The Edge Magazine Vol. 7
THE NEXT FRONTIER:
WHAT IS THE METAVERSE, ANYWAY? The term metaverse is complex and largely still being defined. In general, it refers to a new way to consume information and experience virtual representations of people, places and things. The tech behind the metaverse is based on gaming technology—so effectively, it’s not new—but the metaverse has shed some of the gamification. It’s more of a choose-your-own-adventure experience. Armed with a screen, Virtual Reality or Augmented Reality device and a web connection, anyone can jump into the metaverse (in avatar form, of course), move through these new environments, find new and unique experiences, interact with virtual objects and, through shared experiences, connect with others who come from near, far and everywhere in between. HOW DOES THE METAVERSE FIT IN FOR COMMERCIAL REAL ESTATE? In part, the metaverse mirrors the physical world. For example, investors can purchase parcels of digital land. Wondering who in their right mind would pay for the rights to a virtual plot of dirt? As it turns out, plenty of speculators—early investors are paying big dollars, too. According to some reports, 2021 saw more than 65,000 land transactions in the metaverse totaling $350 million dollars, including 116 parcels that sold for $2.5 million in virtual world Decentraland. Blockchain company Tokens.com recently paid $1.7 million for a 50% stake in Metaverse Group, one of the world’s first virtual NFT based real estate companies. Metaverse Group owns an extensive portfolio of virtual NFT (see NFT side bar) real estate properties in metaverse communities such as Decentraland and the Sandbox. It also offers virtual property development, property management and marketing services.
Investors who buy digital properties are banking on the idea that once they own a piece of digital land, they can lease it or sell virtual ads much in the same way online advertising works—that is, the way advertisers pay popular websites to display ads to visitors. Likewise, owners of digital land in the metaverse can lease kiosks, billboards or prime locations to big brands who want to advertise. For property owners and developers in the physical world, the metaverse represents another kind of opportunity. Analyzing how people behave in the virtual world can give CRE investors a rich seam of intelligence around what people engage with and for how long. Owners, investors and developers can then take these learnings and apply them to physical real estate. For example, they can plan a workplace and its amenities all based on insights from the metaverse. Through this kind of application of the metaverse, developers can reduce risk and take bolder steps in the creation of built environments. Are these virtual land acquisitions investable opportunities like physical commercial real estate assets? Likely not for now, given so much is yet to be determined with respect to laws and jurisdictions governing metaverse transactions. But we may see it one day as organizations like the Metaverse Standards Forum are signing up major corporations to help establish some of these guidelines to help protect users and ensure a positive experience.
Commercial real estate (CRE) is probably not the first thing that comes to mind when you hear the word metaverse. After all, commercial real estate is property primarily used for business purposes—and it’s typically physical, not digital. However, major companies are placing big bets that the metaverse will be a place where real estate investors, the businesses that use real estate, and the people who visit will be spending more time. It’s too soon to tell, but given the opportunities the metaverse represents—from new revenue streams and unique brand experiences, to improving experiences and physical real estate itself, to enabling a new future of work—those bets may pay off.
ANDREW PHIPPS Global Futurist and Head of Business Development, EMEA & Local Markets email@example.com
BRIAN VAUGHN Sr. Director, Digital Advisory firstname.lastname@example.org
ROSS HODGES Global Emerging Technology Lead email@example.com
32 THE EDGE
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