virtual worlds are trying to break into the real estate sector

Limited interests, unattractive… Metaverses today are struggling to convince the general public, although some platforms, such as Meta, have spent millions to put this technology of virtual worlds to use. Because the market is promising according to analysts. By 2030, it could weigh between $4,000 and $5,000 billion, according to McKinsey estimates published in June.. More specifically, real estate constitutes an encouraging segment of this virtual world, albeit purely speculative. Here are the reasons.

Metaverse: virtual worlds are still struggling to meet their audience and uses

First of all, this Web 3.0 is an imaginary virtual universe connected to the Internet that allows a user to travel around the world and exchange with other users. If it is possible to immerse yourself in the universe thanks to a virtual reality helmet, most of the metaverses are directly accessible online on PC, with the exception of the world. Worlds of the Horizon developed by Meta. Thus, the opportunities in the metaverse abound and brands see a genuine interest in rushing into it. Between the Nikeland concept developed by Nike in the video game Roblox, the virtual art gallery opened by Sotheby’s in the Decentraland world, or even the pizza order offered by Domino’s Pizza, many brands are investing in this universe for digital marketing purposes as it is a advertising space on its own according to Mihai Vicol, metaverse analyst at Newzoo.

However, to really establish themselves in this sector, they must earn ” lands “, these famous virtual conspiracies.

Available for purchase directly from virtual world stores such as The sandbox Where Decentraland, land is also sold on NFT sales platforms such as OpenSea or Rarible. To get some, then it is enough to have a wallet, called ” wallet ”, of cryptocurrencies, to choose the right land and buy it or make an offer if it comes up for auction. Once the purchase is complete, the buyer receives the plot in the form of a NFT (non-fungible token), which guarantees unique, immutable and digital ownership of the land.

However, buying an NFT real estate comes with a certain cost. To date, a conspiracy in the universe The sandbox it costs 1,280 ETH (cryptocurrency” ethereum ”) minimum, or the equivalent of $1,550. On average, land in this metaverse costs $11,000, but for the best-placed land, prices can run into the tens or hundreds of thousands of dollars, or even millions of dollars. In December 2021, the company Everyrealm (formerly Republic Realm), based in New York, then spent a record $4.3 million to tackle a conspiracy in the metaverse The sandbox.

Speculative feature of virtual real estate

If these investments are less attractive to private investors because it is impossible to physically spend time there, buying real estate in the metaverse can still present an advantage from a speculative point of view. Indeed, the reason why all the land in the four main metaverses has already been sold is that the number of plots on these worlds is limited…and therefore rare.

The sandbox, Decentraland, Cryptovoxels AND Somnium space together they represent 270,000 parcels of land, including 160,000 in The sandbox and 90,000 further Decentraland. Thus, these lands can increase in value and allow the first buyer to receive a profit on resale. The increase in prices is thus directly related to the limited amount of land because according to a Chulalongkorn University study in Thailand, the price of land in The sandbox So it is multiplied by 300 between December 2019 and January 2022.

However, this system is not immune to the bursting of the speculative real estate bubble. According to media reports information published this summer, the average price per plot has actually fallen by more than 66% in five months.

Investing in the metaverse, a risky bet

There is a very high risk of volatility and loss of capital However, warns Arnaud Groussac, founder of Patrimoine Store, a real estate investment support platform. Indeed, it is difficult to predict what will become of the metaverse in a few years. ” Companies can become the new Google or Amazon of the metaverse in 20 years, or they can disappear in a few years “, explains Arnaud Groussac. If a platform ceases to exist, the land sold on it will be lost. Indeed, virtual property legislation is unclear in many countries and there is no guarantee that buyers will get their money back, let alone their land or building.

In addition, the metaverse being deregulated and decentralized, the possible legal remedies in the event of a fraud are limited. “However, Europe is now in favor of the MiCA (Market for Crypto Assets, editor’s note) law, which aims to protect investors », declares Julien Villeneuve, Marketing and Development Strategy Manager at La Boîte Immo during the RENT 2022 show. Thus, this law will aim to warn investors of certain risks associated with investments in crypto-assets and allow them avoid fraudulent systems. If the implementation of the law is on track, it still takes two years before it is applied to the French market.