The virtual Australian property boom

The business of reselling domains at a profit has matured a lot since the days of being a lawless cybersquatter ridden industry and things are getting better.

We all know that Australians are obsessed with owning property and real estate values. Well, for some this obsession has been redirected away from physical properties located on Australian land, to virtual property on the internet, in the form of domain names.

Just like in the physical world, people who lease lots of domain names find they need auctioneers to aggregate new opportunities for sale and agents to make day to day administration such as lease renewals easy, leaving the owners to concentrate on extracting maximum value from the domain names they have control over.

The .AU domain aftermarket market opened up in 2008 after the rules for .AU domains were changed. Netfleet has grown to become the biggest and most active location on the internet for trading and managing portfolios of these Australian domain names.

Mark Lye CEO of NetFleet recently invited Technology Spectator to attend a meeting of domainers (domain name investors) at a pub in Sydney. Looking around at those who attended the event he told us they probably owned about 150,000 domains in total.

Lye says that while domaining was once a lawless cybersquatter ridden industry it has matured a lot during the last few years. According to him most of the players today operate legitimately as virtual property owners, hoping to resell domains at a profit or develop the domain with content that generates revenue.

One example of a niche that is currently being targeted is pet insurance. 

“ sold for $18,888 back in Feb 2011 then just this weekend we had for $6,174.25 and for $3,568," Lye says.

"I personally did not even realise you could buy insurance for your pet until I saw these domains, it just shows that there are many unexplored and valuable niches on the internet." 

During the last 12 months some of the notable domain names auctioned in Australia through various marketplaces include $125001, $100000 (despite online gambling being illegal in Australia), $100000, $150000 and for $33000, bought by Woolworths after Bunnings accidentally let it expire.

Bigger fish in the market

Some Australians operate in much larger domain markets overseas such as entrepreneur Roland Bleyer. Bleyer is bullish about the value of domain names as positive growth assets stating that he believes:

“The growth in domain name value far eclipses that of traditional, physical real estate. While we have seen the property market in Sydney show very low returns in recent times, the domain market continues to deliver for investors that are willing to take up the charge. With minimal upkeep

(domain renewal fees) and a market that is growing at such high rates I believe that domain names should be part of a balanced investment portfolio.”

When questioned about how many domains he controlled he revealed his portfolio contains over 1000 domains including the recent purchase of

In the world of domain names a .COM domain consisting of a single dictionary word that is often searched for on the internet is a prized possession, so it is likely that a very significant amount of money changed hands on the secondary market to transfer ownership of

Bleyer said that monetising the domain will be an exciting challenge as an Australian company taking on major global players in the accommodation space and he is committed to deliver 10 per cent  of all profits back into the community through a range of charity projects.

Corporates get involved 

Individual entrepreneurs are not the only ones investing in domain names. Examples of Australian corporations which are active in the space include which lodged full year accounts with the ASX showing annual expenditure of about $2.6 million on domain names and

Dominic Carosa’s company Dominet Digital which is said to invest in over 10000 domain names. Several months ago quite a few Australian companies including banks and media organisations also entered the new Top Level Domain (TLD) market.

A look at the past year would confirm that the Australian domainer industry is still in a growth period. The total number of .au domain registrations is up 13.90 per cent on last August with 2.5 million .au domains registered. It will be interesting to see if this trend continues and how many buyers recoup their investments and make a profit out of their virtual property holdings.

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