Many have already tried to explain the metaverse but I will try to give another definition. It will essentially be an upgraded version of the internet. It’s a virtual reality platform that aims to be a mixed reality in the future where people can connect with friends and family, attend meetings, play games and even go to virtual concerts. So what is Metaverse real estate? Well you probably have guessed it right, it’s the real estate in the virtual world of the metaverse.
To dive deeper there is one metaverse but several platforms can support it. We should imagine these platforms as geographical locations with borders, which means that they include a specific amount of virtual land. If the land is bought by someone, no one else can use this land unless they are willing to rent or buy it out from the previous owner. The most prominent platforms in metaverse are: The Sandbox, Decantraland, Cryptovoxel, and Somnium Space with a total of more than 250,000 parcels of land.
Like in the real world the strategy around metaverse real estate is buying land where a lot of people gather. As a result, that's where brands and advertising will want to appear. There is a theory that buildings won’t have any value for advertisers but the billboards on them could be useful. Some major companies that have already invested in the real estate of metaverse are PWC owning land in The Sandbox where it aims to set up “a Web 3.0 advisory hub to facilitate a new generation of professional services, including accounting and taxation” with Adidas, HSBC, Gucci and Warner Music Group following.
Metaverse Market Cap
To present you with some further information, sales in the metaverse exceeded the benchmark of $500 million for 2021 and analytics firms project that the figure will be doubled for the current year. Sales for January amounted to $85 million which represents 17% of the total sales from last year. A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31% a year from 2022 to 2028.
However, there seems to be some skepticism around potential metaverse real estate investors as they think that users will be offered the feature of teleportation with their VR headsets, making the value of the lands plummet. Even if that is the case people will tend to teleport to specific and famous lands maybe in shopping centres or virtual event venues making these areas more attractive to advertising and commercial real estate.
Another long-term concern is if this land eventually becomes worthless which can happen if apart from the already existing platforms that have a bounded size, there is a possibility we will see more platforms becoming available with more lands in the future. Because let’s not forget that platforms and lands can be finite but the metaverse itself does not present any reason to be so.
The Future of Metaverse
We have insufficient information if real estate in the metaverse will be the next big thing or an upcoming bubble as many others in the past, but we can be sure of one thing; whatever this is, it is only the beginning. It is early days for both the technology adoption and for its potential. As metaverse adoption expands further into the new norm, we are only going to see a broader spectrum of brands investing in the metaverse to create digital-first experiences that engage customers.