‘Metaverse’ bet fuels booming virtual real estate market

The idea of ​​spending millions on non-existent land may sound ludicrous, but feverish predictions of a virtual reality future are driving investors to bet big on digital real estate.

This week, New York-based company Republic Realm announced that it had spent a record $ 4.3 million on digital land through The Sandbox, one of several “virtual world” websites where people can socialize, play games and even attend concerts.

This follows a $ 2.4 million land purchase in late November on a rival platform, Decentraland, by Canadian crypto firm Tokens.com. And a few days earlier, Barbados had announced its intention to open a “metaverse embassy” in Decentraland.

Such websites present themselves as a prototype of the metaverse, a future internet where online experiences like chatting with a friend would end up feeling face to face thanks to virtual reality (VR) headsets.

“Metaverse” has been a buzzword in Silicon Valley for months, but interest skyrocketed in October after Facebook’s parent company renamed itself “Meta” as it focused on reality Virtual.

Facebook’s rebranding “brought the term ‘metaverse’ to millions of people much faster than I expected,” said Cathy Hackl, a technology consultant who advises companies on entering the metaverse. .

According to crypto data site Dapp, land worth more than $ 100 million was sold last week on the four largest metaverse sites, The Sandbox, Decentraland, CryptoVoxels and Somnium Space.

For Hackl, it’s no surprise that the market is booming, spawning a whole ecosystem around virtual real estate, from rents to developers. “We are trying to translate the way we understand physical goods into the virtual world,” she told Agence France-Presse (AFP).

And while it may be some time before these sites function as true metaverse, transporting us elsewhere with virtual reality glasses, the digital earth already functions as an asset just like the real earth, Hackl said.

“They can build on it, they can rent it, they can sell it,” she said.

“Fifth avenue of the metaverse”

Tokens.com has purchased a premier patch in the Fashion Street district of Decentraland, which the platform hopes to develop as a hotbed for luxury brands’ virtual stores.

“If I hadn’t done the research and understood that this is a valuable property, it would sound absolutely crazy,” admitted Andrew Kiguel, CEO of Tokens.com.

Kiguel spent 20 years as an investment banker specializing in real estate. He insists that the Decentraland plot has exactly the same commercial meaning as it does in the real world – it’s in a hip, high-traffic neighborhood.

“It’s an advertising and event space where people will come together,” he explained, pointing to a recent virtual music festival in Decentraland which drew 50,000 visitors.

Luxury brands are already venturing into the metaverse – a Gucci handbag sold on the Roblox platform in May for more than the actual version – and Kiguel is hoping Fashion Street becomes a shopping destination akin to Fifth Avenue in May. New York.

As to how the land could be used to make money, “it can be as simple as having a billboard, or it can be as complex as having a storefront with an employee? real, ”he said.

“You can come in with your avatar and have 3D digital representations of a shoe that you can hold and ask questions.”

Second Life, restarted

Already in 2006, a real estate developer made headlines after earning $ 1 million with land sold on the virtual world site Second Life.

While Second Life remains active, supporters of its next-gen rivals point out one key difference.

In Decentraland, everything from earth to virtual artwork comes in the form of a non-fungible token, or NFT.

Some people have spent tens of thousands of dollars on these digital items, and the concept has sparked both skepticism and enthusiasm.

But Kiguel predicts that this form of digital property will become mainstream in the years to come, as the blockchain technology behind it creates trust and transparency in transactions.

“I can see the history of the property, what was paid for it and how it was transferred,” he said.

But investing is not without risks – especially given the volatility of the cryptocurrencies used to buy NFTs.

And while virtual gigs on sites like Roblox and Fortnite have attracted tens of millions of viewers, the scant data available suggests that traffic to metavers like Decentraland lags far behind that of established social media sites like Facebook and Instagram.

Ultimately, the value of land investments depends on whether people start flocking to these sites.

“I know this all sounds pretty ridiculous,” Kiguel said. “But there is a vision behind it.”

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