Real estate in the metaverse – land or structures in a virtual environment – is, in reality, nothing more than pixels on a computer screen, but its value is rising.
Virtual land can be built upon to create experiences that lend themselves to advertising, marketing, socialising and entertainment. The type of properties that are being built in this virtual environment includes corporate headquarters, billboards and casinos where games can be played online by 3D avatars. The value of each plot of land depends on the experience it provides, as well as other factors, such as collectability, platform popularity and market sentiment.
When Facebook announced that it would be changing its name to Meta in June 2022, signalling its interest in the metaverse, digital real estate value increased, and it’s estimated to increase further by 31% compound annual growth rate (CAGR) from 2022 to 2028, according to recent market data from MetaMetrics Solutions.
Decentraland is a prime example of the potential of real estate investment. Creative Director of Decentraland Foundation Sam Hamilton says: “When we first sold land, it was all sold at $20 [€20.50] a pop, and we sold it all. Now, I think the cheapest you can buy is $3,500 [€3,591]. So, you can see the speculators already made a lot of money.”
In 2021, a 116-parcel plot of digital land in Decentraland sold for a record €2.49 million worth of cryptocurrency. The buyer, Tokens.com, bought the estate in the heart of Decentraland’s Fashion Street district to facilitate the company’s expansion into the digital-fashion industry.
“It’s not the land itself that’s important, it’s the experience you build on top of that land,” explains Hamilton. “Just like in the real world, different parts of the Decentraland, different parts of the city, are more in demand than others – like where all the nightclubs are, or where all the casinos are – if you can park your experience there, it’s much more valuable than somewhere else on the map.”
In total, Decentraland recorded sales of €514 million in 2021, and that figure is expected to exceed €1 billion in 2022.
In September, in the United Arab Emirates, the two-day Dubai Metaverse Assembly brought together more than 300 experts to discuss opportunities in the virtual environment. Dubai’s overriding metaverse strategy aims to create 40,000 jobs and add more than €4 billion to the emirate’s economy in the next five years.
Hamilton was a speaker at the event, updating audiences on the latest technological developments in the metaverse. “I’m super excited,” he says. “I’ve seen a technological advance in the last two months. The software is growing really quickly. Blender – which is the programme that 90% of the people who build for Decentraland and the other metaverses use – has integrated an AI system to make textures. Making textures seamless is very difficult, but using AI technology, they can now do that, and I think we’re going to see another level up of aesthetics in Decentraland because of that.”
Textures – images that are applied onto a 3D object – create the illusion of different materials from wood to transparent glass, adding depth to the scenes created by pixels.
Other future technologies revealed at the assembly included a new VR (virtual reality) headset due to be released this year and a language tool facilitating instant translation in the metaverse. In addition, Meta is set to introduce a haptic glove that will allow users to experience the metaverse physically. Wearing the glove will allow users to move chess pieces in a board game, for example, or even play a guitar in a music lesson.
The metaverse is still a young concept, but with rapid advancement and investment, in theory, you could have an avatar of guitar legend Brian May giving haptic glove wearers lessons in a digital recreation of the famous concert venue Madison Square Garden – and that’s a piece of virtual real estate that would be worth a lot more than a song.
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