CoStar’s $1.92 Billion Domain Acquisition: A Bold Move to Dominate Global Real Estate Tech

On March 27, 2025, CoStar Group, the leading commercial real estate data provider, reached a pivotal agreement to acquire Australia’s largest residential real estate portal, Domain, for $1.92 billion. This deal, the culmination of months of negotiations, marks CoStar’s most significant international expansion to date and underscores its ambition to challenge REA Group’s dominance in the residential classifieds market. The acquisition, which follows a revised offer after initial pushback from Domain’s majority shareholder, Nine Entertainment, positions CoStar to leverage Domain’s platform to fuel growth in a sector it has long sought to enter.

Strategic Rationale: Global Ambitions and Competitive Pressure

CoStar’s CEO, Andy Florance, has long argued that REA Group, Australia’s market leader, lacks the incentive to innovate its platform due to its near-monopoly position. By acquiring Domain, CoStar aims to disrupt this dynamic, creating a competitive alternative that can leverage its own advanced technologies, such as those from Matterport, a 3D spatial data firm CoStar acquired in 2023. Integrating Matterport’s tools into Domain’s platform could enhance visual real estate data, a feature critical for modern buyers and sellers.

The move also aligns with CoStar’s broader strategy to diversify beyond its core commercial real estate business. In Q1 2025, CoStar reported a 12% year-on-year revenue increase to $732 million, driven by record net new bookings across its platforms. For instance, CoStar’s commercial listings saw a 68% year-on-year booking surge, while LoopNet bookings jumped a staggering 200%, signaling strong demand for its services. The Domain acquisition extends this momentum into the residential sector, where Homes.com—a CoStar subsidiary—is already the second most visited U.S. residential portal, with unaided brand awareness soaring to 36% in early 2025 from just 4% in 2024.

Financial Terms and Market Reactions

The revised $1.92 billion offer, which values Domain at $4.43 per share, represents a 42% premium over its February 20 closing price. While falling short of Nine’s requested $4.65 per share, the deal gained momentum after Nine endorsed the revised terms, accelerating the due diligence phase. Domain’s share price rose to $4.44 in the days following the announcement, reflecting investor confidence, though it settled at $4.38 amid lingering uncertainty.

For CoStar, the acquisition is a calculated risk. The company has maintained 56 consecutive quarters of double-digit revenue growth, a testament to its financial discipline. The integration of Domain’s 10 million monthly visitors into CoStar’s ecosystem could amplify its global reach, particularly as it experiments with vendor-paid advertising models like Homes.com’s “Boost” feature. This model, which allows sellers to pay ~$500 for enhanced online visibility, has already shown success in Australia and Sweden, and Florance calls it “universally positive” in focus groups.

Risks and Challenges

The deal faces hurdles, including regulatory approval and the need to harmonize Domain’s operations with CoStar’s U.S.-centric systems. Additionally, CoStar must navigate Australia’s competitive real estate tech landscape, where REA Group’s entrenched position could limit immediate gains. A 2% dip in REA’s share price after the announcement suggests investors see CoStar as a credible threat, but sustained growth will depend on execution.

Conclusion: A Pivotal Step Toward Dominance

CoStar’s acquisition of Domain is a bold strategic move that leverages its financial strength and technological edge to challenge entrenched competitors. With $732 million in Q1 revenue and a history of outperforming expectations, CoStar is well-positioned to integrate Domain’s platform into its global network. The deal’s success hinges on executing synergies, such as deploying Matterport’s 3D data tools and scaling the “Boost” model, which could drive higher engagement and monetization.

While risks remain, the transaction aligns with CoStar’s track record of disciplined growth. If successful, this move could redefine the residential real estate tech sector, positioning CoStar as a dual leader in both commercial and residential markets. For investors, the acquisition reflects a calculated bet on CoStar’s ability to capitalize on its 56-quarter revenue growth streak and expand into a $1.8 billion opportunity—one that could pay dividends for years to come.