People are paying real money for virtual real estate in the metaverse

People are paying real money for virtual real estate in the metaverse

The highest-selling virtual plot went for more than $1 million

Location, location, location. That’s the common phrase for success in the real estate market, and it’s no different when these properties are listed in an alternative virtual reality, called a metaverse.

The metaverse is a growing topic in tech and some crypto circles, describing a virtual reality space into which users can log in and interact with one another using avatars to represent their real selves. It has been growing particularly in the gaming space with titles like Fortnite, Animal Crossing: New Horizons, Roblox, and many others fostering a metaverse community for players. Social media websites such as Facebook are also pushing into the space with Horizon Worlds and is planning to hire 10,000 people in the European Union over the next five years to help build their vision of a metaverse.

It’s no coincidence that this concept has sci-fi vibes to it, the term “metaverse” was originally coined in science fiction writer Neal Stephenson’s book “Snow Crash” in 1992 to describe a virtual world that people would plug into using their own virtual avatars. Online games like Second Life, which launched in 2003, were a pioneers for metaverse economies, allowing users to trade goods and services using their in-game Linden dollars — including virtual real estate.

It is also taking off among the decentralized finance crowd with platforms like Decentraland, an online metaverse space that calls itself the first fully decentralized virtual world owned by its users where they create, explore and trade virtual goods using smart contracts on the Decentraland marketplace. Along with virtual clothes and accessories you can purchase using the platform’s native MANA crypto, you can also secure virtual land parcels and estates.

These virtual properties could be vacant parcels for creators to build on, or structures that reflect real-life properties and completely original creations. They are represented by co-ordinates on the metaverse platform where users can meet up using their avatars to socialize and decorate their own spaces with collectibles.

Monetizing this space is starting to give rise to metaverse real estate companies, the first being Metaverse Property. Being a nascent industry, the company works to secure a wealth of land assets in the virtual real estate space. It focuses on buying and selling, managing business properties, offering rentals in the metaverse, virtual land development, as well as consultation and marketing. Metaverse Property currently operates on platforms including Decentraland, The Sanbox, Somnium Space, Cryptovoxels, and Upland.

Beyond being virtual landlords and developers, Metaverse Property also says it is creating what it’s calling the first “metaverse real estate investment trust (REIT)”, which will trade through a non-fungible token (NFT) that is backed by the company’s virtual land portfolio.

With a bullish bet on metaverse real estate, crypto and decentralized financial services company Tokens.com Corp purchased a 50 per cent stake in Metaverse Group this week valued at about $1.7 million, reportedly a record equity investment in a metaverse real estate company.

Andrew Kiguel, the chief executive officer at Tokens.com, explained that the company’s goal is to secure as many virtual real estate land parcels as possible to rent them out to clients.

On platforms like Decentraland, which has seen more than $50 million in virtual sales for goods like real estate, clothes, accessories, usernames and avatars, an outlying parcel in an area less travelled could run a user around $5,000 MANA, or roughly over $4,600 Canadian dollars as of mid-October. These prices can jump up quickly in larger built-out properties in popular zones, with the highest-selling virtual plot of land recorded on the platform being a $1.3 million MANA property in June, equal to about US$900,000 at the time.

Skeptics might find it bizarre to spend any amount of money on a property that they themselves cannot live in, though Kiguel told the Financial Post that there are valid uses for these virtual properties.

“Really, it’s the foot traffic,” Kiguel said. “So, you might want to build a house to invite friends over, you can decorate the walls with your NFTs, it’s a way of socializing…. COVID drove a lot of this: when the world shut down, people turned to their computers as a means of interacting with people, and so the foot traffic in the metaverse continues to grow at a very high rate.”

Kiguel added that celebrities like Snoop Dogg are getting into the metaverse as well. In late September, Snoop Dogg partnered with The Sandbox to reconstruct his real-life mansion on the platform’s NFT metaverse. Paris Hilton signed a partnership with Decentraland as one of the headline celebrities being featured on the platform’s first-ever Metaverse Festival slated for October 21 to the 24th. Hilton will be using a Genies avatar, which are animated avatars that can speak using the celebrity’s voice.

With this growing adoption and promotion among brands and celebrities, Kiguel expects that more users will flock to the metaverse space.

“The possibilities are endless. There’s museums and galleries, if you want to go in and see some of the most expensive NFTs sold in the world … you can go to Decentraland,” Kiguel said. “So, the possibilities are really endless, here’s all the different things you could do to attract people here.”

Source: Financial Post

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