Domain's CoStar Acquisition and the Future of Australian Proptech
Published on offmarket.now | November 2025
In August 2025, CoStar Group completed its acquisition of Domain, Australia's second-largest property portal. The deal brought one of the world's most data-rich real estate companies into the Australian market. Seven months later, the implications are becoming clearer.
What CoStar brings
CoStar Group is a US-based real estate information and analytics company with a market cap exceeding $30 billion. It operates Apartments.com, Homes.com, LoopNet, and CoStar's commercial real estate database. Its ambitions in residential are centred on Homes.com, which it has been building aggressively since 2023.
The company's core asset is data. CoStar employs thousands of researchers who physically verify commercial real estate data — rents, vacancies, lease terms, building specifications. It has been building a similar capability for residential, and Domain's Australian listing data is a key acquisition.
CoStar has described its Homes AI as "the most sophisticated vertical AI application in real estate." The technology powers conversational search, predictive analytics, and agent matching on Homes.com. The expectation is that these capabilities will flow into Domain's Australian platform.
What's changed since the acquisition
Domain reported record traffic of 55.1 million visits in October 2025, up 46% year-on-year. Whether this is organic growth or CoStar-driven investment in marketing is debatable, but the trajectory is clear: Domain is not retreating.
Inside the organisation, Domain has been building AI capabilities. Before the acquisition, one-third of Domain's staff were already using an internal AI assistant for natural language data queries. CoStar's technology stack is expected to accelerate this.
For the Australian market, the acquisition means:
More investment in data and analytics — CoStar's approach is research-intensive. Expect deeper property data, more granular analytics, and richer listing information on Domain
Conversational search coming to Domain — CoStar's Homes AI will likely be adapted for the Australian market
Commercial-residential convergence — CoStar's commercial real estate data combined with Domain's residential data creates a cross-asset platform that competitors can't easily replicate
International capital backing — Domain now has access to CoStar's significant R&D budget
What it means for REA Group
The acquisition intensifies the rivalry between Domain and REA Group. REA responded proactively in 2025 by:
- Rolling out natural language AI search to all users
- Launching a ChatGPT property search app (February 2026)
- Delivering a "predicted serious buyer" AI metric
- Investing in conversational AI through its OpenAI partnership
The result is that Australia's two largest property portals are now in an AI arms race, each backed by substantial technology partnerships (REA with OpenAI, Domain/CoStar with its internal AI team).
For buyers, this competition is positive — it means faster innovation, better search tools, and richer data on both platforms.
What it means for off-market
The CoStar acquisition is unlikely to change the off-market dynamic directly. Domain and REA remain portal businesses: they display properties that agents choose to list with them. Off-market properties, by definition, skip the portal step.
However, the acquisition has several indirect effects:
- Data pressure on agents — as portals invest in richer data and AI, the value proposition of listing on portals increases. This could reduce off-market rates as agents are incentivised to list on portals for the analytics and exposure
- The "missing middle" opportunity — there are properties that appear on agency websites but not on portals. Neither Domain nor REA captures these. Aggregators that scrape agency websites fill this gap
- AI tools for off-market analysis — the analytics capabilities that CoStar brings (predictive models, market forecasting, comparable analysis) are useful for evaluating off-market deals, even if the deals themselves aren't discovered on Domain
- Increased buyer expectations — as portal search becomes more sophisticated, buyers will expect the same quality from off-market discovery tools. Aggregators need to keep pace with portal UX
The broader proptech landscape
The CoStar-Domain deal is part of a larger pattern. VC investment in proptech reached $16.7 billion in 2025, up 67.9% year-on-year. AI-centred proptech companies grew at 42% annualised versus 24% for non-AI proptech. Q4 2025 alone saw $2 billion raised — the strongest quarter since 2021.
In Australia specifically:
- PropHero raised USD $25.1 million in Series A (February 2025), the largest for an Australian proptech, building AI-powered investment advisory
- Archistar continues to grow with AI-powered generative building design
- The Australian proptech market reached AUD $1.83 billion in 2025 with a projected CAGR of 14.2% through 2035
The market is consolidating at the top (CoStar acquiring Domain) while fragmenting at the edges (new AI-powered tools for specific niches like off-market, investment analysis, and property management).
What buyers should do
- Use both portals — Domain and REA have different listing inventories. Searching only one misses properties on the other
- Supplement with off-market sources — portals, no matter how sophisticated, only show properties agents choose to list there
- Leverage the AI tools — try conversational search on both platforms. The technology is genuinely useful for discovering properties that rigid filters miss
- Set up alerts everywhere — Domain alerts + REA alerts + off-market aggregator alerts. The overlap is lower than you'd expect
The CoStar acquisition makes Domain stronger. It makes the portal market more competitive. But it doesn't solve the fundamental off-market gap — the 15-20% of transactions that never appear on any portal. That gap is where the next wave of proptech innovation will focus.
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