Investors take hold of Metaverse real estate in virtual land boom

Justin Bieber performed at a live concert this month, but the show was not in a stadium or arena. Like recent performances by Ariana Grande, The Weeknd and Travis Scott, this concert took place in the metaverse, the online world that expands the nooks and crannies of the internet into immersive four-dimensional experiences.

Fans around the world have watched the avatar of Mr. Bieber sing songs from his hit album “Justice”. Investors were also watching. Preparing for a digital land boom that will only emerge in a few months, they are taking over concert halls, malls and other properties in the metaverse.

Interest in this digital universe skyrocketed last month when Mark Zuckerberg announced that Facebook would be known as Meta, an effort to capitalize on the digital frontier. The global market for goods and services in the Metaverse will soon be worth $ 1 trillion, according to digital currency investor Grayscale.

The Metaverse consists of several digital realms. Each is like a virtual 3D city where avatars live, work and play. Anyone who has been exposed to popular video games like Fortnite, Animal Crossing, and the Roblox universe has had a taste of what these realms look like. In each, elements such as virtual reality, video streaming, mobile games, avatars and artificial intelligence are combined into immersive digital experiences.

But investing in real estate in the Metaverse is still highly speculative, and no one knows for sure whether this boom is the next big thing or the next big bubble.

Technologists believe the metaverse will become a fully functioning economy in a few years and deliver a synchronous digital experience that will be as integrated into our lives as email and social media are today.

Money in these digital worlds is cryptocurrency, as finance in the metaverse is fueled by blockchain – a digitally distributed public ledger that eliminates the need for a third party, such as a bank. Anyone entering a virtual world can buy or trade art, music, and even homes in the form of non-fungible tokens, or NFTs, which are blockchain-based collectibles that are digital representations of real world objects. The NFT serves as proof of ownership and is not interchangeable.

And in recent months, the volume of commercial real estate transactions in the metaverse has increased.

In October, Tokens.com, a blockchain technology company focused on NFTs and metaverse real estate, has acquired 50 percent of Metaverse group, one of the world’s premier virtual real estate companies, for around $ 1.7 million. Metaverse Group is based in Toronto but has a virtual headquarters in a world called Decentraland in Crypto Valley, which is the metaverse’s response to Silicon Valley. Decentraland also has neighborhoods for gambling, shopping, fashion, and the arts.

“Rather than trying to create a universe like Facebook, I said, ‘Why don’t we go and buy the plots of land in these metaverse, and then we can become the owners? Said Andrew Kiguel, co-founder and CEO of Tokens.com.

Since this acquisition, Tokens.com has innovated in digital on a tower in Decentraland. Louis Vuitton, Gucci, Burberry and other luxury brands have already entered the metaverse via NFTs, a move that makes business executives optimistic that the Tokens.com tower will soon generate revenue from leases and advertising for brands like these.

For those wondering why a business would want to invest in a virtual office in the Metaverse, Michael Gord, co-founder of the Metaverse Group, said skeptics should examine the trends catalyzed by the pandemic.

“As more and more people participate, this is where you go with friends, where you have experiences like lectures and concerts,” he said. “It’s inevitable that the metaverse will be the world’s No.1 social network.”

The Metaverse Group has a real estate investment trust and plans to build a portfolio of properties in Decentraland as well as other areas including Somnium space, Sandbox and Uplands. The internet may be endless, but virtual real estate isn’t – Decentraland, for example, is made up of 90,000 plots of land approximately 50 feet by 50 feet each. Among investors, there is a feeling that there is gold in these pixelated hills, Mr Gord said.

“Imagine if you came to New York when it came to farmland and had the option of getting a block of SoHo,” he said. “If someone wants to buy a block of real estate in SoHo today, it’s priceless, it’s not on the market. This same experience is going to happen in the metaverse.

Last week, Tokens.com closed an even bigger land deal in the fashion district of Decentraland for around $ 2.5 million. The company, which claims the real estate transaction was the largest in Metaverse history, plans to develop the area into a virtual shopping center for luxury fashion brands at Rodeo Drive or Fifth Avenue.

Mr Kiguel estimates his portfolio in the Metaverse is valued up to 10 times more than his purchase price, and much of the reasoning will sound similar to anyone who has ever bought or sold real estate.

“It’s the location, the location, the location,” he said. “Land in the city center, which is very popular with visitors, is worth more than land in the suburbs. There is a rarity value.

Many of these digital realms appear as gummy-colored cartoonish fantasy worlds, while others are digital apps of the planet we already know and love. Supermonde, a virtual real estate platform mapped across the face of the globe, offers 64.8 billion plots of land, each for sale as NFT. The Taj Mahal is available as is, most likely, your childhood home. Landlords can buy plots for sentimental or wise reasons, but in any case, once they buy the NFT, they get a share of the trade that occurs on that property.

“You can buy places you love, whether it’s Central Park or the pyramids in Egypt,” said Hrish Lotlikar, co-founder and CEO of SuperWorld. “What you are buying is the virtual earth covering the earth in these places.”

And as the Metaverse seeps deeper into the daily consciousness of our universe, there is a new realm where the division between them is blurred: the omniverse.

The real world and the online world merge into a single hybrid universe, where the fungible and the non-fungible intersect at multiple points, said Justin Banon, co-founder and CEO of Boson protocol, which allows the sale of physical products in the metaverse as NFT. Real estate in the Metaverse will house the trade that will drive this transformation.

“It’s already happening, and it’s just a matter of degree,” he said. “But I think in five years my daughter won’t allow me to pick her up from school if I don’t wear a pair of sneakers that don’t have an NFT either,” he said.

In June, Boson Protocol purchased land comprising an entire block of Decentraland’s Vegas City gaming district. Space, according to the company, will become a point of trade where real-world products can be traded for NFTs; these same NFTs, acting as digital representations of physical products, can also be redeemed for items in physical stores.

“Everyone recognizes that we are very early and that these things are going to be modern day antiques,” Mr. Banon said. “So buying at this point is extremely lucrative. “

There are only a handful of digital domains where investors can buy and sell real estate, and all of them use their own cryptocurrency. The one from Decentraland is called MANA, for example. Decentraland also has a marketplace where people can browse NFTs, including land for sale. “It’s almost like a multiple listing service,” Kiguel said.

Wave, an entertainment company that hosts interactive concerts, including Mr. Bieber’s, profits from virtual merchandise and brand sponsorships for shows, which take place in neutral areas rather than a digital arena. The company isn’t monetizing real estate yet, but Adam Arrigo, co-founder and managing director, said he’s looking for possibilities.

“These platforms like Decentraland and Sandbox are pioneers in the certification of these sites, these storefronts,” he said. “Over the next few years what we do is going to become much more common.”