Will metaverse change the face of commercial realty?
By Aryaman Vir
Technology has been the cornerstone for millennials around which our world is getting shaped. Almost everything we do in our daily lives has evolved with the integration and adoption of new technologies. Google maps has transformed the way we commute; zoom has changed the definition of a meeting; Amazon instigated a new paradigm shift in consumer shopping and there are many other such examples. The way we interact and engage with the real world is dynamically and constantly changing! Astute businesses and industries are able to pre-empt and adopt such technologies enabling them to change the prevailing status-quo.
Similarly, the world of commercial realty is also a space where technology can play a key role in boosting the sector. Although, if we consider the early past, commercial real estate has maintained a lag in technological innovations and adoption as compared to many other sectors which vastly benefited from it. In the past two years, this scenario has changed rapidly. It is often said that periods of adversity fosters innovation and the same could not be truer for the real estate sector in India! Key players in the sector have rapidly transitioned their approach to a more tech and digital oriented one – enabling them to differentiate themselves and successfully navigate through the pandemic. This has paved the way for a new era of proptech solutions with a potential to change the landscape of the industry. We have already seen proptech data platforms, VR based virtual tours, fractional ownership, and many other innovative solutions gain significant market adoption and acceptance. Now with the evolution of Metaverse and Web 3.0, and its vast applicability to the real estate sector, the technology could be a game changer!
One interesting aspect of commercial realty in the virtual space is that with the help of AR and VR tech, the players in this field are able to showcase the available properties to potential investors in a digital world. This particular shift in the trend can be attributed to the fatal Covid-19 pandemic that changed the whole world in the past 2 years. Covid-19 is also the primary reason behind the accelerated adoption of technological innovations even in sectors that were traditionally more physical in nature, just like the real estate space.
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The evolution of the Metaverse is responsible for a rather peculiar shift in the trend that might be a bit difficult to understand for many of us. Now digital properties are being designed, built and sold to investors in the virtual world. Decentraland is one such platform that offers around 90,000 plots of land that measure 16 meters by 16 meters in the virtual world of Metaverse. There are other organizations like Sotheby’s that have purchased land and created a digital auction house to sell goods in the virtual world. Apart from these, there are other digital platforms that even sell virtual versions of real-life properties. For instance, a platform known as SuperWorld allows potential investors to buy land including real landmarks, or even their childhood homes in the Metaverse.
Yes, it is difficult to comprehend the logic behind assigning values to things that demand real-time wealth to purchase that are still very much artificial in nature. But, one should consider the fact that the valuation of such virtual properties arises due to the millennial’s psyche of imparting equal value to virtual interactions, the same as in-person interactions. For this tech-savvy generation, a property in the virtual world might mean as important as any other property in real-life.
Due to the above-mentioned factor, even the digitally rendered properties built in the Metaverse are becoming valuable. This is supported by the fact that real estate sales on the four major Metaverse platforms touched $501 million in 2021, according to MetaMetric Solutions. This figure might double this year and reach up to nearly $1 billion, according to projections made by investors and analytics firms. Another report by BrandEssence Market Research suggests that the real estate market in the Metaverse is expected to grow at a compound annual rate of 31% a year from 2022 to 2028.
Despite all these positive indicators, there are still many industry experts who are wary of this trend. Many believe that Metaverse is still far from being fool-proof and may turn out to be just a fad with no substantial wealth opportunities. Many feel that just because there is a rush and everyone seems to be mesmerized by this new avenue of investment, a lot of unaware investors are getting lured into buying these projects which may eventually turn out to be a waste of resources. The main reason why such suspicions arise is because of the fact that the availability of real land is limited, whereas virtual land can easily be created with code and that too without the limitations of availability of land in the real-life. In essence, one can potentially build an infinite number of spaces in the Metaverse.
The Metaverse may find its footing in our world and become more comprehensible as a real estate concept for investors, or it may turn out to be a true disaster, this only time can tell. But whatever the outcome might be, there will surely be a learning curve that will teach us a lot about human behavior and our consumption patterns in this new world order. It is only a matter of time till the truth reveals itself, but till then, industry experts will have to keep a close eye on every development in this space as it will be important to learn from this experiment in the future.
(The author is founder and CEO of MYRE Capital. Views expressed above are those of the author and not necessarily of financialexpress.com)