Dubai : Listed real estate classifieds company REA Group is the latest Australian property player to join the rush to the United Arab Emirates, contracting to buy a controlling stake in Dubai's biggest real estate magazine.
REA Group yesterday agreed to buy a 51 per cent stake in the biweekly AlBabWorld magazine for $1.2 million, with plans to inject a further $2.5 million in the company this financial year.
The property classifieds group, which operates realestate.com.au locally and is controlled by News Limited, publisher of The Australian, also bought Dubai property website AlBabWorld.com under the deal.
REA chief executive Simon Baker said the earn-out clause would encourage AlBabWorld's founders to remain and improve earnings.
"We wanted them to stay on board (and) continue to run the business because the guys have been there and understand the market, and there's an upside incentive for them to perform well and make a bit more money out of the sale," he said.
"Acquiring a strong local player with an existing brand and good market position gives us the opportunity to capture a major part of that growth," he said.
The REA Group joins a throng of local players – including Australian property developers Mirvac and Sunland and construction groups Multiplex and Leighton Holdings – which have descended on the Gulf in recent years.
Mr Baker said it would rebrand AlBabWorld.com as propertyfinder.ae, in line with its UK classifieds Property Finder site.
"The majority of sales in Dubai are to people out of Dubai. A chunk of them come from the other Arab states and a chunk of buyers come from Europe," he said. "We have strong branding in the UK with the Property Finder brand and we think that will help drive a great amount of traffic to the (Dubai) website."
Mr Baker said REA now controlled real estate classified sites in 10 countries and the group was the only player currently taking a "multinational approach" to the sector.
The Dubai acquisition follows an announcement last month that REA had bought Square Foot Ltd, the publisher of Hong Kong's largest circulation English real estate magazine, Square Foot, for $4.8 million.
In February the group announced it had paid $7.5 million for the AtHome group of companies covering Luxembourg, Belgium and parts of France and Germany.
REA Group will initially pay $US1 million ($A1.1 million) for a 51 per cent stake in AlBabWorld.com. It will then buy the remaining 49 per cent from AlBabWorld's founder, Swiss Media Group, over the next four years. The price will depend on the company's performance.
The current Swiss Media Group management team would remain in place, REA said.
AlBabWorld publishes a bi-weekly listings magazine, the No. 1 in Dubai, as well as a website in English and Arabic.