despite concerns over CoStar's entry into Australia.
- Overall, REA Group's Q3 update reinforces its pricing-led growth strategy and the sustainability of its competitive advantage.
- Montgomery Investment Management views REA as one of the top ten listed companies in Australia based on its strong profitability and competitive edge.
Summary
Contract Asset Management
30 Apr 2025
$248.23
- Contract Asset Management updates their investment thesis on REA Group Ltd, highlighting its resilience amidst market challenges.
- In its 1H25 result, REA Group achieved an 18% revenue growth despite headwinds in the real estate market, driven by demand and price increases.
- REA’s market dominance is evident, with its flagship platform realestate.com.au reaching approximately 65% of Australia’s adult population monthly (around 12 million users).
- The company enjoys a near monopoly in online real estate advertising, recording 132 million monthly visits compared to Domain’s smaller share, ensuring stable revenue.
- Real estate agents depend on REA’s tools and listings, solidifying its entrenched role in the market.
- Real estate advertising is linked to essential economic activities such as buying, selling, and renting homes, sustaining demand even during downturns.
- REA’s ability to raise prices during the 2019 slowdown illustrates its resilience in challenging conditions.
- Unlike cyclical sectors, REA’s services are less sensitive to discretionary spending, providing stability.
- The forecast Earnings Per Share (EPS) for the next twelve months shows a steady improvement, reinforcing confidence in the company.
- This resilience allows Contract Asset Management to leverage short-term fluctuations in the share price effectively.
Summary
DS Capital
31 Mar 2025
$219.55
- REA Group reported strongly
- Emergence of CoStar Group as the likely new owner of Domain Group impacted REA’s share price
- Concerns revolve around a deep-pocketed owner potentially hurting REA’s profitability
- DS Capital believes that it is difficult to materially impact the incumbent
- Reference to CoStar’s challenges in the UK where it could not adversely affect Rightmove
- Rightmove continues to report strong operational results
- Rightmove is expected to deliver 8-10% revenue growth and earnings growth of at least 10%
- Continues investing for longer term growth
- DS Capital continues to hold its position based on these insights
Summary
Selector Funds Management
31 Mar 2025
$219.55
- REA Group is Australia’s leading online property portal with 6.1 million exclusive monthly visitors, far surpassing its nearest competitor.
- Internationally, REA operates Housing.com in India and holds a minority share in Move, Inc., owner of realtor.com.
- The platform facilitates buying, selling, financing, and renting properties, providing innovative digital solutions.
- For HY25, REA reported a 20% revenue increase to $873 million and operating profits (EBITDA) of $553.5 million, up 22%.
- Underlying profit after tax for the period was $310 million, reflecting a 27% increase year-on-year.
- In Australian residential, revenue rose by 21% to $614 million, driven by double-digit yield growth and a 5% increase in national listings.
- NextGen Listings initiative aims to enhance user experience, with a 91% increase in consumer engagement on property listings.
- Phase two of NextGen Listings is set for mid-CY25, introducing new functionalities for property applications and offers.
- Phase three, expected later in CY25, will focus on immersive experiences and deeper integration with financial services.
- In India, revenue grew 46% to $64 million, with EBITDA losses improving by 27% to ($14 million).
- Management anticipates continued growth in app traffic and user engagement as a priority for future success in India.
- CEO Owen Wilson will retire after ten years, with a search for a new CEO currently underway.
- Management is optimistic about continued double-digit growth in residential yield and targets low double-digit growth in operating costs.
- REA Group currently has a market capitalisation of $31 billion.
Summary
Ten Cap
28 Feb 2025
$238.16
- Ten Cap observed a robust performance leading to a strong result.
- The fund manager reduced their REA position.
- The valuation appeared stretched, sitting at a standard deviation above historical average.
- There is rising uncertainty following an unexpected CEO resignation.
Summary
Oracle Advisory Group
31 Dec 2024
$233.31
- REA Group (REA) has shown resilience following its unsuccessful buyout attempt of Rightmove.
- Despite a decline of 8.2% in September, REA's stock has recovered this quarter.
- The rebound is attributed to increasing expectations for interest rate normalization in Australia.
- Oracle Advisory Group believes REA should have offered a higher bid for Rightmove.
- The rationale for this opinion is that REA could have used its per-customer and tiered pricing approach in the UK.
