Metaverse Real Estate: Here and Now
Thu Dec 2, 2021 by Oppenheim Law on Real Estate
Looking to buy land? Want to invest in perhaps the most in demand real estate market? While one would traditionally scour specific areas to live, considering schools, zoning, work-life balance, cost of living, and other factors, the metaverse has attracted a frenzy of digital real property sales, setting records during the past few weeks.
Welcome To The Metaverse
Picture courtesy Boson Protocol/NY Times
What is the metaverse? While we had discussed real estate and the implications of the metaverse in a recent blog, the metaverse is an online world that stretches the corners of the internet into immersive, “four” dimensional experiences. The actual term metaverse comes from a 1992 science fiction novel by Neal Stephenson, and popularized by the Matrix, starring Keanu Reeves. This notion of science fiction is rapidly becoming front and center of our digital world.
Investment firms are actually acquiring land in the metaverse where gamers simulate real life, from shopping to attending concerts and other events. These virtual worlds, created by videogame developers, include cities where an individual’s avatar can spend time with avatars of real-life friends in their digital apartments or homes. The concept is this: as individuals and companies spend more money to use virtual homes and retail space in the metaverse, the values of such properties will increase as more and more people join.
Virtual Real Estate Development
Image courtesy Money Inc.
Real estate investors are not only developing virtual residential real estate but also commercial spaces, where they will lease virtual retail space priced in either cryptocurrency or hard currency. Ownership of the land is recorded in nonfungible tokens, digital identifiers that serve as deeds. Sales of property are typically done in a cryptocurrency specific to each universe within the metaverse.
With Facebook changing its name to Meta Platforms Inc. last month and focusing on the metaverse, investment in virtual real estate is increasing. Republic Realm, a metaverse real estate developer, reportedly paid $4.3 million for land in the world of Sandbox, the largest virtual real estate sale to date, according to NonFungible.com, which tracks digital land sales. Headed by real estate investment executive, Janine Yorio, Republic Realm buys land from virtual world creators or third parties, pays architects to design virtual homes or malls and a game developer to build them. The Canadian investment firm Tokens.com Corp. reportedly paid approximately $2.5 million for land in the world of Decentraland’s Fashion District which it wants to rent out to fashion companies as event and retail space. Both Sandbox and Decentraland are two “worlds” within the metaverse.
Real estate in the metaverse, however, is risky. Unlike the “real” world, virtual real estate can fall to zero if people stop using the virtual world. Further, cryptocurrencies have been volatile, which effect the price and sale of virtual real estate. Zoning rules in the metaverse limit what and where a developer may build which also may lead to a market glut if there is too much development in a particular world. Just as in the real world, there will be contractual issues, easements, and boundary disputes.
As more and more individuals flock to the metaverse, the digital realms in which they “live” include artificial intelligence, virtual reality, streaming video, mobile gaming, and avatars that all combine into immersive digital experiences. Many in the tech space believe that the metaverse will grow into a fully functioning economy in a few short years that will be eventually integrated over time, fully into our lives just like e-mail and social networking does today.
Whether or not we are interested in the metaverse, the metaverse is here and growing tremendous momentum. How the “real” world will “connect” to the virtual world is evolving. Products and services in the metaverse may be then purchased and delivered to your “real” home or office. One may use a virtual drone in the metaverse to steer an “actual” drone in the real world to look at commercial or residential property. Real estate agents may use the metaverse to allow potential buyers to virtually experience walking through a home in the “real” realm. Furniture and interior design can also be scanned into the metaverse and uploaded to see how it would look within a real property.
What does all this mean?
Ready Player One Oasis/Metaverse
The convergence of reality and virtual living is at cross-roads with the expansion and stretching of the internet to include the metaverse, a Twilight-zone place where we all can conceivably live, buy, and sell property, be social, and purchase goods. How the actual real estate market will evolve may depend upon our ability and desire to embrace it. While the metaverse is truly a “game” changer, there are opportunities that will continue to emerge as our real world, augmented reality and virtual reality begin to converge into one seamless existence for human civilization.
From The Trenches
Metaverse is really the big changer in VA world. I am excited to see what else they have to offer.