Metaverse: Virtual Realty to become a Virtual Reality

By Ramesh Nair

There is a new world out there, where one can buy and sell land, collaborate with colleagues, go on a trip with friends and even attend concerts. Just that all of it is virtual and is called Metaverse. Metaverse is a three-dimensional, immersive virtual platform where users can interact with each other using AI-powered avatars in a highly realistic virtual environment. The rapid growth in digital transactions has got the attention of global firms and are planning to setup a variety of services in the metaverse landscape. Research shows that between 2022 and 2028, the metaverse real estate market is expected to see a compound annual growth rate of 31%.

Large companies are looking to capture the next digital frontier, building virtual experiences onto their existing products. Companies such as Meta (previously known as Facebook), Google, Microsoft, are investing heavily to develop the fast-emerging metaverse environment. Gaming industry is also driving the development of metaverse. Animation & gaming companies such as Unity and Nvidia are creating transformational technologies to make metaverse as real as possible. With the thriving technology sector coupled with expected greater digital user penetration, the investment in metaverse real estate environment, currently pegged at USD500 million holds significant potential to catapult into a multi-billion-dollar industry in the upcoming years.

Visualizing Real Estate in Metaverse

In metaverse, real estate is a virtual ecosystem, where technologies such as virtual reality, augmented reality, seamlessly come together to create a real-world user experience. In this digital space, there are unique and non-replicable land parcels available. Visiting and creating a virtual landscape, conducting virtual events and purchasing properties is opening new possibilities for real estate. According to a leading Analytics firm, real estate sales on major metaverse platforms reached USD501 million in 2021 and is expected to double in 2022.

Users can claim ownership of a parcel of virtual land based on blockchain ledgers. The landowners will have complete control over how virtual land is utilized on their land which is identifiable by a set of geographic co-ordinates to locate the property. The most popular metaverse environments also known as the Big 4 are Sandbox, Decentraland, Cryptovoxel and Somnium. These four platforms together have a combined 268,645 parcels of land. Land prices in Metaverse have risen by as much as 500% as of March 2022, from the time Facebook changed the name of its holding company to Meta in October 2021.

Transaction and ownership of land on metaverse can be done using cryptocurrency. For this, users can create an account on any of the crypto wallets such as Metamask, Bitski or Arkane. The actual token currency in which the transaction takes place depends on the metaverse environment.

Several large companies have jumped onto the metaverse bandwagon. For instance, global consulting company PwC’s Hong Kong wing has purchased a land parcel in a metaverse space where it intends to construct a Web 3.0 advisory hub to facilitate a new generation of professional services. Sporting goods giant Adidas also aims to market exclusive branded content, experience and merchandise in the metaverse. South Korean mobile manufacturer Samsung recently launched its metaverse location designed basis its store location in New York named Samsung 837 store. In addition to this, popular music artists Snoop Dogg, Imagine Dragons, BTS have conducted virtual concerts in metaverse.

Investing in Metaverse

Real estate investors are exploring ways to incorporate real estate in metaverse as an asset class in their investment portfolio. With low barriers of entry, metaverse allows a wider pool of investors with virtual land parcels available at various price points. Land on metaverse are also being bought by large brands looking to create an experiential centre to showcase their products. Also, there are several Indian investors who are reimagining real estate in the virtual world. For instance, Lepasa, which is a web 3.0 metaverse ecosystem, is creating 15-20 virtual cities, with each city having a different theme.

Developing in Metaverse

Real estate developers can also exploring opportunities arising from metaverse. Metaverse with its immersive landscape could one day be used to solve complex engineering challenges by providing a collaborative landscape for architects, engineers and project managers to seamlessly interact and come up with solutions to real world problems. Unity, a cross-platform game engine developed by Unity Technologies can be used to create a virtual model on metaverse. This virtual model could then be used as the reference model for the actual construction of the building.

Metaverse is at its nascent stage, currently used for gaming and virtual events, could soon have the capability to solve real world problems. With greater penetration of 5G technology and global brands investing, the metaverse landscape is expected to gain greater acceptability in the near future.

(The author is CEO, India and Managing Director, Market Development, Asia, Colliers)