6 minute read
Virtual Reality
Virtual Realty
Forget Toronto’s next hot neighbourhood. What if your next property investment took place in a virtual world? With buyers flocking to the metaverse, it’s a close reality.
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Imagine donning a headset to scope out a parcel of land for sale in a virtual city where buildings —designed by real-life famous architects— loom over the skyline. Luxury brands, art galleries and major investment banks have set up shop in your neighbourhood. And there’s a 24/7 street party going on, with the avatars of hundreds of thousands of global users milling around and decking themselves out with Nike, Gucci, Burberry and Louis Vuitton accessories bought via cryptocurrency-backed tokens.
If all of that sounds like a feverish sci-fi fantasy, consider that one plot of such “land” recently sold for the equivalent of $4.3 million USD. Virtual real estate sales in the so-called metaverse are projected to top $1 billion in 2022, and the value of metaverse properties is expected to grow at a compound annual rate of 31 percent per year over the next six years—that’s three percent more than Toronto’s searing hot market, which saw average home prices soar 28 percent year-over-year for February 2022.
If the idea of shelling millions for property that you can’t physically stand on sounds puzzling to you, you’re not alone. “The Jetsons seems more true to life than this,” says Lisa Clarke, agent with The Richards Group. “You’re not going to actually live in this virtual world and sit in your virtual house, but this is going to take the way we interact to a new level.”
Fans of the metaverse—meaning a fully realized digital world beyond the one we live in—say it’s hard to underestimate the potential of a totally immersive experience of video games, movies, concerts, shopping and even day-to-day social and business interactions. Facebook CEO Mark Zuckerberg is so confident about it that he changed his company’s name to Meta last year, announcing they would be spending the next few years building a seamless, composite universe that will become the new social networking platform, along with developing the technology beyond those clunky headsets to make virtual and augmented reality seem, well, more real. “The metaverse is the next frontier in connecting people,” Zuckerberg said in a letter to shareholders.
Right now, the metaverse is a network of digital worlds with names like Decentraland, Somnium, Horizon, Sandbox and CryptoVoxels, each with a slightly different layout and visual style (mostly reminiscent of Lego-esque games like Minecraft and Roblox, although that may change as graphics capabilities evolve). What they share in common is a commitment to community-first governance— all major decisions are voted on by the user base—and a token economy driven by blockchain technology. Users can buy things like “wearables” for their avatars, pieces of digital art, or parcels of land on a grid system, all as NFTs (non-fungible tokens). Essentially, with each transaction, each item’s unique ownership is recorded right in the code, using the same blockchain that powers cryptocurrency. The most affordable land parcel— about 16 by 16 metres square—goes for the crypto equivalent of about $10,000 US.
As things stand, most of the buyers purchasing metaverse real estate on a large scale are major brands and tech companies seeking a way to reach out to new and younger audiences. With 400 million monthly users, if you include popular gaming platforms like Fortnite, advertising space in the metaverse will be at a premium, and U.S. bank J.P. Morgan has pegged the total metaverse market value at $1 trillion in the next few years. No wonder Atari, Samsung, Adidas, and Pricewaterhouse Coopers have set up virtual storefronts and HQs along the metaverse’s streets.
“Every brand needs to have a presence in the metaverse,” says Eric Klein, founder and CEO of MetaSpace REIT (MREIT), a virtual real estate investment trust that acquires, mints and leases high-traffic properties in Decentraland and other meta-worlds. “It’s not only about increasing brand awareness—there’s an avenue for monetization through things like digital collectibles. Seventy percent of people in the metaverse are purchasing.”
MREIT hopes to expand their sales network to include over 1,000 realtors working in the virtual market, with even some crossover into traditional real estate. Especially as VR technology improves, there’s potential to revolutionize the way real-life real estate is bought and sold.
“Developers can build virtual prototypes of different units and link back to their website, or an agent can build an NFT replica of one of their listings as a virtual house,” says Klein. “There are so many possibilities beyond traditional marketing.”
Clarke says virtual reality and the metaverse can attract global buyers to Toronto real estate on a much larger scale than ever before. “When I started out, 90 percent of my clients came from open houses,” she says. “Now, almost all buyers scope out their homes online. As realtors, especially during the pandemic, we’ve had to adapt and put ourselves out there on social media instead of meeting potential clients in person.”
The metaverse and VR can not only increase the visibility of agents and listings, it opens up the possibility of doing business with anyone, anywhere in the world. “Within the next five years, the technology will probably reach a point that it could transcend the need to physically show a property,” Clarke says. “You could walk through a space virtually and maybe even touch a surface and see what that stone countertop feels like. It’s not out of the realm of possibility.”
Going Virtual
Interesting in buying a piece of e-real estate? Here’s how to do it.
Fill your crypto wallet
To buy a plot of virtual land in Decentraland, the largest meta-world, you’ll need the cryptocurrency Ethereum, which you’ll exchange for MANA, the platform’s unique token system. First, get a crypto wallet like Metamask, an app which allows you to purchase (via credit or debit card) and securely store Ethereum, as well as use it on a number of other blockchain-based platforms. Right now, 1 ETH is worth about $4 CAD.
Select your parcel
To see what plots of land are available and where they’re located, visit Decentraland’s Market (market. decentraland.org). You’ll need a desktop PC or Mac running Chrome, Firefox or Brave (mobile devices are not currently supported). You can buy a single parcel (about 16 metres by 16 metres, starting at the equivalent about $10,000 US) or multiple lots lumped together as an estate. In general, the greater the foot traffic— such as near the Fashion District or Vegas—the more the parcel is worth.
Want to learn more? Connect with Lisa today!
