The metaverse and the future of Real EstateOwen Mitchell
Real Estate is tangible – its shapes our world and the way in which we live. Even when markets crash and the value of real estate plummets, physical bricks and mortar fulfil a purpose.
However, the metaverse is challenging this narrative.
Labelled as the ‘next iteration of social media’, virtual worlds have witnessed a buying frenzy, as major players seek to consolidate land and assets that don’t exist. There are no bricks and mortar, just code, representing 3D spaces in a virtual web of worlds that some, including Facebook, say is the future of the internet.
As a Gen Z, I remember playing games online, the whole purpose of which was to create your own world – games like the Sim City &. Minecraft. But those were an escapism from real life, not an extension of the world we live in.
Clearly the metaverse is morphing into something the commercial real estate industry can no longer ignore. It encompasses everything that exists virtually, from digital art to virtual worlds and real estate parcels that are being snapped are just one type of metaversal investment, often listed as NFTs.
Virtual worlds—The Sandbox, Decentraland, Cryptovoxels, Earth2, Nifty Island, Superworld, Wilder World—each offer different things to users: hyper-realistic graphics, gaming options, communities of specific types of early adopters.
In these virtual worlds, a retailer taking a lease is buying advertising, which is pretty much the purpose of physical shop on the high street. It’s a big billboard that we can enter, have a little browse around, maybe try out a few things, and then probably buy whatever we were looking at on our phone.
If we really think about it, isn’t the creation of a metaverse just where capitalism and consumerism goes next?
Clearly, some businesses have come to this conclusion, and have started to invest serious cash. Toronto-based company Tokens.com, has dropped £1.84m on a patch of virtual land in Decentraland – a metaverse based around crypto with its own currency.
Just over £6.1m was spent on “land” in Decentraland in the past week and over the past four years, sales have totalled more than £120m. Meanwhile, in The Sandbox, £260m has changed hands – that’s the same value as 57,000 acres of real prime arable land.
Andrew Kiguel the Canadian founder and chief executive of crypto and NFT investor Tokens.com, commented that real estate in the metaverse “is going to be a multi-trillion-dollar industry.”
However, investment isn’t without risk – it’s highly speculative, blockchain-based, and as we know, crypto is highly volatile. Ultimately, you’re still buying something that isn’t tied to reality.
Although the rapid emergence of real estate land rush is fascinating and one that the industry should keep a close eye on, in the real world our industry still has a vast amount of responsibility which cannot be ignored. Even by immersing ourselves in a world of avatars, blockchain and code we cannot escape our shared responsibility of building back a better world post-pandemic. And this is where our focus should remain.