Thinking of Buying a Real Estate Business in Australia? Here Are 3 Vital Questions to Ask
The Australian real estate services industry generated $30.9 billion in revenue in 2024–25, with profit margins averaging 11.1%. The sector employs over 163,000 people across 45,000 enterprises, dominated by small operators, while major franchise groups like Ray White and LJ Hooker hold modest market shares.
Revenue is projected to rise at 1.3% annually through 2029–30, reaching $33.0 billion. Growth will be supported by strong migration-driven population growth, rising housing prices, and heightened demand for rental and build-to-rent (BTR) properties. However, profitability remains sensitive to interest rate volatility, housing affordability constraints, and regulatory reforms in both sales and rental management.
1. Is the Business Financially Resilient in a Volatile Market?
Why It Matters
The industry is highly cyclical, tied to dwelling transfers and mortgage affordability. Rising interest rates in 2022–23 triggered one of the sharpest downturns in transaction volumes, but activity has rebounded as rates eased in 2024–25. Agencies relying heavily on sales commissions face greater volatility than those with diversified income from property management and leasing.
What to Check
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Revenue composition – Review reliance on commissions versus recurring rental management fees.
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Profit margins – Compare against the industry’s 11.1% average.
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Cash flow resilience – Assess capacity to withstand downturns when sales volumes fall.
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Overheads – Check labour costs, which account for the largest share of industry expenses.
2. Does the Market Position Provide Competitive Advantage?
Why It Matters
The sector is fragmented, with no single agency controlling more than 6.6% of market share. Location is critical, as eastern states (NSW, VIC, QLD) dominate revenue due to higher property values and turnover. Strong brand recognition, digital capability, and property management portfolios are increasingly key to competitive advantage.
What to Check
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Geographic presence – Confirm the business is located in high-demand areas or growing regional hubs.
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Client mix – Assess balance between owner-occupiers, investors, and commercial clients.
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Brand strength – Review alignment with major franchise networks or established independent reputation.
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Technology adoption – Check use of proptech, online platforms, and virtual inspection tools.
3. Is the Business Positioned for Future Industry Shifts?
Why It Matters
Housing affordability issues and rising interest rates are accelerating the shift toward renting, with rental management becoming a key growth area. At the same time, sustainability reporting requirements and consumer demand for green buildings are reshaping property demand. Businesses that adapt to BTR developments, climate compliance, and regional migration trends will outperform peers.
What to Check
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Rental focus – Review scale and quality of the property management portfolio.
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Sustainability – Ensure readiness to market and manage eco-certified properties.
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Regulatory compliance – Confirm systems for AML/CTF reporting, tenancy law changes, and franchise code obligations.
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Diversification – Assess exposure to both residential and commercial segments to reduce volatility.
Ready to Invest in a Thriving Real Estate Business?
With steady growth driven by migration, population increases, and rental demand, real estate businesses remain central to Australia’s property market.
Success will depend on balancing cyclical sales revenue with recurring rental income, adopting digital and sustainability strategies, and securing strong brand positioning in competitive markets.
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