The last few months have been marked by soaring real estate prices, in Canada as elsewhere. But this market is now also racing… in the virtual world. In the metaverse, buying a piece of land can be expensive. But why do some snap up properties in which they cannot really live? A foray into this digital real estate boom.
No less than 450,000 US dollars. That’s how much an NFT collector paid last December to become rapper Snoop Dogg’s virtual neighbor in the “Snoopverse” — a world the artist is developing in The Sandbox. Attracted by the potential of the metaverse, more and more users are joining digital worlds, such as The Sandbox, Decentraland, or CryptoVoxel, and settling there.
Perceived as the future of the Internet, the metaverse — a contraction of the words meta (from the Greek: beyond) and universe — designates a virtual world, accessible in particular thanks to virtual reality and in which it is possible to carry out all kinds of actions: meet with friends, attend a concert, visit a museum or take part in a conference.
In many ways, these platforms resemble video games. You control an avatar and you navigate in a virtual environment. Except that, unlike games, these universes have no end or break. They are accessible in real time and continue to evolve even when you are not online. They also have their own economy, where cryptocurrencies and NFTs are exchanged (non-fungible tokens, digital certificates of authenticity for digital objects). And as in the real world, the real estate market is also very popular there.
“The idea of spending thousands or even millions of dollars to buy land in a virtual world seems, to be frank, absurd,” agrees Theo Tzanidis, senior lecturer in digital marketing at the University of Scotland in Scotland. West, in interview with The duty. However, the one who is interested in this field and who invests himself in virtual real estate affirms that it is about an investment which can prove to be lucrative.
“For digital real estate to have value, supply must be limited. This is the principle of scarcity. For example, Decentraland is made up of 90,000 parcels of land, each about 50 feet by 50 feet,” says Tzanidis. “These assets can appreciate enormously. But we must not lose sight of the fact that this remains a very speculative investment,” he underlines.
Andrew Kiguel, CEO of Toronto-based crypto-asset investment firm Tokens.com, for example, saw the value of his portfolio multiply by 10, he said in an interview with USA Today. “It all depends on the location,” he explained to the American media. “The more visitors, the more valuable the land, and the more a retailer and advertisers will be willing to spend to gain access to those people. »
The enthusiasm on the part of certain investors sometimes reaches dizzying amounts. Mr. Kiguel’s company, Tokens.com, for example, invested US$2.5 million for land in Decentraland. In The Sandbox, a shopping mall meanwhile sold for more than US$4.3 million to digital real estate investment fund Republic Realm, led by Janine Yorio.
Some acquire their virtual plots of land simply in the hope that the price of these will appreciate. Others profit from it, by renting them, by opening a museum, a casino, or by installing an advertising space there, for example. More and more retailers are thinking about how to do well in this new context. Retail giant Walmart is plotting its own entry into the metaverse, according to a CNBC report — as is Nike.
“Imagine the possibilities for a company like Nike. Instead of having a store in every major American retail thoroughfare, Nike could build a jaw-dropping virtual experience in the metaverse that would allow it to sell, literally, to anyone, anywhere, anytime. “, explained the company Republic Realm in a recent report.
Imagine the possibilities for a company like Nike. Instead of having a store in every major American retail thoroughfare, Nike could build a jaw-dropping virtual experience in the metaverse that would allow it to sell, literally, to anyone, anywhere, anytime. .
“The Meta Effect”
Last October, the metaverse was brought to the fore with Facebook’s announcement that it was renaming its parent company to Meta — which demonstrates the company’s firm intention to make the metaverse its strategic priority.
Not only did the announcement increase the number of land sales in digital universes, but the “Meta effect” also drove their prices up. Between Meta’s announcement last October and the start of January, the average price of a parcel in The Sandbox rose from nearly US$2,700 to currently around $12,100 (+350%), according to data. of Meta Metriks aired in the Republic Realm report. For the same period, the average price of land in Decentraland has risen from nearly $10,700 to around $13,600 (+25%).
“While some people find this completely absurd, it must be remembered that people once doubted the potential of the Internet”, emphasizes Theo Tzanidis. “Now we can’t do without social networks, and all companies have their website, for example. I believe it will be the same with the metaverse. It is not a world that will replace the one in which we live, but it will be complementary to it”, he believes.