Is Real Estate Investing in the Metaverse the Future?
Since Facebook’s recent shift to virtual social reality via the Blockchain-powered metaverse, which was announced earlier this year by its rebranding to “Meta,” tech and fintech companies have tried to be pioneers in virtual reality. Although Microsoft had already announced their metaverse for Microsoft Teams months before, Facebook is aiming to create a huge, interconnected experience that is straight out of a novel for the masses. Mark Zuckerberg’s metaverse announcement was made just five months ago. HNWIs, investors, financial institutions and financial institutions have already staked claim to the metaverse revolution.
What is the metaverse exactly?
It is an online world where people can interact with each other via virtual avatars. This could include walking around the environment, working in virtual offices, meeting with friends and colleagues, or simply interacting with the world through virtual screens. It’s literally a new world online.
For millions of dollars, real estate investors have started investing in digital real estate through metaverse platforms. The metaverse has also been used by other industries. Dolce&Gabbana and Louis Vuitton have launched digital-only clothes that you can outfit with your metaverse avatar. A virtual mega yacht, which was purchased on The Sandbox for 149 ether (or $650,000), is another example. Even more impressive, sovereign countries such as Barbados are working together with multiple metaverse businesses to establish an embassy within the Metaverse.
Real Estate and The Metaverse
Virtual real estate has been a popular investment option since the NFT (non fungible token boom) in early 2021. Virtual real estate has become a hot commodity in the metaverse. Recent announcements made by multi-million dollar digital real property purchases on virtual metaverse platforms such as the blockchain-powered Decentraland, The Sandbox and Axie Infinity have highlighted this trend.
The cryptocurrencies linked with major metaverse platforms such as Decentraland’s MANA token or Sandbox’s SAND have seen a rise of 256% and 16,156% respectively over the past year. Facebook/Meta’s metaverse will not be the only one, but it could end up being the largest due to its 1,000,000+ users. It will likely trade with its Diem (formerly Libra), cryptocurrency, provided that it isn’t closed down by international regulators.
It would seem obvious that the traditional valuations of real estate and phrases such as “location” would not apply to digital real estate. But that is far from true.
Let’s take, for example, Decentraland’s largest real-estate transaction.
Metaverse Group, owned by Tokens.com and which invests in revenue-generating crypto assets in Decentralized Finance & NFT spaces, purchased 6,090 sq. feet of land in Decentraland’s Fashion District for 618,000 MAN or approximately $2.43 Million. This was the largest real property transaction ever done on the platform. Metaverse Group plans to use the investment to establish a stronghold in Decentraland’s digital fashion sector by opening a store where users can purchase outfits for virtual avatars.
Dencetraland could grow to be a well-known metaverse platform. The store’s outfit sales, and partnerships with major brands, will generate greater revenue. Traditional real estate developers can also transition to the metaverse by buying land and selling property on the metaverse. Real estate investors can rent their properties to the platform to generate returns based upon their location, property profile, and other factors such as property management fees or service charges.
The Metaverse is a familiar concept to many people
The metaverse might sound new to anyone born before 1996. But for many Millennials and virtually all of Gen Z, it’s video games transforming into the real world. For nearly two decades, many video games, including MMOs (Massively Multiplayer Online) like World of Warcraft and Club Penguin, have had their own metaverse. Let me explain. Let me explain.
Users would be charged a subscription fee for renewing their access to the game. MMOs, while micro transactions such as these are quite common in most games, are the closest to a metaverse. Users are happy to renew their subscriptions and spend hundreds (or even thousands) of dollars on in-game goods. Some brands have metaverse experience and don’t know it. For example, Gucci, which sold the Dionysus bag for more than $4,000 on Roblox – which is much more expensive than a physical one!
Not only are cryptocurrencies popular among young people, but they also have a lot of appeal for teens. Teens and kids already set up mining stations to mine Bitcoin. If the metaverse grows, there will be more demand for metaverse currencies such as MANA and SAND.
As wealth transfers to younger generations via metaverse-based online transactions, it is possible that virtual investment in real estate and other asset classes will increase over the next decades. However, this depends on how long the metaverse lasts.
Reasons of Why Property Should Be Purchased In Metaverse:
Commercial names leap first into the metaverse:
Nike (NYSE : NKE) is one of a number of major brands that have entered the metaverse. It announced the purchase of RTFKT, a company that makes NFT shoes. Yes, that’s correct. It creates sneakers that exist only in the metaverse.
Nike wants every avatar to wear Nike shoes. It’s making a big push to do this quickly. Because it is well-versed in the driving forces behind these platforms, and can reap the rewards of them, it doesn’t wait to see what others do.
Gucci, a Kering division, ran a limited promotion where it created a digital copy of the Gucci Garden exhibit, gave away and sold metaverse editions of popular bags on Roblox (NYSE : RBLX). The initial price range was $1.20 to $9, but some items were resold for up to $4,100 in Robux. This shows both a primary and secondary market demand for branded products.
Metaverse is awash with millions of dollars from real estate:
Republic Realm, a virtual real estate developer, just purchased a $4.3million piece of land on metaverse platform . This broke a previous record of Tokens.com’s $2.5 million land purchase in Decentraland. This is some serious walking-around cash.
These companies are fully committed to creating spaces like virtual malls or other rentable properties (where Nike might set up shop) and they both seriously considered how to value metaverse property. I find it hard to believe that this is a publicity stunt. These guys are as serious as cancer and have the business plans that prove it.
They envision a world in which they can rent shopfronts to companies that want to sell merchandise, but not maintain any real estate. Or rent virtual condos for people who want the metaverse to see them. Or even build custom homes for celebrities who feel that a metaverse presence is beneficial for their brand image, but don’t have time to mess around with the messy parts.
Metaverse real estate isn’t new:
Even though the most popular platforms in the metaverse may be relatively new, they are far from the first examples of people investing in virtual real estate and making a killing. Bloomberg reported on Ailin Graef (second life’s first millionaire) in 2006. After getting into Second Life very early, she spent two years developing avatars and virtual land holdings. She now invests heavily into technology groups, with a virtual world fortune.
Second Life, which was founded in 2003, reported a GDP of $600 million and more than $80 million in cash payouts to creators. This is based on the community’s investments. Second Life Marketplace has a variety of rental options, but very few real estate listings. Owners are likely making enough money renting, even at $4 to $5 per week, to not want to sell. These transactions are mostly handled by real estate groups that are native to the platform.
A platform that virtually no one has ever heard of before social media can still capture the hearts and minds of about 70% of Americans, and continue to bring in that much money long after its debut, surely a platform built with all the lessons learned from Second Life can be just as stable and possibly even more profitable.
Is Virtual Real Estate Investing in Metaverse a Success?
The metaverse has many possibilities and virtual real estate investment can be very profitable if there is significant metaverse adoption. If only one person owns a telephone, it is worthless. If a property is empty, it takes up space.
These are the most important days for the metaverse. If Facebook/Meta and the other large multinationals and metaverse platforms can attract significant numbers of people, then the metaverse may be here for good. Real estate could enter a new era that many believed impossible.