Investors Snap Up Metaverse Real Estate in a Virtual Land Boom

Justin Bieber appeared at a live concert this month, but the show wasn’t in a stadium or arena. Like recent appearances by Ariana Grande, The Weeknd and Travis Scott, this concert took place in the Metaverse, the online world that expands the corners of the internet into immersive, four-dimensional experiences.

Fans from all over the world watched as Mr. Bieber’s Avatar sang songs from his hit album Justice. Investors also watched. As you prepare for a digital land boom that will appear just months away, you’re grabbing concert halls, shopping malls, and other real estate in the Metaverse.

Interest in this digital universe soared last month when Mark Zuckerberg announced that Facebook would become known as a meta 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 encompasses several digital areas. Each is like a 3D virtual city where avatars live, work and play. Anyone exposed to popular video games like Fortnite, Animal Crossing, and the Roblox universe has had a taste of what these realms look like. Each one combines elements such as virtual reality, streaming video, mobile gaming, avatars and artificial intelligence to create immersive digital experiences.

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

Technologists believe that in a few short years the Metaverse will grow into a fully functional economy, delivering a synchronous digital experience that will be as integrated into our lives as email and social networks are today.

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

And in the last few months the transaction volume for commercial real estate in the metaverse has increased.

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

“Instead of trying to create a universe like Facebook, I said, ‘Why don’t we go in and buy the lots in these metaverse and then we can become the landowners?'” Said Andrew Kiguel, Co-Founder and Managing Director of Tokens .com.

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

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

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Nov. 30, 2021, 11:03 a.m. ET

“When more people attend, you go with friends where you have experiences like conferences and concerts,” he said. “It is inevitable that the Metaverse will be the No. 1 social network in the world.”

The Metaverse Group owns a real estate fund and plans to build a real estate portfolio in Decentraland as well as other areas such as Somnium Space, Sandbox and Upland. The internet may be infinite, but virtual real estate is not – Decentraland, for example, consists of 90,000 pieces of land, each about 15 by 15 meters. There is a feeling among investors that there is gold in those pixelated hills, said Mr. Gord.

“Imagine if you came to New York when it was still farmland and you 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. The same experience will happen in the metaverse. “

Last week, Tokens.com signed an even larger land contract in the Decentraland fashion district for around $ 2.5 million. The company, which says the property transaction was the largest in Metaverse history, plans to develop the area into a virtual trading hub for luxury fashion brands à la Rodeo Drive or Fifth Avenue.

Mr. Kiguel estimates that his portfolio in the metaverse is up to ten times higher than his purchase price, and many of the arguments will sound similar to anyone who has ever bought or sold real estate.

“It’s location, location, location,” he said. “A plot of land in the city center that has a lot of visitor traffic is worth more than a plot of land in the suburbs. There is a rarity. “

Many of these digital worlds appear as cartoon-like, rubbery fantasy worlds, while others are digital uses of the planet we already know and love. SuperWorld, a virtual real estate platform spread across the globe, offers 64.8 billion lots – each for sale as NFT. The Taj Mahal is just as available to you as is probably your parents’ home. Owners can buy land for sentimental or savvy reasons, but either way, once they buy the NFT, they get a share of the trade that takes place on that property.

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

And as the metaverse penetrates deeper into the everyday consciousness of our universe, there is a new area in which the gap between them is being removed: the omniverse.

The real world and the online world are merging into a hybrid universe where the fungible and non-fungible overlap at several points, said Justin Banon, co-founder and managing director of Boson Protocol, which enables physical products to be sold in the metaverse called NFTs . Properties in the Metaverse will host the commerce that drives 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 sneakers that don’t have NFT either.”

In June, Boson Protocol bought an entire block of the Vegas City gambling district from Decentraland. The space, according to the company, will become a trading point where real-world products can be exchanged for NFTs; The same NFTs that act as digital representations of physical products can also be exchanged for items in brick and mortar stores.

“Everyone realizes we’re very early and these things are going to be modern antiques,” said Banon. “The purchase in this phase is therefore extremely lucrative.”

There are only a handful of digital spaces that investors can buy and sell real estate in, and all of them use their own cryptocurrency. For example, Decentralands is called MANA. Decentraland also has a marketplace where people can search for NFTs, including land for sale. “It’s almost like a multi-entry service,” said Mr. Kiguel.

Wave, an entertainment company that hosts interactive concerts, including those of Mr. Bieber, makes its profit with virtual goods and brand sponsorship for the shows, which take place in neutral zones instead of a digital arena. The company isn’t monetizing real estate just yet, but Adam Arrigo, co-founder and chief executive officer, said he’s researching opportunities.

“These platforms like Decentraland and Sandbox are pioneers in notifying these properties, these showcases,” he said. “In the next few years, what we do will become a lot more mainstream.”