With an expected CAGR of 31.2% from 2022 to 2028, the Metaverse is one of the fastest growing economies in the world. Developing a virtual world through the metaverse offers endless possibilities for creating better spatial experiences. Its immersive and engaging virtual environment makes digital interactions real. This quality has caught the attention of leading technology companies who are now vouching for the metaverse as the future of the built environment. Thus, investors and developers see the metaverse as a potential investment to improve the user experience and marketability of a place.
What is Metaverse Real Estate?
Real estate in the metaverse refers to parcels of land and buildings in the virtual environment. Earth in the Metaverse is virtual, which implies that it has no physical attributes. Land plots in the metaverse are essentially pixels that act as programmable spaces in virtual reality platforms. These lands can be used to develop workplaces, playgrounds and meeting rooms.
Investors can purchase land from several metaverse platforms offering unique virtual environments. Each of these platforms offers various functions; therefore, no single platform represents the entire metaverse. Sandbox, Decentraland, Metahero, Horizon Worlds, and Celebrity Atlas are some of the most popular metaverse platforms that real estate developers can invest in.
Why and how to buy real estate in Metaverse?
Metaverse real estate offers people a place to connect with people in remote places around the world. Developers can monetize their virtual properties to advertise services, host events, and provide unique visitor experiences. Similar to physical land, real estate can also be leased or leased. Therefore, investing in metaverse real estate can be profitable for key players in the AEC industry.
In 2017, at Decentraland’s first LAND auction at the Terraform event, a piece of land sold for an average of $20. In 2021, the same plots of land were sold for an average of over $6,000. Additionally, the start of 2022 has seen a real estate price boom in the metaverse, with real estate costs reaching $15,000.
For purchases of land in the metaverse, the investor must require a virtual wallet to carry out all transactions. MetaMask is one of the most trusted browser-based wallets for performing digital transactions. The digital wallet will need to be filled with cryptocurrency since it is the currency of the virtual world. Investors can study the features of various metaverse platforms and compare them to each other before signing up.
Following this, the investor can create a digital avatar of himself and follow a tutorial on the platform to familiarize himself with his virtual environment. After that, the plot selection and purchase process can begin. Purchasing a metaverse property involves a deed of ownership, a unique code on a blockchain. This code certifies ownership rights to virtual land. The purchased land can be used to develop a new building or a digital twin of physical space.
Benefits of Investing in Metaverse Real Estate
The main advantage of metaverse real estate is that it compensates for the lack of space in the physical world. For example, employers can create conference rooms and event rooms in the metaverse if an office lacks physical meeting spaces. Moreover, the metaverse offers a seamless collaboration experience that allows people living in different parts of the world to communicate with each other.
Project marketing and real estate showcase are other important advantages of the metaverse in the real estate industry. Developers are creating immersive metaverse experiences for potential buyers to see their “dream home” in virtual reality. Equipped with VR headsets and compatible smartphones, shoppers can take virtual reality tours of various locations around the world.
Many countries like Germany, Croatia, Hungary, Norway, Mauritius, Iceland, Spain, and Costa Rica have invested in virtual tourism using the metaverse. Tourists can watch the most popular public buildings, experience their charm and indulge in regional activities by weaving VR headsets.
Risks associated with Metaverse Real Estate
Investing in the metaverse is promising, but it can also be high risk due to its relative newness. Although researchers predict that the metaverse has excellent room for growth, it is very early to predict how the industry will develop. For example, if a metaverse platform decides to go offline permanently, the real estate it contains will also become non-existent. In this case, the value of the investments made by real estate developers would be questionable.
The valuation of physical land is appreciated or depreciated depending on market conditions, the environment and other tangible factors. But, all these factors have no impact on the real estate of the metaverse since the virtual environment can be controlled. Thus, the single and most important variable that impacts the value of real estate in the metaverse is the volatility of cryptocurrencies.
Develop and manage real estate in the metaverse
In the metaverse, developers can assign real estate development roles to architects. In the case of neighborhood developers, urban planners and urban designers can be involved. Architects can design the virtual world by planning plots of land to maximize the use of space. Additionally, land in the metaverse needs management similar to managing physical property. The virtual world has the potential to grow real estate through effective management of virtual properties, rental assortment, handling of customer inquiries, and general land maintenance.
Investing in metaverse real estate is associated with high risks and equally high rewards. The uncertainties of the virtual world can multiply exponentially to reap huge benefits or deteriorate into a total loss of investments. So, before investing, the developer should make sure that he has full knowledge and understanding of how the metaverse works.
Investors should identify their risk appetite, weigh all of their investment options, and speak to experts before investing. Considering all of these factors, the fact that the Metaverse will define the future of life is undeniable. Therefore, all key players in the AEC industry must prepare for the dawn of this next generation technology which is challenging, immersive and engaging.
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