The digital world is increasingly taking over our daily lives. We can communicate with each other even though we are on the other side of the world, we can schedule video calls, shop, work with just a click. Perhaps we do not realize the impact that this scenario can produce, gradually, all activities that we used to do face to face are now done behind a screen, turning the digital world into a new reality.
Given the above, let’s talk about Metaverse. As many know, Metaverse is about a digital world and social space that allows people to create an avatar and interact with others without limitations. One of its main objectives is letting people perform activities virtually that are usually done physically, as if there were in a parallel world, without leaving their seat. Let’s give an example: with the pandemic and its incentive for virtuality, online meetings became part of the routine. What is sought through the Metaverse is to “cross the screen” and be able to have the meetings and interact directly with people in a virtual world. Another example is in the construction industry, in which an architect can see the final version of the projects (houses, apartments, buildings) with the help of virtual reality.
However, it is not all about video conferences and using huge goggles: the Metaverse is estimated to become “an $800 billion market by 2024” (Joshi). Huge companies such as Facebook, Microsoft, Google, Samsung and Sony have already invested in this world with the purpose of accelerating their growth in different virtual platforms. In this way, the Metaverse is becoming one of the main players not only in the digital economy but in other industries such as entertainment, ecommerce and retail, manufacturing and the one we are going to discuss in this article: Real Estate.
The Real Estate at Metaverse is starting to be a striking activity for huge companies. Tokens.com, trader company that uses shareholder capital to invest in digital assets, acquired 50% of Metaverse Group, one of the world’s first virtual real estate company, for about US$1.7 million (Sanchis). The main idea of Tokens’ executive directors is to earn an income by letting luxury brands such as Louis Vuitton, Gucci and Burberry advertise on their virtual lands. The value of the land depends on the number of people joining online territories and the activities they choose to perform (i.e. buy virtual clothes of high-end brands, rent their lands, participate in auctions of digital works of art). These brands and many others, are investing in these platforms to engage with customers who are already immersed in this reality, as they see it as an opportunity of investment as well as advertising.
On the other hand, not just this kind of businesses invest in virtual lands. One of the big four consulting firms, Price Waterhouse Coopers PwC, invest as well. This company decided to enter the real estate market at The Sandbox (NFT gaming Metaverse), with the purpose of creating value through innovative business models, and introducing new ways of engaging with their customers.
Nowadays, there are four main platforms operating in real estate Metaverse: Decentraland, The Sandbox, CryptoVoxels, and Somnium Space. According to CNBC News and MetaMetric Solutions, sales of real estate in the metaverse topped $500 million last year and could double this year (Frank), which might mean a green flag and an incentive for investors. However, it is important to notice that not all is rosy; cryptocurrency’s extreme volatility means a risk, taking into account that the value of Metaverse land is based on this currency. Likewise, Metaverse depends on people interacting in the platforms, there is no certainty that such interaction will occur since human behavior is not usually that predictable.
Metaverse is a phenomenon that is gaining strength in the digital economy, becoming one of its main players. In addition, the Real Estate Metaverse is gaining force as well. As mentioned, the largest companies around the world are betting on the lands of Metaverse: creating their own virtual cities to attract customers, making possible the purchase or rent of lands, construction of houses, hotels, hosting of fashion shows and also opening doors to the retail industry. Investors compete with each other for the best sites in these parallel realities. We are talking about a fully functioning economy in the coming years, providing a digital experience as integrated into our lives as the internet and social media are now. Is it going to be possible? Is something we will be able to answer perhaps a little later on, as Janine Yorio (CEO of Republic Realm, a Metaverse real estate investor and advisory firm) said, “There are big risks, but potentially big rewards” (Frank).
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