last year’s highly anticipated The virtual land rush to the Metaverse has yet to materialize, proptech experts say, but its enthusiasts are piling up bets, citing a slump in participants and little profit from alternative worlds that aren’t real estate. was never raised.
Metaverse real estate has yet to spawn a brave new world of speculation and wealth akin to the mercury markets of cryptocurrencies and NFTs. However, the combination of hardware and software such as augmented reality (AR), virtual reality (VR) and digital twinning to create powerful marketing and development capabilities is beginning to demonstrate its real utility for real estate.
But first I had to get past the “hype cycle”. Luke Graham, Research Director pie laban early-stage proptech venture capital firm based in London.
“We published the following research paper 12 months ago. Unreal EstateIt’s right in the middle of a hype cycle, and it was pretty intentional,” Graham said. “There’s certainly been a lot of hype. One of the things that’s interesting is that virtual land platforms are being sold that have a higher price per square foot than real estate. And then we’re looking at farmland. And it was several times the price comparable to a luxury property in the middle of a city like London or New York, which was obviously very precarious given the low traffic and increased traffic. But we’ve seen it really boil over.”
Overcoming the hype, Graham said there is now “increased adoption and interest in virtual tools” and excitement about the Metaverse. “There is a great deal of debate about whether digital twins fall under conversations in the metaverse, and whether mixed reality is used in worlds built to augment or replace physical space. “
Real estate transactions within the metaverse are also about to gain momentum.
“There’s certainly still trading going on, there’s still trading in parcels, but there’s not that much activity,” said Zach Aarons, co-founder and general partner of Manhattan-based venture capital firm Proptech. has not been done,” he said. metaprop.
He added that there are only “tens of thousands” of people in the real estate metaverse compared to millions on virtual world gaming sites. “I’m not talking about gaming sites like this” roblox and fortnitebut looking at the metaverse where people can buy land, I think the two main cryptocurrencies are: sandbox and Decentralandand the main non-cryptographic ones are: second life.
“Throughout this mayhem, I think Second Life has been pretty consistent with their transactions. I don’t think so, and I think there is probably as much trading volume as there was during the boom.”
The so-called metaverse boom has arrived in 2020 and 2021. Facebook sets the pace and names meta Look ahead to the next wave of online communities for virtual live, work and play. In March, the same meta announced that it would cut another 10,000 jobs, or 13% of its workforce, after laying off 11,000 people in November 2022. The layoffs were seen by many as massive. Metaverse No Confidence Vote by company.
Despite these announcements, no individual investor in Metaverse Real Estate has yet been found to speculate on the parcel.
“We haven’t sold the land we bought, so we haven’t made a profit, but the sandbox land was purchased in the first offering. Yulcho said. and CEO Ask Web3, a Frederick, Maryland-based startup that consults with companies on blockchain, NFTs, and games. “It was really nothing. These parcels would probably be worth around $1,700 at today’s value, so I would make a lot of money, but of course I wouldn’t want to sell them in the current market conditions. ”
Yulcho said he entered the market “100 percent based on speculation”, believing that his land would appreciate in value over time. What he bought in The Sandbox was near a large tract of land owned by a large corporation, expecting it to become more popular, increase the value of the land, and allow him to turn over the land for a profit. .
The current value of his investment has exceeded his expectations, but it’s been a roller coaster ride, Yulcho said. “In 2020 and 2021, I said, ‘Wow!’ So it goes back and forth. However, I am heavily invested in cryptocurrency and blockchain and it makes sense to diversify. ”
Despite some retailer interest in Yurcho’s metaverse consulting work, there has been little overall interest in the area from traditional real estate firms.
“I haven’t seen much interest from real estate companies,” he says. “The ones who think this will be most profitable in the future are the brands trying to sell something or market a product. If it had emerged in 2018, I think you might have experienced incredible losses and rethought your strategy or it wouldn’t have been viable as a business at that point, because at this point it’s really all It’s still early in the process, so don’t invest in something you can’t afford to lose.”
One specific use of the metaverse is to market through product connections and build brand awareness about products. Virtual retail real estate sitesaid MetaProp’s Aarons.
“Snapple just created its own store in Decentraland and did the activations the same way they do activation events at grocery stores on the surface world,” Aarons said. “The only difference is that you can’t actually taste it. So the idea when buying property is to own the place where that kind of activity takes place and collect a commission from the brand.
“In Decentraland, the concept of place, place, place makes sense when you think about how people get around there. On the other hand, it’s debatable how precious location is in the sandbox-like metaverse, where you can simply point and click to move from anywhere you want. You don’t have to, so it’s totally different, but to be honest, a lot of what’s happening in these metaverses right now is brands doing fashion shows, digital activations, things like that. Advertisements, lots of events, some concerts and nothing else.”
The combination of Metaverse and AR/VR technology could be a key factor in the growth of the virtual real estate world, he said. Jyothika SinghData Science Director placemacle, Technology-enabled flexible-use hospitality and multi-family housing operator based in Washington, DC
“The metaverse in real estate is a still emerging concept related to a virtual world interconnected with the physical world facilitated by augmented and virtual reality,” Singh said in a statement. “There are many examples of how the metaverse is connected to the real estate industry, including the use of virtual property tours and property staging.”
Like Aarons and Yulcho, Singh also pointed out the value of real estate location even in virtual worlds.
“Sandbox reportedly owns over 60% of the Metaverse real estate market,” she said. “Sandbox land is estimated to be worth $167 million in 2022. There is a direct buy market as well as an active secondary market where prices can be multiplied. Interesting. An example is Snoop Dogg’s name after he acquired a parcel of land in the sandbox.snoop verse“Buyer paid $450,000 just to be a neighbor.”
Speculative metaverse deals aside, some architects, engineers, landlords and property developers are tentatively embracing virtual worlds in planning their real projects.
“I think architects are being asked for it and developers are starting to test it,” Aarons said of using the Metaverse to visualize projects before actually building them. “I don’t think there’s much that I can do directly. I don’t know if there will be a company set up to do this, but it’s definitely something we’re looking at.”
Overall, Aarons has declared that he is “neutral” about the future real estate use of the Metaverse.
“When the hype was going on, I was more bullish than most on the functional side of it, but more bearish than some on the speculative side,” he said. “Now that everyone is bearish again on the speculative financial side, I have to say that the best thing to do against it is to be bullish on it.
“But I’m definitely bullish on the usefulness of this kind of virtual experience as it relates to the world of real estate, but I don’t want to actively fund companies that do it or nurture companies that do it.” I’m not so bullish about what I do.”
Aarons hasn’t seen much growth in real estate or proptech’s relationship with the Metaverse either.
“It’s the same,” he said. “That’s the part that’s kind of frustrating. Unfortunately, while the amount of change is the same, there’s not much new.”
Philip Russo can be reached at: email@example.com.