September 29, 2022

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

7 min read


Talk to people who work in the Metaverse and one descriptor follows: “It’s like the Wild West.” Make of it what you will. Is this a new frontier for those seeking their fortune? A lawless land? A place characterized by the unknown, removed from the rest of society? Maybe all of the above. But one thing’s for sure – people in the Wild West weren’t quitting. $650,000 in cryptocurrency on Digital Yacht.
The metaverse — the growing number of immersive virtual online worlds where users live and play — has become a hotbed of real estate speculation. Investors are betting that this is an essential part of a potential paradigm shift in how we use the Internet — a decentralized version. Web 3which supporters say would wrest control of the Web from big tech companies and redistribute power, privacy and security back to consumers.
According to the consultancy firm McKinseyCorporations, venture capitalists and private equity invested $120 billion in the metaverse between January and May 2022, more than double the $57 billion invested in 2021.

But real estate values ​​have had a rocky ride. According to Winston Robson, CEO and co-founder of Metaverse analytics company WeMeta, land prices across the four major Metaverse platforms, The Sandbox, Decentraland, Cryptovoxels and Somnium Space, have fallen 50 to 80 percent this year. He pointed to problems in the real-world economy and cryptocurrency market contributing to the decline.

Look beyond the numbers, however, and you’ll find all professions shaken up, from architects and designers to developers and real estate agents. And far from being isolated from the metaverse, their projects there are already affecting the real world.

Building for the future

George Blacka, CEO of Voxel Architects, studied architecture and design, and was working toward a career in car design when he was given some land in cryptovoxels to play with. At the start of the pandemic, he used it to build dealerships to sell NFTs (Non-Fungible Tokens). Digital cars It was designed by his friend. Two years later, Blacka has a team of 25 working full-time at Metaverse.
Voxel Architects, headquartered in Portugal, has designed and built more than 100 Metaverse projects, the CEO said, including galleries for auction house Sotheby’s, Fashion Week venues and NFT manufacturing for American artists. Plants are included. Tom Sachs. Next: An official The Elvis Presley Experience In the sandbox and decentraland.
Sotheby's in Decentraland, designed and built by Voxel Architects.  The building is modeled after a real-life auction house on New Bond Street in London.

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

Initially, the design process for Metaverse buildings is similar to the real world, Blacka said. An architect or designer consults with a client, and sketches out ideas, either on paper or on a computer. Once a design is agreed upon, it is 3D modeled, using traditional design software, but will be populated according to the Metaverse design (different Metaverses use different building blocks, and have different texture and color ranges).

Then the coding begins. “A construct is just an empty corpse,” Blica explained. “On top of that shell we add functionality, like being able to open doors, interact with artworks…customization (user interface), gameplay exploration and many other interactive elements.” to make.” Once completed, it is deployed in a metaverse.

Voxel Architects designed Auroboros for Metaverse Fashion Week in March 2022.  Recording artist Grimes performed a concert during the event.

Voxel Architects designed Auroboros for Metaverse Fashion Week in March 2022. Recording artist Grimes performed a concert during the event. Credit: Courtesy of Voxel Architects

The studio charges an hourly rate for its work, with some projects running into the millions of dollars — the most expensive being around $500,000 to design, build and deploy development in the sandbox. Yes, says Blacka, who did not disclose this. The client

Brand ambitions

Some are buying properties for recreational use. Others are trying to generate income from their land. Some are creating retail spaces or ticketed experiences. Others are renting out their land to brands trying to reach consumers in the metaverse. According to McKinsey, e-commerce in the metaverse a $2.6 trillion Market impact by 2030

LandVault claims to be the largest land developer in the metaverse, renting out its land to brands and running campaigns for them. CEO Sam Huber insists not to call it advertising. “In Web3 … the word actually has no place,” he said. “What we’re building is not advertising. It’s brand experiences, which are very different.”

He gave the example of playing a game in the Metaverse, inside an arena with a MasterCard logo. “You can still play your game. It’s not an ad. It’s not annoying. It’s like real life,” he argued.

“(Online) advertising as we know it, intrusive… compromising user data and so on — that has no place in Web3.”

Metaverse developer LandVault has created brand experiences for the likes of Mastercard.

Metaverse developer LandVault has created brand experiences for the likes of Mastercard. Credit: Courtesy of LandVault

Just like in the real world, location has a big impact on the cost of rent. Being in a high-traffic area, near a popular game or close to a valuable asset (eg a celebrity’s home) can be important. But some are making the case that good design also has value.

