Adam Kamani, the founder of property portal app MoveStreets, recently announced plans to invest in the metaverse, in particular metaverse property. The entrepreneur, who also set up the woman’s fashion chain PrettyLittleThing, announced the move in tandem with U.S. based RTFKT studios, a Nike-owned company. So what is the metaverse, and how is this connected to the world of real estate?
What is the metaverse?
The metaverse is seen by many as the next Internet revolution. It is already prompting a colossal battle between tech giants across the globe. However, the phrase was coined by author Neal Stephenson in his 1992 science fiction novel “Snow Crash”. In his novel, lifelike avatars met in realistic 3D buildings and other virtual reality environments. As so often happens with science fiction, the concept is becoming a reality with the creation of hyper-real alternative worlds.
Many believe the foundations for metaverse already exist in virtual world platforms such as Second Life and online gaming concepts such as Fortnite and Minecraft. However, the metaverse is a world apart, incorporating:-
- Augmented reality
- Virtual reality
- 3D holographic avatars
- Gaming experiences
While ongoing advances in technology will allow people to live a virtual life in these digitised worlds, the introduction of NFTs (Non-Fungible Tokens) will revolutionise virtual real estate. NFTs are digital items you can buy and sell using blockchain technology – a system used to trade cryptocurrencies. Due to their recent success, many investors are selling their homes for cash to buy cryptocurrencies.
A £20 note is an example of a fungible token as you can exchange it for another £20 note. NFTs are unique assets akin to diamonds or land, with unique qualities which add or subtract value from the digital asset. Confused?
Adam Kamani is looking to the future
MoveStreets will purchase a plot of land on The Sandbox metaverse as part of a long term investment. Working with the RTFKT studios, MoveStreets will create its very own NFT, a head office in the digital world of The Sandbox, on the land acquired. The idea is simple; the virtual head office will be used to create an interactive experience for individuals worldwide looking to buy/sell their next home. The physical business of MoveStreets will also exist in the virtual world of The Sandbox metaverse. Fascinating!
Investing in metaverse property via real estate NFTs
The Sandbox metaverse is one of many digital universes where you can buy and sell digital land plots as unique NFTs. Once you buy a plot of land, you can develop, rent and even sell as you would in the “normal world”. However, to add value to your real estate NFT, metaverse property, you need to create an experience akin to gaming for those living in your online world.
A real estate NFT is akin to a freehold over the land on which a property is built. So, you can buy the plot of land in The Sandbox digital universe as an NFT – with your purchase held within what is known as a blockchain system. This online ledger is an unbreakable record of NFT transactions and ultimate ownership of digital assets. You may decide to develop the plot of land, build a home, offices or retail outlets. Lease these digital assets to 3rd parties in The Sandbox, creating income and what many believe would be a viable long-term business. In the words of Star Trek’s Spock:-
“Its life, Jim, but not as we know it”
Are real estate NFTs just a concept or really happening?
The jump from the real world to gaming concepts such as Minecraft to the metaverse is relatively simple for gaming enthusiasts. For those with no knowledge of gaming concepts such as Minecraft, which involve living and working in a digital virtual world, it can be challenging to make the jump. However, you can now buy and sell real estate NFTs in huge quantities. Some experts are even predicting the metaverse could be worth more than $1 trillion very soon.
How can investors make money from metaverse property with real estate NFTs?
As we touched on above, the idea is simple in theory but perhaps more difficult in practice. One misunderstood concept is that each of these metaverse worlds has a defined landmass and is not infinite. Therefore, in theory, the same supply/demand concept of the “real world” property sector is still applicable. However, it is probably easier to give some examples of how you can make money from real estate NFTs.
Developing an office complex
Let us assume that you bought a plot of land in the metaverse then created an office block. This is similar to how MoveStreets is looking to develop an interactive experience for those entering their office. If your office complex is popular in the metaverse world, it will attract businesses looking to rent virtual offices. In effect, you are creating your own virtual world real estate business.
Each virtual office tenant will pay rent, and as demand increases, you can increase the rent. As in the real world, the higher the rent, the higher the value of the office complex if you ever wished to sell. If you switch the digital world for the real-world, the concept is precisely the same and perhaps easier to understand.
Back in November 2021, while many Covid restrictions were still in place, Justin Bieber performed a live concert to the world. Well, the digital world. In a perfect example of potentially monetising metaverse real estate Justin Bieber’s avatar sang songs from his hit album “Justice”. We have also seen metaverse performances from Ariana Grande, The Weeknd and Travis Scott. While these shows were held in “neutral zones” instead of digitised concert halls, it is not difficult to see the moneymaking opportunities.
The entertainment company, which staged the metaverse interactive concerts, profited from virtual merchandise sales and brand sponsorship. Now, imagine holding concerts in metaverse concert halls, with fans paying a fee to attend, this opens up a whole new world.
Viewing and buying metaverse homes online
It is not a huge jump to imagine the viewing and buying of homes in digitised metaverse worlds such as The Sandbox. A world where estate agents have offices. Where avatars visit for advice and guidance, and real estate NFTs are bought and sold. Even though this notion is still relatively new, it is perhaps helpful to put this into perspective. Since its inception, The Sandbox metaverse has:-
- Completed circa 140,000 real estate transactions
- Worth a total of $347 million
In another development, SuperWorld, a virtual real estate platform, has mapped out the entire face of the globe. This has been split into 64.8 billion plots of land, all available to buy as unique NFTs.
Snoop Dogg joins the metaverse property party
In a sign of the times, the infamous rapper Snoop Dogg has joined the metaverse party. Creating his own virtual world entitled Snoopverse, his fans are flocking. Investors can buy avatars, souped-up cars and virtual land. The first round of real estate went on sale in December 2021. One NFT investor paid a staggering $450,000 to be the virtual neighbour of Snoop Dogg, buying a plot of land next door to the rapper’s home. How can we follow that!
While many people will associate these new digitised worlds, known as the metaverse, with the likes of Second Life and Minecraft, in reality, these are literally worlds apart. Metaverse worlds will bring together the concept of human interaction, accommodating augmented and virtual reality to create virtual worlds. Worlds which you can almost touch, smell and feel. As ever, real estate will play a significant role in the development of metaverse worlds. Real estate NFTs, in theory, are the freehold of metaverse property.