Shares in Australian publishing giant Fairfax Media plunged by a third on Thursday as it spun-off its lucrative property arm in a bid to boost its bottom line.

Domain had been a money-spinning division of Fairfax that benefited from Australia's strong real estate market and digital classifieds, even as its traditional media divisions were hit by advertising and circulation declines.

Fairfax flagged spinning-off Domain in February and outlined details in August after a bidding war between US private equity giant TPG Capital and US investment firm Hellman & Friedman to buy the entire firm fell through.

Shareholders overwhelmingly backed the separation plan -- in which Fairfax took 60 percent of Domain stock -- in early November.

Domain Holdings Australia was valued at Aus$2.1 billion (US$1.6 billion) after its first day of trading in Sydney Thursday, finishing the trading day at Aus$3.69 after opening at Aus$3.80.

But Fairfax collapsed 31.46 percent to 73 Australian cents.

The media giant -- which owns major newspapers including The Sydney Morning Herald and Australian Financial Review -- in August posted a return to profit for the year to June 30 after a cost-cutting drive.

But advertising revenue for its major newspapers weakened further