Metaverse Real Estate Piles Up Record Sales
Kanebridge News
Share Button

Metaverse Real Estate Piles Up Record Sales

Firms’ purchases of digital land in online worlds are bets that property values will rise as more people join in.

By Konrad Putzier
Wed, Dec 1, 2021 11:29amGrey Clock 3 min

The latest hot real-estate market isn’t on the scenic coasts or in balmy Sunbelt cities. It’s in the metaverse, where gamers are flocking and digital property sales are setting new records.

A growing number of investment firms are acquiring digital land in worlds such as the Sandbox and Decentraland, where players simulate real-life pursuits, from shopping to attending a concert. They are betting that individuals and companies will spend money to use virtual homes and retail space and that the value of properties will increase as more people join the worlds.

Investors’ interest in virtual real estate got a boost last month after Facebook renamed itself Meta Platforms Inc. and said it would focus on online worlds, commonly called the metaverse.

That interest reached a new peak on Tuesday when Republic Realm, a firm that develops real estate in the metaverse, said it paid $4.3 million for land in the world Sandbox, the biggest virtual real-estate sale publicized to date, according to the company and to data from the website NonFungible.com, which tracks digital land sales.

Republic Realm bought the digital land from videogame company Atari SA and the two firms said they plan to partner on the development of some of the properties.

That acquisition broke a record set just last week by a subsidiary of Canadian investment firm Tokens.com Corp., which said it paid around $2.5 million for land in the world Decentraland’s Fashion District.

“This is like buying land in Manhattan 250 years ago as the city is being built,” said Andrew Kiguel, chief executive of Tokens.com.

These virtual worlds, often created by videogame developers, include cities where a user’s avatar can stroll and shops where they can buy a new winter coat or a painting to hang on the walls of their virtual homes. These digital worlds feature apartments or lounges where users can hang out with avatars of their real-life friends. Participants pay in cryptocurrencies to gamble in virtual casinos or to indulge in more extravagant pursuits such as virtual yachts.

Real-estate investors are looking to sell homes that are close to users’ friends and virtual attractions. They are also developing retail spaces, which they hope to lease to virtual retailers for rent priced in hard currency or cryptocurrency. Ownership of land is recorded through so-called nonfungible tokens, digital identifiers that act as de facto deeds. Property sales are usually done in a cryptocurrency unique to each metaverse.

The investments can be risky. Unlike actual real estate, which tends to retain some value even during a market downturn, the value of virtual properties could fall to zero if the world they are in goes out of fashion and people stop visiting it.

Prices can also be slammed by the volatility of cryptocurrencies, said Zach Aarons, general partner of the real-estate-focused venture-capital firm MetaProp. “If I buy a building for 40 ETH, and then ethereum goes from $4,000 to $100, that’s a fundamental risk that I’m not really taking when I’m buying a piece of physical real estate,” he said.

Republic Realm is trying to reduce the risk by buying land in a number of different virtual worlds, said co-founder Janine Yorio. The company says it runs two real-world investment vehicles focused on virtual real estate and owns about 2,500 plots of digital land across 19 worlds. Ms. Yorio said she spent a decade as a real-estate investment executive, first at NorthStar Realty Finance Corp. and then at the Standard Hotels, before switching to the financial-technology industry.

The company either buys land directly from a world’s creator, or from third parties through public listings or off-market deals, Ms. Yorio said. In some cases, it decides to just sit on the vacant land and wait for it to appreciate. In others, it pays an architect to design virtual homes or malls and a game developer to build them.

As in the physical world, zoning rules limit what and where a company can build in the metaverse and, in theory at least, too much development could lead to a market glut. But unlike in the real world, metaverse buildings can defy the laws of physics by appearing to hover above the ground.

“And then we charge rent, just like a regular landlord,” Ms. Yorio said. The company employs an asset manager to deal with tenants’ complaints and change requests. Its developments include a mall, which it leases to retailers selling fashion for avatars, and a master-planned community of around 100 villas on private islands that it sold to individuals.

Tokens.com, which is publicly traded, is currently developing an 18-story skyscraper in Decentraland that it hopes to lease to lawyers or cryptocurrency exchanges, which can use the building for events or advertising.

It is looking to develop properties on the land it bought in Decentraland’s Fashion District, which it wants to rent out to fashion companies as event and retail space.

“We can create something that’s the equivalent of a Rodeo Drive or Fifth Avenue, where the Guccis and Adidases will come,” Mr. Kiguel, the CEO, said.

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: November 30, 2021



MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

Related Stories
Property
It’s a slam dunk as a covetable $2m KDR site complete with basketball court hits the market in the Hills District
By KANEBRIDGE NEWS 18/04/2023
Property
The top 10 Australian locations at highest flood and bushfire risk
By Bronwyn Allen 11/06/2024
Property
I.M. Pei’s Son Speaks of His Father’s Legacy of Creating ‘Places for People’ Ahead of a Retrospective in Hong Kong
By ABBY SCHULTZ 11/06/2024
It’s a slam dunk as a covetable $2m KDR site complete with basketball court hits the market in the Hills District

The ball is in the buyer’s court with this knockdown/rebuild opportunity

By KANEBRIDGE NEWS
Tue, Apr 18, 2023 2 min

Glenhaven in Sydney’s Hills District is one of those areas that locals tend to keep to themselves. Leafy with large blocks on offer, the suburb takes its name from its valley location, with the northern end originally known as the Glen and the southern end called the Haven. 

En route from Parramatta to the Hunter, Glenhaven has become an ideal place for growing families in search of a little more space, or even room to house several generations under one roof.

The challenge is finding properties that tick all the right boxes.

As demand for trades and supply chain issues continue to ease, now could be the right time for a knockdown/rebuild project for would-be buyers looking to create their dream home.

Fairmont Homes specialises in knockdown/rebuild projects in Sydney. General manager at Fairmont Homes, Daniel Logue, said there are key features to look for when choosing a knockdown/rebuild site.

“The key items we look for are the site falling to the street, not to the rear, to help with stormwater drainage as well as access to the site,” he said. “Neighbouring property front setbacks are also important. In some older areas, the older houses are set closer to the street, meaning your new home will have to be set to suit.

“Value for money and the return on the end sale price of the home is another issue.”

If possible, he said designing a home that meets the criteria of the Complying Development legislation will speed up approvals considerably.

While suitable knockdown/rebuild sites can be hard to find in Glenhaven, there are still hidden opportunities if you know where to look.

One block at 158 Gilbert Road, Glenhaven is ideally suited for rejuvenation. With almost 850sqm to play with, it slopes down to the street and sits between neighbouring properties that have already been stylishly updated.

 

 

An existing basketball court at the rear could provide the perfect teen backdrop to a family home, or it could make way for a larger house with landscaped gardens and pool. Alternatively, it could be the perfect position for a cabana or granny flat to serve as in-law accommodation or a source of secondary income.

With recent sales of completed homes in nearby streets reaching well above $5 million, it’s a great opportunity to make a slam dunk of a buy into one of Sydney’s best kept secrets.

Address: 158 Gilbert Road, Glenhaven
Price guide: $1.8 million
Inspection: By appointment only
Contact: William Brush, LJ Hooker Dural 9651 1566 

 

MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

Related Stories
Lifestyle
EV Trade War Could Spread to Luxury Cars
By STEPHEN WILMOT 12/06/2024
Money
A Killer Golf Swing Is a Hot Job Skill Now
By CALLUM BORCHERS 14/06/2024
Money
The unexpected reasons Australians are retiring earlier than planned
By Bronwyn Allen 14/06/2024
0
    Your Cart
    Your cart is emptyReturn to Shop