Metaverse: How Real Estate Became the New Frontier

Metaverse: How Real Estate Became the New Frontier

He talks to people who work in the metaverse and one descriptor follows him: “It’s like the Wild West.” Do whatever you like. Is it a new front for those looking for their fortune? A lawless land? A place marked by the unknown, far from the rest of society? Maybe all of the above. But one thing is for sure – the people of the Wild West did not come down $650,000 in cryptocurrency on a digital yacht.
The metaverse – a growing number of virtual online worlds where users live and play – has become a hotbed of real estate speculation. Investors are betting that it is an integral part of a potential paradigm shift in how we use the Internet – a decentralized version called web 3which its proponents say will wrest control of the web from big tech companies and distribute power, privacy and security to users.
According to consulting firm McKinseyCompanies, venture capitalists, and private equity invested $120 billion in the metaverse between January and May 2022, more than double the $57 billion invested in 2021.

But property values ​​have been volatile. Land prices in the four major metaverse platforms, The Sandbox, Decentraland, Cryptovoxels and Somnium Space, are down 50-80% this year, according to Winston Robson, CEO and co-founder of analytics firm Metaverse Wimta. He noted that problems in the real world economy and the cryptocurrency market are contributing to the decline.

However, look beyond numbers, and you’ll find entire careers in shambles, from architects and designers to developers and real estate agents. Far from being isolated from the metaverse, their projects there are already impacting the real world.

We build for the future

George Bellica, CEO of Voxel Architects, studied architecture and design and was in the automotive design business when he got some land at Cryptovoxels to play with. At the beginning of the epidemic, he used it to build an agency to sell NFTs (non-fungible tokens) from digital cars Designed by his friend. Two years later, Bileca has a team of 25 people working full time in the metaverse.
Portugal-based CEO Voxel Architects said they have designed and built more than 100 metaverse projects, including galleries for Sotheby’s auction house, Fashion Week venues and the American artist’s NFT factory. Tom Sachs. Next: responsible Elvis Presley Experience In Sandbox and Decentraland.

Sotheby’s in Decentraland, designed and built by Voxel Architects. The building is modeled after a real-life auction house on New Bond Street, London. attributed to him: Courtesy Voxel Architects

Initially, the process for designing metaverse buildings, Bileca said, is the same as in the real world. The architect or designer consults with the client, sketching out the ideas, either on paper or on a computer. Once the design is approved, it is modeled in 3D, using traditional design software, but conforms to the design specifications of the metaverses to be populated (different metaverses use different building blocks, have different textures and color ranges).

Then the coding starts. “The building is nothing but an empty corpse,” Bilica explained. “Furthermore, we are adding functionality, such as the ability to open doors, interact with artwork… to create custom (user interfaces), gameplay quests and many other interactive elements.” Once completed, it is published to the metaverse.

Voxel Architects designed Auroboros, the venue for Metaverse Fashion Week in March 2022. Recording artist Grimes gave a concert during the event.

Voxel Architects designed Auroboros, the venue for Metaverse Fashion Week in March 2022. Recording artist Grimes gave a concert during the event. attributed to him: Courtesy Voxel Architects

The studio is paid hourly for its work, with some projects running into the hundreds of thousands of dollars—the most expensive being close to $500,000 to design, build, and publish a project in Sandbox, says Bileca, who did not disclose a client.

Brand ambitions

Some buy real estate for recreational use; Others are trying to make revenue from their lands. Some are building retail spaces or ticket-buying experiences; Others are renting their land to brands trying to reach consumers in the metaverse. According to McKinsey, e-commerce in the metaverse could reach a $2.6 trillion Market impact by 2030.

LandVault claims to be the largest land developer in the metaverse, leasing its land to brands and developing campaigns for them. Just don’t call it an ad, CEO Sam Hooper insists. “In Web3…the word really has no place,” he said. “What we build is not advertising. They are completely different brand experiences.”

He gave the example of playing a game in the metaverse, inside a Mastercard-themed arena. “You can still play your game. This is not advertising. This is not annoying. This is like real life,” he said.

“(Online) advertising as we know it is intrusive…compromising user data etc. – it has no place in Web3.”

Developer Metaverse LandVault has created brand experiences for the likes of Mastercard.

Developer Metaverse LandVault has created brand experiences for the likes of Mastercard. attributed to him: Courtesy of LandVault

As in the real world, the location has a huge impact on the rental price. Being in a high demand area, near a much-loved toy or near a prized asset (a celebrity’s home, for example) can be important. But some assert that good design also has value.