- Rightmove operates on a blanket pricing model, limiting its market appeal.
- Potential market opportunities were significant, given the UK's 2.5 times larger population than Australia.
- The current dominance of Rightmove in the UK market suggests strong value creation for REA.
- Overall, the failure to secure Rightmove is seen as a strategic misstep for News Corp, which controls about 61.4% of REA.
Summary
DS Capital
30 Sept 2024
$201.00
- DS Capital maintains a long-term positioning with REA Group.
- Strong earnings result driven by price increases and growth in residential listings.
- Growth particularly noted in Sydney and Melbourne.
- REA Group proposed an acquisition of Rightmove, a leading UK property portal.
- Despite four proposals, no agreement was reached under UK takeover law.
- REA Group elected to withdraw its offer for Rightmove.
- DS Capital sees value in both REA and Rightmove independently.
- Belief that holding each will lead to significant rewards.
Summary
Selector Funds Management
30 Sept 2024
$201.00
- Selector Funds Management notes REA Group's recent indicative offer to acquire Rightmove, the UK's largest property listing platform, which holds over 80% market share in property portals.
- Throughout September, REA improved its original offer for Rightmove on three occasions, increasing its scrip and cash value by 11%, from 705 pence to 781 pence per share, valuing Rightmove at approximately £6.2 billion.
- The final offer represented a 41% premium to Rightmove's undisturbed share price of 556 pence as of 30 August 2024.
- Following the rejection of its fourth proposal by Rightmove's board on 30 September, REA withdrew plans for a formal offer, citing the need for a fair price and constructive dialogue.
- In FY2023, Rightmove reported revenue of £364 million and operating profits (EBIT) of £258 million, reflecting increases of 9.5% and 6.9% respectively.
- Rightmove maintains a strong financial position with £33.4 million in cash and no debt.
- Separately, REA has agreed to acquire a 19.9% equity stake in Athena Home Loans for up to $62 million, funded by existing cash, and will take two seats on Athena’s board.
- This acquisition aligns with REA's strategy to enhance its offerings in property financing, continuing its partnership with Athena that dates back to 2022.
- In FY24, Athena Home Loans achieved $1.2 billion in settlements, showcasing its growth potential.
- As of now, REA Group has a market capitalization of $26.4 billion.
Summary
Yarra Capital Management
30 June 2024
$191.18
- Yarra Capital Management holds an underweight position in REA Group (REA).
- Investment exposure to the online real estate sector is gained indirectly through Domain Holdings (DHG).
- Domain Holdings is associated with Nine Entertainment (NEC), which owns 60% of DHG.
- REA trades at a multiple of 45.0-times FY24 P/E.
- Yarra Capital Management identifies superior risk-adjusted returns in other high-growth online businesses.
- Example of such companies includes Carsales.com (CAR), trading on 32.8-times FY24 P/E.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"Valuation seems to be flirting with the edge, hovering a standard deviation above historical norms. With uncertainty creeping in post-CEO resignation, it appears prudent to trim positions in REA Group while the market recalibrates."
Last Updated: 30 Sept 2025
Query The Data
Frequently Asked Questions
Who is investing in Rea Group Ltd (ASX:REA)?
Fund managers including Ten Cap, Oracle Advisory Group, DS Capital, Yarra Capital Management, Contract Asset Management, Montgomery Investment Management, Hyperion Asset Management, Selector Funds Management and Seneca Financial Solutions have invested in Rea Group Ltd (ASX:REA).
Why do fund managers invest in Rea Group Ltd?
Fund managers have invested in Rea Group Ltd due to its strong performance and historical growth. However, recent developments, including a perceived overvaluation and increased uncertainty following a CEO resignation, have led to cautious adjustments in their positions.
What happened to Rea Group Ltd (ASX:REA)?
Fund managers are investing in Rea Group Ltd due to its dominant position as Australia's leading online property portal, boasting 6.4 million exclusive monthly visitors. The company is expected to benefit from a cyclical recovery in housing activity as monetary policy eases, which will enhance its earnings trajectory. Rea Group's innovative digital solutions in property transactions, strong financial performance, and a robust net cash balance of over $400 million further solidify its appeal. Additionally, the leadership transition appears to maintain cultural consistency, crucial for navigating increased domestic competition from new entrants like CoStar Group.