Like other sectors, the real estate industry is also preparing to list its properties in the metaverse. The real estate market has always been one of the first options to consider in investment strategies, due to the widespread belief that bricks never lose value. This concept has been gradually evolving and transforming thanks to constant technological innovation. At first, using devices, such as virtual reality glasses, to enhance the sales experience. Later, with 360º virtual property showings, a widespread practice during the pandemic. But the dynamism of the real estate market is unstoppable. Now it is beginning to develop in the remote virtuality of metaverses.
The Future of the Internet: Metaverse, NFT and Web3
Real estate and metaverse
Last week, several news items reported record numbers registered in what we now call “virtual plots”. Apparently, several virtual land plots were sold for five million dollars on the Decentraland and Axie Infinity platforms. These reports confirm that the new virtual reality developed with blockchain technology, along with the evolution of web3 and the token economy, are causing the birth of new markets. In the virtual worlds of the metaverse, alternative financial and investment markets have begun to emerge. These markets are still being deciphered, but they are gaining popularity day by day.
One of these markets has to do with digital real estate. On several of the platforms that make up the metaverse, digital plots of land are traded. As in physical life, such plots can have different functions: investment, for personal use or for the development of services and products within the platform and the crypto economic market. Where they create content and experiences that can be monetized. In fact, some of these metaverses are already inhabited by globally recognized brands.
All the above, gives rise to thinking and questioning the way virtual parcel sales are handled and the possible interactions in secondary markets of the same. One of the first virtual real estate businesses is Metaverse Property. This company offers plots in Decentraland, the Sandbox, Somnium, Upland and Cryptovoxels.
In addition to buying and selling plots, Metaverse Property also offers leasing, property management, marketing, project development and consulting services. The company has an investment project, called REIT, where it reports the creation of the first virtual real estate investment trust on the mentioned platforms. In other words, the company provides the investor with direct exposure to real estate in the metaverse without the need to go through the barriers to entry or learn the skill set required to do so.
Basically, it is a virtual real estate portfolio, represented by the REIT token, a non-fungible token (NFT) backed by Metaverse Property’s virtual land portfolio. Another similar concept is Republic Realm, also focused on the possibility of advising on different urban developments and businesses.
NFT: Non-fungible tokens, the new fad of the blockchain
New professions and professionals
Providing security and sufficient guarantees in this new real estate market implies the evolution of several professions. In this sense, it is important to consider basic aspects of it. Such as the need to hire designers, virtual architects, or decorators, but also professionals capable of providing the necessary guarantees and certainties in the different processes.
In virtual leases, thought should be given to where the contractual obligations are embodied and what type of platform and electronic signature or digital identity format should be used. The capabilities of avatars should also be considered. As well as the need to adapt an API with sufficient KYC, to identify the user and his wallet. Thinking about a basic “KYC – Know your costumer” is an important diligence. Another key issue is the terms and conditions of the platform, to distinguish between a simple use or housing contract or if it is for the development of a commercial business. What we know as “destination” of the same in physical life.
What are NFTs and why do people pay huge sums for them?
Likewise, as the virtual plots are programmed with NFTs, their use should be given for a certain time to a person. It is important, for example, to be able to see beforehand the programming of the smart contract that provides for automatic payment. Likewise, a guarantee in deposit or custody could be foreseen, with the instructions to whom it should be transferred in case of termination of the contract or breach of contract. Or consider the circumstances derived from the “improvements” and investments made in the property.
What seems clear is that there is a need for an approach and introduction to these new markets. Only in this way is it possible to gauge their possible developments and layers of investment. It is important for their understanding, to see new business opportunities and to provide security to the different participants.
Do you have a real estate company, and do you want to use virtual reality tools for your business? Contact Enkronos today.