The metaverse: How it became real estate’s new frontier

Talk to people who work in the Metaverse, and one explanation follows: “It’s like the Old West.” make it what you do. A new frontier for those seeking fortune? Lawless area? A place characterized by the unknown, removed from the rest of society? Probably all of the above. But one thing is certain: the people of the Old West weren’t down. $650,000 Cryptocurrency on Digital Yacht.

The Metaverse, the growing number of immersive, virtual online worlds in which users live and play, has become a breeding ground for real estate speculation. Investors are betting that this will be an integral part of a paradigm shift in how we use the Internet. Web3its proponents claim, this will take control of the web from big tech companies and distribute power, privacy, and security to users.

According to consulting firm McKinsey, corporations, venture capitalists and private equity invested $120 billion in the Metaverse between January and May 2022. That’s more than double his $57 billion in 2021.

But real estate values have fluctuated. According to Winston Robson, his CEO and co-founder of metaverse analytics firm WeMeta, land prices on four major metaverse platforms, The Sandbox, Decentraland, Cryptovoxels, and Somnium Space, have fallen by 50-80% this year. did. He pointed out that problems in the real world economy and the cryptocurrency market contributed to the decline.

But look beyond the numbers and you’ll see that entire professions are being shaken, from architects and designers to developers and realtors. Far from being isolated in the Metaverse, their ventures are already making real world impact.

building for the future

George Bileca, CEO of Voxel Architects, was given the land to play with Cryptovoxels while studying architecture and design and pursuing a career in car design. At the start of the pandemic, he used it to build dealers selling NFTs (Non-Fungible Tokens). digital car Designed by his friend. Two years later, Bileca has his team of 25 working full-time on the Metaverse.

Headquartered in Portugal, Voxel Architects has designed and built more than 100 Metaverse projects, including auction house Sotheby’s galleries, fashion week venues, and NFT manufacturing plants for American artists, said the CEO. tom sachs. Then civil servants Elvis Presley experience In Sandbox and Decentraland.

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

Initially, Bileca says the design process for buildings in the Metaverse is nearly identical to the real world. An architect or designer consults with a client and sketches an idea on paper or computer. Once a design is agreed upon, he is 3D modeled using traditional design software, but created according to the design specifications of the metaverse (different metaverses use different building blocks, textures and a range of colors). are different).

After that, the coding begins. “The build is just an empty corpse,” explained Bileka. It will add functionality that allows you to create unique elements.” Once completed, it will be deployed in the metaverse.

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

Studios charge an hourly rate for their work, with some projects reaching hundreds of thousands of dollars, with the most expensive costing nearly $500,000 to design, build and deploy development in The Sandbox, says Bileca. . client.

brand ambition

Some people buy real estate for recreation. Others are trying to earn income from their land. Some are building retail spaces and ticketed experiences. Some companies rent out land to brands looking to reach consumers in the metaverse.According to McKinsey, e-commerce in the Metaverse is up to $2.6 trillion Market impact to 2030.

LandVault claims to be the largest land developer in the Metaverse, renting out its land to brands and running campaigns. Don’t call it advertising, he argues CEO Sam Huber. “On Web3…the word really has no place,” he said. “It’s not advertising that we’re building. It’s a very different brand experience.”

He gave an example of playing games in an arena metaverse with the Mastercard logo. “You can play the game. It’s not advertising. It’s not annoying. It’s like real life,” he insisted.

“Advertising (online) as we know it is intrusive… compromising user data, etc. Web3 has no place.”

Metaverse developer LandVault has created experiences for brands such as Mastercard. credit: Courtesy RandVault

Just like in the real world, location has a big impact on rental prices. Being in high traffic areas, near popular games, or near valuable assets (such as celebrity homes) can be important. However, some argue that good design is also valuable.

One of the backers is Janine Yorio, CEO of Everyrealm. The Metaverse developer, formerly known as Republic Realm, has so far raised $66 million in funding and has been backed by luminaries such as The Weeknd, Will Smith and Paris Hilton. That gorgeous project generated headlines. In November 2021, Everyrealm purchased his 792 lot (equivalent to about 3 square miles) of The Sandbox for his $4.3 million. Around the same time he sold his $650,000 superyacht, meta flowercomplete with a DJ booth, helipad and hot tub for discerning buyers.

