Activist investor Dan Loeb has launched a scathing critique of CoStar Group’s strategy, raising concerns about its investment plans, particularly in Australia, where it owns the Domain real estate portal. CoStar, an American real estate giant, acquired Domain last year for $3 billion with ambitious plans to challenge the dominant REA Group. CoStar Group is a provider of information, analytics, and online marketplaces for the commercial real estate industry. Domain is one of Australia’s largest online real estate advertising portals.
In a letter to CoStar’s board, Loeb, founder of the hedge fund Third Point, criticised the company’s “weak board oversight” and “disastrous capital allocation policies.” He specifically targeted the expansion into residential real estate portals, which began with the acquisition of Homes.com in the United States in 2021. Third Point, holding less than 1 per cent of CoStar, is pushing for a board overhaul, a review of its residential real estate businesses, and a renewed focus on its core commercial property operations. Loeb also attacked CoStar’s chief executive Andy Florance’s compensation package, citing a lacklustre share price performance.
Angus Aitken, executive chairman at Aitken Mount Capital Partners, noted the significance of Loeb’s letter for the Australian real estate sector, suggesting it could diminish the perceived threat Domain poses to REA Group. Aitken believes this indicates Domain may not receive unlimited capital, as some had feared. Shares in REA fell 2.6 per cent to $190.76, continuing a slide from the second half of 2025 when investor concerns arose around competition and AI.
CoStar responded that it has had “extensive engagement” with shareholders and that its spending decisions were sanctioned. Sam Chipkin from 5AM Capital supports Third Point’s critique, highlighting the risks associated with portal acquisitions in the UK, Australia, and the US, emphasizing the advantages of established local portals. Previously, CoStar had agreed to a board change and indicated a reduction in investment in loss-making ventures.
