Melbourne-headquartered REA Group to continue investing in tech, innovation, says CEO Owen Wilson

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Melbourne-headquartered REA Group, which owns and runs Housing.com, PropTiger.com and Makaan.com, is increasing its investment in India more than in Australia as it plans to add mortgage business, list commercial properties and expand to tier 2 cities in coming years, Owen Wilson, Global CEO, REA group told ET.

REA’s current market cap is 17 billion Australian dollar and company is expected to close this financial year (July 21-June 22) with a revenue in excess of one billion dollar.

“Previous year, India accounted for less than 5% of our revenue but this year we expect it to be between 5-10%. Going forward, it will only increase,” Wilson said.

The company has invested close to 300 million dollar in India since 2017.

The REA Group had in October 2020 acquired Elara Technologies, which operated Housing.com, PropTiger.com and Makaan.com, and renamed it REA India. Before that, it had a minority stake in Elara. The total consideration for the transaction was $50-$70 million, with $34.5 million payable out of the cash reserves of Elara.

“The 300 million dollar we have invested so far include our equity investment plus all the the investment in capital expenditure in tech. Going forward, India will be getting a larger share of our investment in terms of percentage growth. We are increasing our investment in India more than in Australia,” said Wilson.

In terms of profitability, Wilson said that company’s number one priority is audience, and building the best consumer experience.

“If you have those two combined, what happens is people come to your site because they know your brand. And then they get a better experience than any other site and they stay and they keep coming back,” he said.

The segment is likely to see a tremendous boost in the near future amid growing use of technologies such as virtual reality, drones, big data, artificial intelligence in home purchases. Real estate in the country is slated to become a $1-trillion market by 2030.

“We are just going to keep investing in innovation, in technology, in marketing, to keep that position and profitability will come,” said Wilson.

Wilson said that India is the fastest growing trillion dollar economy in the world and there is a passion about property in the country.

REA group currently has no acquisition plan in India but is open to the right offer.

“It doesn’t mean we don’t look, people approach us all the time. And so if the right deal came along at the right price, we absolutely would look at it. If you look at the history of REA group, we’ve done between four and six acquisitions every year,” Wilson said.

The company is also planning to have a tech back office for REA Australia in India.

“REA Australia has about 200 people working in China through an outsource provider but they are exclusive to us. We believe India probably makes more sense for us. And so we’re going to explore creating effectively a back office here in India for REA Australia to help with their tech development,” Wilson said.

63% of Australians visit REA site every month. With Covid accelerating the digital adaption, company expect further growth in India business.

“I think mortgage is one big focus area, for us going forward and in Australia, mortgage and financial services has a big thrust. And we also believe it’s a very fragmented market here, which, can be more organised. That’s one area we want to look at in the future,” said Dhruv Agarwala, Group CEO, PropTiger.com.

The Indian real estate market is estimated at $180 billion and projected to grow at a compounded annual rate of 19% over the next decade. The digital real estate classifieds advertising market is expected to expand at a CAGR of 29% till 2025.

Wilson also said that mortgage business is going to be the priority.

“In Australia, when people start looking for property, the very next thing they do is they try to work out how much can I borrow? We have got great tools to help them do that, to work out, given the bank lending requirements, how much they can borrow. Getting a loan is a complicated process for most individuals. And so having someone help you do that, to sort through the offers from the banks to help you with your application to make sure it gets processed and approved is a huge opportunity here in India,” Wilson said.

Company has already started listing commercial properties and is planning to launch the full fledged service in few months.

“We have started getting listings on an organic basis. We are not going to brokers and selling them commercial packages yet. Right now the focus is get organic listings, and build audience,” Agarwala said.

The company also thinks work from home is the way forward and it will continue to hire but will allow employees to work from anywhere.

“Covid accelerated consumer uptake of digital products like ours. It’s definitely changed the way the workforce works. Efficiency gained from not commuting has resulted in productivity increases,” Wilson said.

Company is also looking to add 6-7 tier 2 cities next year.

“Currently, we are in the top tier one cities and we are in seven tier two cities. And we plan to sort of extend that number,” Agarwala said.

The investment inflow in real estate is growing at a CAGR of 10%, of which PropTech has been a blue-chip segment since 2010, growing at a robust CAGR of 57%.