Property transactions within digital realms are jumping. As in the physical world, property transactions in the metaverse are guided by location, location, location.
Interest in Properties within Digit Universe Skyrocketing
Love him or don’t, when Mark Zuckerberg talks, people listen. When Zuckerberg announced last month that Facebook would now be known as Meta, investors began scrambling to own a piece of the rock in the digital frontier.
Anticipating a digital land boom on the near horizon, investors are buying up concert venues, shopping hubs and other metaverse properties. Which properties? Just like the physical world in which we live, work and play, metaverse properties that reek of location, location, location.
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What is the Metaverse?
For those of you gamers who are hooked on games like Fortnite, Animal Crossing and the Roblox universe and for those of you eXp Realty agents, you already have a knowing sense that the metaverse encompasses multiple digital realms.
Each realm is like a 3D virtual city. In the case of eXp Realty, a virtual campus is dedicated to real estate professionals. Both 3D virtual cities and campuses are places where avatars live, work and play. Each digital realm or 3D virtual city combines elements of avatars, virtual reality, streaming video, and artificial intelligence to provide immersive digital experiences.
Technologists & Investors Betting Big on the Metaverse
Technologists and investors alike believe the metaverse will grow and develop into a fully functioning economy in just a few years. They also believe that all activities in metaverse will become as integrated into our lives just as email and social networking are today.
According to the digital currency investor Grayscale, the global market for goods and services in the metaverse will soon be worth $1T.
Money in these digital realms is cryptocurrency and finance in the metaverse is powered by blockchain technology. Anyone entering and functioning in a virtual world can buy/trade goods, services, art, music, concert venues, historic monuments such as the Eiffel Tower, and yes, even homes as nonfungible tokens or NFTs. NFTs are blockchain-based digital representations of real-world items. The NFT provides proof of ownership and cannot be interchanged.
Transaction Volume for Commercial Real Estate in Metaverse Rapidly Rising
Tokens.com, a blockchain tech company focused on NFTs and metaverse real estate, bought 50% of Metaverse Group, one of the world’s first virtual real estate companies, for some $1.7M. Though based in Toronto, the Metaverse Group is “headquartered” in a virtual world called Decentraland in Crypto Valley.
Andrew Kiguel, co-founder and chief executive of Tokens.com, said, “Rather than try to create a universe…I said, ‘Why don’t we go in and buy the parcels of land in these metaverses, and then we can become the landlords?’”
Since then, Tokens.com has broken digital ground on a tower in Decentraland and has attracted the likes of luxury royalty (Gucci, Burberry, Louis Vuitton) via NFTs as tenants in that tower. Very soon, Tokens.com will begin generating revenue from its NFT tenants’ leases and advertising.
Just last week, Tokens.com closed a land deal in Decentraland’s fashion district for approximately $2.5M in crypto. Kiguel plans to develop a virtual commerce hub for lux fashion brands similar to Fifth Ave. and/or Rodeo Road.
Estimating his metaverse real estate portfolio has appreciated 10 times its purchase price, Kiguel said, “A parcel of land in the downtown core…is worth more than a parcel of land in the suburbs. There’s a scarcity value…it’s (all about) location, location, location.”
Virtual Real Estate Not Limitless
Again, just as in our physical world where land is not limitless, land in the metaverse is not limitless. Though the internet is infinite, virtual real estate is not. The virtual realm of Decentraland has about 90,000 land parcels, each roughly 50 feet by 50 feet. The same is true in other virtual realms such as Somnium Space, Sandbox, and Upland.
Michael Gord, cofounder of the Metaverse Group, said that metaverse real estate investors believe there’s “gold in those pixelated hills.” Once investors buy virtual plots of land represented by NFTs, those investors get a share of any commerce that happens on that piece of property.
Sounds as though being a landlord in any sphere, physical or digital, is the way to go, right?
Thanks to The New York Times.