One advocate is Jeanine Urio, CEO of Everarium. The Metaverse development company, formerly known as Republic Realm, has raised $66 million in funding to date and is backed by celebrities including The Weeknd, Will Smith and Paris Hilton. His luxury projects made headlines. In November 2021, Everrealm purchased 792 parcels of The Sandbox (equivalent to approximately three square miles) for $4.3 million – still a record purchase. Around the same time, he sold a $650,000 superyacht. Meta flowerComplete with DJ booth, helipad and hot tub for the discerning buyer.

The company’s latest project is The Row, an upcoming invitation-only community of 30 homes. Everarium invited artists including Daniel Arsham, Misha Kahn and Alexis Christodoulou to contribute to the design. Neoclassical buildings as well as giant cantilevers are alien forms, fulfilling the promise of digital architecture without the laws of physics.

“We really just let the artists have free rein,” Urio said. The driving principal, he added, was “architecture so important and special that it becomes something that people look at as a high watermark.”

A rendering of the property designed by Barcelona-based studio SixNFive for the Avreum project The Row.

A rendering of the property designed by Barcelona-based studio SixNFive for the Avreum project The Row. Credit: Courtesy of Six N Five/Everyrealm

Euryo cited Everrim’s Fantasy Island project — in which 100 private sandbox islands sold out in a single afternoon in August 2021 — as an example of how these assets can be appreciated. . Selling for about 15,000 each, the CEO said they now trade for about $100,000, down from $250,000 at the peak of the cryptocurrency and NFT market in late 2021.

Property buyers at The Row will purchase architectural plans in the form of an NFT, which can be created and deployed on various platforms.

Alexis Christodoulou Studio has made a name for itself in 3-D design and has clients that include Kenzo and Microsoft.  Now it's working on digital properties, including this rendering of a house for The Row.

Alexis Christodoulou Studio has made a name for itself in 3-D design and has clients that include Kenzo and Microsoft. Now it’s working on digital properties, including this rendering of a house for The Row. Credit: Courtesy of Alexis Christodoulou/Everyrealm

“We want to stay true to the ethos of decentralization,” Urio said, but the sales model also speaks to the uncertainty that hangs over investing in the metaverse. “It’s very difficult to know which metaverse is going to be the most popular in one year or five years,” he said.

With a name for the development inspired by Billionaires Row in Manhattan, Averyrium has enlisted the services of elite New York real estate brokers Oren and Tal Alexander to oversee sales.

The Alexander brothers are currently vetting potential buyers, Urio said, with the private sale set to open in September. “We want to make sure the art goes to the right kind of collectors, not people who want to buy and flip and stimulate NFT hyper-speculation,” he explained. Pricing was not disclosed to CNN.

Yurio disputed the idea that The Row was an example of a metaverse moving toward social stability. “It’s about owning one of the first seminal works of three-dimensional habitable art in a new media. And I think that’s a very different conversation (than), ‘We’re building a country club.’ Which can include only 30 people,’” he reasoned.

The search for stability

The long-term value of a Metaverse property may also depend on whether users decide to work there as well as play.

Pallavi Dean, CEO of Dubai-based design studio Roar, is already doing just that, having purchased the company’s space in D’Centraland. Dean wanted to showcase Roar’s work to clients and bought four plots in January 2022 for a total of $60,000. “You have to have skin in the game before you can convince other people.” “I’m writing it off as marketing money.”

She has already moved some of her business operations to Metaverse, hosting client meetings in Roar’s virtual office. In the next two months, she plans to run a training course from her Metaverse meeting room.

Dubai-based design studio Roar has established a company location in Decentraland.

Dubai-based design studio Roar has established a company location in Decentraland. Credit: roar

Roar is looking to generate revenue in Metaverse by building an NFT gallery, a retail space and floating pods that could become a hotel. Although Dean admits she is still waiting for her first rental and first NFT sale, she is optimistic for future growth.

Given the metaverse’s short life and fast pace, long-term forecasting is risky — especially when the property market is experiencing growing pains. But can real estate in the metaverse ever become as reliable an investment as bricks and mortar? Or it could be the Web3 equivalent. The dot com bubble?

“It’s hard to know if the inside (metaverse) is stabilizing… at least all of us, and we’re deep into it,” said Yurio.

Many outsiders view its long-term prospects with more than a hint of caution. Understandably, some people working in this growing industry remain complacent.

“It’s very likely that real estate in the Metaverse will be a stable investment in the future,” Robson of analytics firm WaitMeta said in an email.

“It’s not a bubble,” insists Huber, who distills the metaverse into a combination of two trends: gaming and blockchain, neither of which can be called a fad. “If you start zooming in, there’s a hype factor — land prices have tripled in the last six months. It’s obviously speculative. But it’s a short blip and now it’s being corrected. has been done.”

“(On a) short-term basis, there’s a lot of hype,” he added. “But that’s not what interests me. I’m interested in macro — and macro is definitely here to stay.”



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