One of the advocates is Janine Yorio, CEO of Everyrealm. The metaverse developer, formerly Republic Realm, has received $66 million in funding so far and is backed by celebrities including The Weeknd, Will Smith and Paris Hilton. Her luxury projects made headlines. In November 2021, Everyrealm purchased 792 packages of Sandbox (the equivalent of about three square miles) for $4.3 million – still a record purchase. At about the same time she sold the luxury yacht for $650,000, Metaflowercomplete with DJ booth, helipad and hot tub for the discerning buyer.

The company’s latest project is The Row, an upcoming invite-only community of 30 homes. Everyrealm invited artists including Daniel Arsham, Misha Kahn, and Alexis Christodoulou to contribute designs. Besides neoclassical buildings and giant windows, there are strange shapes that fulfill the promise of digital architecture unconstrained by the laws of physics.

“We really let the artists have freedom,” Yorio said. She added that the leadership director was “so important and exclusive that the architecture becomes something that people look at as kind of a high watermark.”

A view of a property designed by the studio in Barcelona Six N. Five for Everyrealm Project The Row.

A view of a property designed by the studio in Barcelona Six N. Five for Everyrealm Project The Row. attributed to him: Courtesy Six N. Five / Everyrealm

Yorio cites Everyrealm’s fantasy island project – where 100 private islands in The Sandbox sold out in one afternoon in August 2021 – as an example of how to appreciate these assets. Sold for around $15,000 each, the CEO said they are now trading around $100,000, down from $250,000 at the height of the crypto and NFT boom in late 2021.

Property buyers in The Row will purchase architectural plans in the form of NFT, which can be built and published on various platforms.

Alexis Christodoulou Studio has made a name in 3D design and has clients including Kenzo and Microsoft.  She is now working on digital ownership, including offering a home for The Row.

Alexis Christodoulou Studio has made a name in 3D design and has clients including Kenzo and Microsoft. She is now working on digital ownership, including offering a home for The Row. attributed to him: Courtesy Alexis Christodoulou / Everyrealm

“We want to stick to the spirit of decentralization,” Yorio said, but the selling model also speaks to the uncertainty surrounding investing in metaverses. “It’s very difficult to know which metaverse will be the most popular in a year or five years,” she said.

With the development name inspired by Billionaires’ Row in Manhattan, Everyrealm enlisted the services of elite New York real estate brokers Oren and Tal Alexander to oversee sales.

Yurio said the Alexander brothers are currently screening potential buyers, with private sales beginning in September. “We want to make sure the art goes to the right kind of collectors, not people looking to buy, reflect and create an overly speculative NFT dynamic,” she explained. Pricing has not been disclosed to CNN.

Yorio opposed the idea that The Row was an example of the trend toward social stratification. “It’s about having one of the first fundamental works of 3D inhabitable art in new media. And I think that’s a very different conversation, ‘We’re building a country club that only 30 people can join,'” she argued.

Searching for stability

The long-term value of the metaverse may also depend on whether users decide to work and play there.

Pallavi Dean, CEO of design studio Roar in Dubai, is already doing just that, having bought space for the company in Decentraland. Dean wanted to showcase Roar’s business to clients and bought four plots of land for about $60,000 in total in January 2022. “You have to have an in-game appearance before you convince others,” she said. “I am writing this as marketing money.”

It has already moved some of its business operations to the metaverse, and has hosted client meetings in Roar’s virtual office. In the next couple of months, she plans to take a course from her metaverse boardroom.

Dubai-based design studio Roar has established a corporate space in Decentraland.

Dubai-based design studio Roar has established a corporate space in Decentraland. attributed to him: Hadeer

Roar is also looking to generate revenue in the metaverse, building an NFT exhibit and retail space and floating pods that could become a hotel. Although Dean admitted that she is still waiting for her first rental and first sale in NFT, she still hopes to grow in the future.

Given the short lifespan and rapid acceleration of metaverses, forecasting over the long term is dangerous – especially as the real estate market is in growing pains. But can real estate in the metaverse become as reliable an investment as bricks and mortar? Or this could be the Web3 equivalent of dotcom bubble?

“It’s hard to know if the real estate within the (metaverses) will be stable…at least we are all, and we’re deeply in it,” Yorio said.

Many outside may view its long-term prospects with more than a hint of caution. Understandably, some people working in this booming industry remain optimistic.

“It is very likely that real estate in Metaverse will be a stable investment in the future,” Robson, of analytics firm WaitMeta, said in an email.

“This is not a bubble,” Hooper insisted, reducing metaverses to a mixture of two trends: gaming and blockchain, neither of which can be called a fad. “There’s an element of hype if you start zooming in – the price of land has tripled in the past six months. That’s obviously driven by speculation. But that’s a short glimpse and now it’s corrected.”

“(In the) short term there is a lot of noise,” he added. “But that’s not what I’m interested in. I’m interested in the macro – and the macro is definitely here to stay.”

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