Home LATEST NEWS HIGH TECH The real estate market is popular in the metaverse

The real estate market is popular in the metaverse

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This week, New York-based Republic Realm announced that it had spent a record US $ 4.3 million (C $ 5.4 million) on the purchase of land on The Sandbox, a platform giving access to a virtual world where participants can chat, play and even attend concerts.

On the competing site Decentraland, the Canadian company Tokens.com, specializing in cryptocurrencies, had spent 2.4 million US dollars (3 million Canadian dollars) in November for a real estate purchase.

A few days earlier, Barbados, a small Caribbean country, had said it wanted to establish an embassy in the metaverse, this network of interconnected virtual spaces, sometimes described as the future of the Internet.

Métavers, a word that marks 2021

Interest in the metaverse (contraction of meta and universe) has skyrocketed since October, following Facebook’s decision to make the idea its new business venture, with the group going so far as to rename its parent company Meta.

A man waves his hands presenting a logo and a new company name.

Mark Zuckerberg unveiled his new company name last October.

Photo: Facebook

This strategic turning point has introduced millions of people to the term much faster than I could have imagined, recognizes Cathy Hackl, technology consultant for companies wishing to enter the metaverse.

According to the cryptocurrency database Dapp, more than US $ 100 million (C $ 126.5 million) was spent last week on real estate purchases on the four main metaverse sites of The Sandbox, Decentraland, CryptoVoxels and Somnium Space.

For Ms. Hackl, the explosion of the market, which brings together owners, tenants and land development managers, is not a surprise.

We try to translate into the virtual world what we know how to do with physical goods, she told AFP.

While it will be some time before these sites become true metavers, allowing internet users to explore parallel worlds through virtual reality headsets, digital terrains are already functioning as financial assets, like goods. land, explains Ms. Hackl.

We can build them, rent them or sell them, she says.

Tokens.com has acquired a prime plot on Decentraland in the Fashion Street district (rue de la Mode), which the platform wants to transform into a destination for the virtual stores of luxury groups.

A man wearing a virual reality headset watches the interior of the Palace of Versailles.

Real places could be visited virtually by Internet users in the metaverse. Here, an image of VersaillesVR, a virtual tour of the Palace of Versailles, in France.

Photo: YouTube screenshot

If I hadn’t done the research and figured out that these are high value properties it would sound crazy, admits Tokens.com boss Andrew Kiguel.

Mr. Kiguel worked for 20 years as an investment banker in the real estate industry. According to him, virtual lands represent an opportunity similar to real-world goods: they are located in a trendy and busy neighborhood.

These are places for advertising and events where people will gather, he explains, mentioning a recent music festival that drew some 50,000 people to Decentraland.

Virtual fashion items sold at high prices

Luxury brands are already venturing into the metaverse: a Gucci handbag sold on the Roblox platform for more than its physical version. Mr. Kiguel hopes that Fashion Street will become the equivalent of 5th Avenue in New York.

As to how to generate income, it can be as simple as owning a billboard or as complex as having a store with a real employee, he explains.

We could go home with our avatar, look at 3D models of a shoe we could hold in our hands and ask questions., he adds.

As early as 2006, a real estate developer had been talked about after having sold land for 1 million US dollars (1.27 million Canadian dollars) in the virtual world Second Life, a precursor site of the metaverse.

Second Life is still in business, but followers of its more recent rival platforms point out one major difference.

On Decentraland, all purchases, whether real estate or virtual works of art, are made through non-fungible tokens (JNF, or non-fungible token, NFT, in English).

Internet users have spent tens of thousands of dollars on these digital objects, the concept arousing both enthusiasm and skepticism.

The blockchain powered metaverse

Mr Kiguel believes digital ownership will become mainstream in the next few years thanks to blockchain technology (blockchain), which guarantees the security and transparency of transactions.

I can see the history of the owners, what it cost and how it went from person to person, he explains.

There are risks involved with investing, however, starting with the volatility of the cryptocurrencies used to buy JNFs.

Moreover, if the virtual concerts on Roblox or Fortnite have attracted tens of millions of people, the scarcity of metaverse data suggests that traffic to sites like Decentraland lags far behind that of established social networks like Facebook or Instagram.

The value of real estate investments in the Metaverse will depend on the number of people going to these platforms.

I know that sounds a bit absurd, admits Mr. Kiguel. But there is a vision behind it all.

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