Digtial gold to digital property… digital opportunity or digital BS?
So first there was Bitcoin. Then there were alt-coins. Then there were NFTs. And now…?
Now there’s virtual real estate.
In the same way that Bitcoin ‘disrupted’ money, the metaverse is coming to ‘disrupt’ property… or so they reckon.
But whatever they reckon, there’s definitely some serious money being made.
The world’s most coveted city – where land values increased more than 500 per cent in recent months and major retailers are scrambling to get in – is not London, New York, Sydney or Paris. It’s in cyberspace.
Metaverses – or virtual-reality cities master-planned with an abundance of amenity for visitors to be entertained, interact and spend (mostly in cryptocurrency) – have become significantly more dominant in the property space since last year, with interest from land investors, tenants and consumers.
Sandbox, a four-year-old metaverse town, has been downloaded by more than 40 million people with about 1.2 million active monthly visitors.
Digital rival Decentraland, where a shopping centre development site recently sold for a surprisingly high $US2.43 million ($A3.39 million), could also be a contender, having experienced rising popularity last year.
Facebook, which rebranded to Meta last October, is also joining the race, reportedly investing $US10 billion-plus in a metaverse town with the potential to disrupt every part of the economy.
Financial services groups, including Goldman Sachs and Morgan Stanley, believe the platform could be responsible for trillions of dollars in annual revenue by 2025 – up from about $US500 million in 2020.
Investment on metaverse real estate – or “lands” – has been following the same growth trajectory.
MetaMetric Solutions, which monitors the sector, says consumers are expected to spend more than $US1 billion on digital property this year – twice what they outlaid in 2021.
Demand, it adds, is likely to surge at an annual compound rate of over 30 per cent until 2028.
$1bn this year you say? So there’s serious money to be made. But what can you do in these virtual universes?
Go shopping, or hang around outside Snoop-Dogg’s house, apparently.
Once in, users are presented with a range of experiential opportunities.
There is retail in abundance – with groups and franchises such as Atari, Care Bears, Disney, Nike, Smurfs and The Walking Dead set up (Adidas recently acquired a parcel for an as-yet-undisclosed project while McDonald’s and Walmart recently filed trademarks suggesting they are entering the metaverse space too).
Importantly, the concept is finding favour with celebrity partners and influencers – Snoop Dogg, for example, recently announced plans to recreate his Californian mansion in the Sandbox, which will be the scene for members-only concerts and parties.
Developers and investors are also big property buyers. Late last year, one outlaid $US450,000 (45 times the average price) for a plot neighbouring Snoop Dogg, where high foot traffic numbers are expected.
Last November, Tokens.com subsidiary Metaverse Group spent $US2.43 million for 116 parcels of digital real estate within Decentraland’s fashion precinct, with plans for a large shopping centre where it hopes to attract key tenants and conduct virtual fashion shows.
Tokens.com chief executive Andrew Kiguel described the purchase as the equivalent of buying in central Manhattan 250 years ago.
Yeah, maybe. But I’m sensing a bit of hype.
The thing about Manhattan – and the thing about land which sets it apart from almost every other asset – is that you just can’t make any more of it.
It just doesn’t matter what happens to demand for land in Manhattan, they just can’t make any more of it.
And true, the land in ‘Sandbox’ is limited. But the number of Sandbox like sites and competitors is not.
So I think they’re pushing it a bit.
But, there’s economically logical and there’s popular, and in the short run, popular trumps logic every day of the week.
Do I think we’re going to see a land boom in the meta-verse?
Yes.
Do I think it will last 250 years?
No.
But what will you care? You’ll be dead, and possibly rich, by then.
JG.