The company’s latest venture is The Row, an invite-only community of 30 homes. Everyrealm commissioned artists such as Daniel Arsham, Misha Kahn and Alexis Christodoulou to contribute designs. Heterogeneous forms alongside neoclassical buildings and giant cantilevers fulfill the promise of his digital architecture unbound by the laws of physics.

“We really let the artists do their thing,” says Yorio. Her driving force, she added, was “because it’s such an important and one-of-a-kind architecture that people will look to it as a kind of high watermark for her.”

A rendering of a property designed by Barcelona-based studio Six N. Five for the Everyrealm project The Row. credit: offered by Six N. Five/Everyrealm

Yorio uses Everyrealm’s Fantasy Island project — a project of 100 private islands in The Sandbox that sold out one afternoon in August 2021 — as an example of how these properties could be valued. I am listing. The CEOs sell for around $15,000 each, and are currently trading at around $100,000, up from $250,000 at the height of the cryptocurrency and NFT market boom in late 2021.

Buyers of The Row properties purchase building plans in the form of NFTs that can be built and deployed on a variety of platforms.

Alexis Christodoulou Studio has made a name for itself in 3D design, with clients such as Kenzo and Microsoft. Currently, this she is working on his property digitally, including a rendering of The Row home. credit: Courtesy Alexis Christodoulou/Everyrealm

“We want to keep the spirit of decentralization,” says Yorio, but the sales model also speaks to the uncertainty that comes with investing in the metaverse. “It’s very difficult to know which metaverse will be the most popular in a year or five years,” she said.

With the development’s name inspired by Manhattan’s millionaire’s row, Everyrealm oversaw the sale using the services of elite New York real estate brokers Oren and Tal Alexander.

Yorio said the Alexander brothers are currently screening potential buyers, with private sales starting in September. “We want the art to reach the right type of collector, not the people trying to buy, flip and create NFT’s hyperspeculation her dynamics,” she explained. The price was not disclosed to CNN.

Yorio disputed the notion that The Row was an example of the metaverse moving toward social stratification. “This is about owning one of the first seminal works of three-dimensional habitable art in a new medium. And I think it’s a very different conversation.” “We’re building a country club you can’t join,” she insisted.

Seeking stability

The long-term value of a metaverse property can also depend on whether users work there as well as play there.

Pallavi Dean, CEO of Dubai-based design studio Roar, has already done so by purchasing space for his company in Decentraland. Dean said he wanted to showcase Roar’s work to clients, and in January 2022, for a total of about $60,000, he purchased four lots. “I’m writing this off as marketing funds.”

She’s already moved some of her work to the Metaverse and hosts client meetings in Roar’s virtual office. Within the next two months, she plans to conduct her training course in the Metaverse conference room.

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

Roar is also building NFT galleries, retail spaces, and floating pods that could become hotels to generate revenue in the metaverse. Dean admits he’s still waiting for his first rental and his first NFT sale, but he’s optimistic about future growth.

Long-term projections are risky given the short lifespan and rapid acceleration of the metaverse. Especially when the real estate market is experiencing growing pains.But will Metaverse real estate be as reliable an investment as brick and mortar? Or could this be the Web3 equivalent? dot com bubble?

“It’s hard to know if the real estate inside[the Metaverse]is stable…especially among us, we’re very much into it,” Yorio said.

Many outsiders may view that long-term outlook with a little caution. Unsurprisingly, some people working in this burgeoning industry are still bullish.

Robson of analytics firm WetMeta said in an email:

“This is not a bubble,” argued Hoover, narrowing the metaverse down to two trends — gaming and blockchain combined — neither of which could be called fads. “When you start expanding, there is an element of hype. Land prices have tripled in the last six months. This is clearly driven by speculation. Yes, it’s fixed now.”

“()In the short term, there’s a lot of hype,” he added. I will stay here.”