Catella shares the five questions you should ask yourself before investing in real estate on the metaverse

  1. What is metaverse?

In 1992, Neil Stephenson coined the term “metaverse,” a contraction of “meta” – “beyond” in ancient Greek – and “universe”, a universe beyond the real world. A virtual, immersive and 3D world in which we can travel, interact, consume and invest…

The experience is not new. In 2003, Second Life opened the way to a parallel virtual world. Since then, other virtual worlds, mainly games like Minecraft, Fortnite, The Sims or Clash of Clans, have democratized the experience to a great extent. Today, spurred by the maturity of technology, the metaverse is taking shape.

  1. Metaverse, for whom, for what?

Lots of people are interested in this new playing field: from celebrities – Paris Hilton, Bubba and James – to tech investors including Mark Zuckerberg, who renamed his company Meta. Brands too: Ubisoft, Warner Music, Adidas, Gucci, Carrefour, Axa… There are no fewer than 170 brands present on The Sandbox, attracted by the opportunity for innovative marketing operations, new revenue potential, or more . At the heart of an emerging trend.

So what about the virtual real estate market? Some universes such as The Sandbox, Decentraland, Somnium Space, Worldwide Webb, and Cryptovoxels, are more specifically suitable for real estate investment. Whether it is selling or renting land, buildings, shops, malls or art galleries, the possibilities are similar to the real world. We can imagine the benefit of investing as we can buy, build, rent and resell our virtual property.

In the Golden Triangle by some measures, prices are already in the millions. The first record is in The Sandbox, where Republic Realm, an American real estate company, acquired land in December 2021 for US$4.3 million (€3.8 million). The value of real estate around Snoop Dogg’s “mansion” is estimated at 458,000 US dollars (404 thousand euros). Another speculative maneuver, the hypothetical New York Stock Exchange sold $23,000 (€22,500) to an investor attracted by potential capital gains.

  1. How to invest in metaverse?

The digital economy is mainly based on three technologies:

  • Cryptocurrencies, digital currencies that allow the purchase of goods or services. Their encryption ensures the security of the transaction, and its operation, particularly on the basis of the blockchain, ensures independence from financial institutions.
  • Blockchain is an independent, transparent and secure information storage, transmission and sharing technology.
  • NFTs (non-fungible token), non-fungible tokens, that is, a unique and non-exchangeable digital asset, such as artwork, whose market value fluctuates.

Once a wallet (“wallet”) of cryptocurrency is formed thanks to specialized platforms, land or virtual plots can be purchased via the NFT system. These “certified” digital lands, because they are registered on the blockchain in the form of unique crypto tokens, grant an inalienable right of ownership.

  1. Investing in virtual real estate, is it profitable?

As in the real world, the value of land is related to its location and rarity. Currently, the supply of plots for Decentraland and Sandbox metaverses is limited, 90,000 for Decentraland, and about 160,000 for Sandbox. Depending on their success, their numbers could increase. Logically, the stronger the demand, the higher the prices. The closer the plots of land are to centers of attraction, big brands or celebrities, the more expensive those plots are, opening the way for speculation.

Another criterion to consider: the attractiveness of the metaverse itself. Depending on the coast, the value of the property can increase or decrease. Today, it is almost impossible to predict the future of this new technology, which is still largely in the experimental stage. The sustainability of metering devices will depend on the quality of experiences brands will deliver, their ability to create and retain users and the revenue they will generate.

  1. Metaverse, eldorado or mirage?

If real estate investing in the metaverse sounds attractive, like any virtual space, it raises a lot of uncertainty. The evolution of the price of a hypothetical property offers no guarantee and can lose all of its value quickly. In the face of the current rise in prices, some investors are warning of the risks of losses that may result from a speculative bubble, such as that which occurred in the first decade of the twenty-first century.

So, in the meantime, investing in a “real” stone remains one of the safest and most profitable!

About Katila Residential:

Founded in 2002 by Claude Cayla, Catella Residential is a consulting and marketing firm dedicated to old and new residential properties for living or investment.

Historically the leading marketer in Ile-de-France, Catella Residential covers the entire residential market through its various activities:

  • Group selling on behalf of institutional investors and the private sector,
  • Lot by Lot sales thanks to its extensive network of trading agents and wealth management advisors,
  • Selling on nude property with turnkey service for designing, assembling and marketing properties in the shredder.

Catella radiates throughout France and develops in the PACA region thanks to its establishment in Nice.

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