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REAL? GARETH BAILEY UNPACKS THE CONCEPT OF BUYING PROPERTY IN THE METAVERSE
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he Metaverse has been dubbed the “next generation of the internet” and the likes of Meta, Nvidia and Microsoft are investing heavily in this space. The concept of the Metaverse really took off in October last year when Facebook changed its name to Meta, signalling its primary focus of developing software for this virtual universe in the foreseeable future. The Metaverse is a broad term referring to a digital world where we will (have the opportunity to) have a virtual existence alongside our real lives – one in which we will be able to work, play, socialise, learn and … invest! This presents a new opportunity to traditional real estate investors – is it worthwhile buying property in the Metaverse? While this is not yet mainstream and is highly speculative and risky, companies like PwC, JP Morgan, HSBC and Samsung have already hopped on board as investors. Metaverse real estate investor and advisory firm, Republic Realm, recently paid
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a record $4,3-million for land to develop 100 islands, called Fantasy Islands, comprising apartment complexes including the opportunity for its residents to purchase or rent boats and jet skis. Ninety of the islands sold on the first day for $15,000 each and some are now reselling for over $100,000. Celebrities have also embraced the Metaverse. Major artists including Justin Bieber and Ariana Grande have performed using their online avatars – an online representation of their real-life identities. Even Paris Hilton DJ’d a New Year’s Eve party on her own virtual island. At the moment, most property purchases in the Metaverse are taking place on gamified Metaverse platforms like The Sandbox and Decentraland using their cryptocurrencies SAND and MANA respectively. The actual transfers are recorded in the form of non-fungible tokens, or NFT’s. In addition to these platforms, a third-party resellers’ market is emerging, such as opensea.io, which allows buyers to bid on listed properties.
Like physical real estate, some investors are buying virtual real estate principally for rental income and others for capital growth. While many of the same principles apply, there are potentially some differences. According to Janine Yorio, CEO of Republic Realm, “Land value in the Metaverse will be determined by what owners do with a property – like designing a popular attraction, museum, or feature – rather than location. You can teleport anywhere, so location isn’t as important.” However, others feel that location is still the most important consideration. For example, Snoop Dogg is building a virtual mansion on a plot of land in Sandbox, and someone recently paid $450,000 to be his neighbour. Either way, it seems that any property that attracts eyeballs, rather than foot traffic, is enjoying strong demand and
attracting the big spenders. Over and above the highly speculative nature of virtual real estate, there are some other risks involved. For example, this market is
Snoop Dogg is building a virtual mansion on a plot of land in Sandbox, and someone recently paid $450,000 to be his neighbour unregulated which makes it easier to fall victim to criminal activity without recourse. Another consideration is that the value of property is linked
