Buying real estate in the virtual world can be a real challenge.Photo/Bloomberg
At one point in history, the idea of giving employees a weekend off was a crazy story.In basketball, slam dunks are illegal and the three-point line was originally considered
gimmick. Not being able to smoke in bars, planes, or offices was considered overly restrictive. And so on, I couldn’t even imagine.
They all became “normal” over time. Of course, it’s usually subjective, but you could probably add something else to that list. Digital real estate.
Tangible assets have a reasonable meaning. They have a steadfastness and permanence that gives us comfort, and for centuries humans have shown a willingness to spend large sums of money to claim their land and have a roof over their heads. This urge tends to be stronger in times of uncertainty, as we have seen during the pandemic.
But we also find value in many other intangibles, and the rise of blockchain ledger systems and non-fungible tokens (NFTs) has allowed us to claim ownership in the digital world.
It doesn’t cost much to buy a print of a famous painting, but the original is much more valuable. There may be digital copies everywhere online, but NFT lets you buy the originals. Sotheby’s auction house jumped into his NFT world and in 2021 he sold over $100 million worth. I enlisted the help of my tech-savvy wife to help me navigate some of the complexities. The process worked.
reality and imagination
Combine the ability to claim ownership with the story of the Metaverse (a rather amorphous concept centered around the idea of immersive virtual worlds in which Mark Zuckerberg and other tech giants are betting big) It means more opportunities to claim your rights. Also chunks of these digital worlds.
In many cases, the process of buying real estate is already highly virtualized. We regularly create online listings that feature beautifully produced videos and walkthroughs of developments that were purchased without planning. Building something in the metaverse before it’s actually built can enhance it. That means you can meet the buyer there, explain, and invite them to see the details and feel.If you’ve seen the emotional impact of virtual reality on the show Your Home Made Perfect, Start to understand what is possible here.
As a listing tool, you can see high-end homes being created in the metaverse and sold at the same time as physical homes. In Miami, Sotheby’s is already considering the idea.
This kind of project is also influencing real-world architectural firms and designers. As CNN recently wrote, “Portugal-based Voxel Architects has designed and built over 100 Metaverse projects, including auction house Sotheby’s galleries, Fashion Week venues, and American artist Tom Sachs’ NFT manufacturing plant. Next up: The official Elvis Presley experience in Sandbox and Decentraland.”
pay to play
Related to this idea is cryptocurrency as a payment method. Cryptocurrencies are becoming more and more commonplace (and the word is coming up again), with recent surveys showing that 20% of people in the US and 18% of people in the UK own some form of cryptocurrency. Prices are the same in New Zealand. We have certainly provided bitcoin and cryptocurrencies to real estate, and we have certainly sold properties to wealthy cryptocurrency traders who have profited from the sharp rise in asset values (the recent sharp decline clinging while).
Abroad, physical assets are being paid for in cryptocurrencies, but this is yet to happen in New Zealand. As long as all stringent anti-money laundering requirements are met and the vendor is willing to be paid in less volatile assets than cash, we are open to that possibility.
So will we finally start selling digital properties that are not linked to physical property?
Part of the ownership is about signaling. Buying art, expensive cars, and nice wine shows that we can afford it. With so much of our lives lived online, that’s our cue. Imagine giving a friend a tour of your home in The Row, a members-only exclusive development created by Everyrealm, and showing him his NFT hanging on the wall.
Many believe that there are already many real world examples of the metaverse. Video games bring humans together in the digital world, and players are often willing to spend real money to advance. In-game spending now exceeds the amount spent buying video games, and is expected to reach $74 billion by 2025. Concerts are also held within video games such as Fortnite.
The same thing is starting to happen in digital real estate. I remember seeing the Million Dollar homepage in the mid-2000s. An Enterprising Student Sells His Million Pixels On His Web Page For $1 Each, Second Life Charges People To Create New Islands And Brands To Create Experiences has taken it to another level. – In-game. This era of digital real estate is still called the “Wild West,” and “land prices on the four major metaverse platforms – Sandbox, Decentraland, Cryptovoxel and Somnium Space – have fallen by 50-80% this year.” But as seen in almost every major city and resort town in the world, the value of real estate is determined by popularity, quality, proximity and rarity. And buying and selling land in the digital world is no different.
Professor Scott Galloway writes:There’s also commercial real estate: luxury designer Philippe Plein bought a property in Decentraland for $1.4 million, soon to be Plein He’s Plaza, and a dedicated real estate development: Metaverse Real Estate Company [Everyrealm] We recently bought the largest virtual land ever — $4.3 million. ”
The popularity of these virtual worlds tends to wane if there isn’t much to do in them (as it eventually did with Second Life). And you obviously can’t sleep or eat in your virtual property. As you spend time (and perhaps start working), parting with a chunk of digital real estate can become the modern equivalent of being offered the opportunity to buy. In 1980, he purchased several acres of land in Queenstown for several thousand dollars.
You may still be thinking that all of this is completely ridiculous. In the early days, people said about the Internet, Because it was difficult to connect and was of little use. The same sentiment can be seen in professional video games, where players often train hard to be the best at difficult tasks, compete with others who do the same, sponsor sponsors and so many enthusiastic players. It engages audiences both in person and online.
Some owners of traditional sports teams have seen the potential and bought esports teams and even the leagues they play in. A whole new market waiting to be explored/developed.
A photo of Mark Zuckerberg walking through a room of participants wearing goggles has been used by many to describe the existence of a dystopia where there is actually no need to interact with the real world (Iceland ‘s recent tourism campaign has brilliantly distorted this idea). I don’t think that’s going to be our future, and I don’t think anything can replace real-world pleasure, but much like the rise of hybrid work between home and office, we’ve chosen I find myself in and out of the world, whether it’s a stint in a fully immersive video game or listening to a podcast on my Airpods.
As an investment class, digital real estate and NFTs are largely speculative but highly frothy markets. At this stage, it’s basically a gamble, so if you’re interested, bet as long as you don’t mind losing. But it is useful to remember that what was unimaginable in the past tends to become normal in the future. Second, it is vehemently opposed, and third, it is accepted as self-evident.”
• Mark Harris is Managing Director of NZ Sotheby’s International Realty.