If you find yourself in Decentraland exploring the Crypto Valley, stop for a moment and gaze upward at the Tokens.com Metaverse Crypto Valley headquarters. Look beyond the stylized building with its rooftop infinity pool to consider its potential. You may be seeing the future of real estate.
What is the metaverse and should you care about virtual real estate? The technology and vocabulary are still developing, but let’s take a closer look at what REALTORS® should know about metaverse real estate.
What is it?
You can’t literally step onto or into these properties like you can a physical cottage for sale in Muskoka, although some real-world sales now have counterparts online. You must use an avatar, which is a digital representation of yourself that you can manipulate to walk, run and jump in virtual lands called metaverses. Now it’s still the early days, so these digital worlds are clunky to move within as an avatar.
While there’s no single, dominating metaverse, for now, people simply refer to this new frontier—where you can meet friends, attend concerts and events, play games and, yes, buy and sell real estate—as the metaverse. The idea of the metaverse isn’t new. Second Life, a virtual gathering place popular in the early 2000s, was a precursor to what we’re seeing today.
Over the last few years, we’ve seen the industry adopt more virtual and immersive technologies. For example, eXp Realty has been using a cloud-based campus since 2016 called “eXp World,” which provides an interactive training and networking platform for the company’s real estate agents and staff—who all work remotely.
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- AI and Its Possible Impact on Real Estate
On Canada’s No. 1 real estate platform, REALTOR.ca*, which integrates several 3D/virtual tour products such as Matterport and iGuide, the COVID-19 pandemic drove up the usage of these technologies.
“Pre-pandemic, 15% of listings included a virtual tour, and since then that number has grown to around 30%. The demand is there from consumers, and it’s great to see REALTORS® adopt these tools as it leads to a higher lead conversion rate,” says Patrick Pichette, Vice President, REALTOR.ca. He also adds, “But the leap to the metaverse is a big one, and we’re still in a very speculative stage, so take time to do your research and move with caution. It’s too early to know which digital world will win—remember that Myspace came before Facebook—and if, ultimately, the metaverse gets traction from the masses.”
These days, most people will feel like strangers in a strange land if they enter any of the growing virtual reality metaverses that provide a focus for real estate investors, including Decentraland, The Sandbox, Somnium Space, Upland and Cryptovoxels.
What steps can curious REALTORS® and investors take to move into this burgeoning but speculative space?
“There isn’t a metaverse real estate agent handbook yet,” says Tokens.com co-founder and chief executive officer Andrew Kiguel, who’s executive chairman of its Toronto-based subsidiary Metaverse Group, which bills itself as the world’s first virtual real estate company. “So, [for REALTORS®] part of it would be to first go in and learn and start understanding the metaverse.”
In November 2021, Tokens.com made what was at the time the largest metaverse land acquisition, paying $2.5 million to acquire a 116-parcel estate in one of Decentraland’s most popular (virtual) neighbourhoods, the Fashion District. It will monetize the (virtual) land through advertising, rentals and festivals.
Kiguel sees potential for REALTORS® to transfer some of their real-world skills into the digital realm by knowing virtual neighbourhoods, in much the same way as they would know a neighbourhood’s real estate in Calgary, for instance, understanding what properties are valuable and why. Also, they might help their clients on the daunting tech side by showing them how cryptocurrencies work and how virtual land is purchased.
Buying and selling virtual land
For now, purchasing and selling real estate in the metaverse is considered high risk with potential high reward.
The first step is to take the time to do your own research. To buy and sell (virtual) land, expect to acquaint yourself with cryptocurrencies, blockchains, cryptocurrency wallets, and the various tokens used as cryptocurrency in each of the metaverses (for example, Decentraland uses the MANA token, and The Sandbox uses SAND). The Sandbox has a primer on how to buy land, which may be useful for beginners, but you’ll need to do a deep dive into whichever metaverse you’re interested in.
Land location and scarcity remain key
Metaverse real estate prices rose 700% in 2021, according to a January 2022 report by the Centre for Finance, Technology and Entrepreneurship. A fan spent $450,000 for land right next to rapper Snoop Dogg’s NFT house in The Sandbox. You can get a plot in Decentraland on the low end for more than $10,000 or go big where the virtual sky holds no limit.
The “why” for investors of buying, selling or building real estate generally remains the same virtually, though currently it’s less about a place to live and more about return on investment, bragging rights and location.
The concept of scarcity applies, too, as Decentraland has only 90,000 plots of digital real estate for sale.
Aside from location, think community. You’re banking on or building beside or within a community that will be a draw for traffic and experiences and brands that will offer them. But, as mentioned earlier in this article, it’s hard to know which metaverse will be the dominate one and for how long.
Steep learning curve ahead
It’s a lot to understand, especially for REALTORS® who may not be comfortable exploring online with a computer, let alone broaching Web3, a decentralized Internet of the future envisioned as on the blockchain using token-based economics.
“I do think there is a future role [for REALTORS® and brokers],” says Kiguel. “I get a lot of messages wanting to know how they could fit in. My gut tells me it will require more specialized services. It’s going to require them to have a degree of technical sophistication that I believe most don’t have yet.”
In other words, roles for REALTORS® and brokers as these nascent virtual worlds grow in popularity and attract more people have yet to form. The rules for governance in these virtual worlds evolves with Decentralized Autonomous Organizations and as yet, there is no licensing body to accredit real estate professionals in these virtual worlds. Its also unclear how provincial regulators will come in to play in the metaverse…if ever.
The skills required in the future may be totally unlike the skills that REALTORS® have today, though serving their clients will always remain critical to success. Regardless, technical know-how is fundamental to exploring the possibilities within virtual worlds.
