Will the metaverse change the face of commercial real estate?

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By Aryaman Vir

Technology has been the cornerstone of Generation Y around which our world is 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 get around; zoom has changed the definition of a meeting; Amazon has initiated a new paradigm shift in consumer shopping and there are many more such examples. The way we relate and interact with the real world is dynamically and constantly changing! Smart businesses and industries are able to anticipate and adopt these technologies, enabling them to change the prevailing status quo.

Likewise, the world of commercial real estate is also a space where technology can play a key role in boosting the sector. Although, looking at the ancient past, commercial real estate has maintained a lag in technological innovations and adoption compared to many other sectors which have benefited greatly from it. Over the past two years, this scenario has changed rapidly. It is often said that times of adversity foster innovation and the same goes for the real estate sector in India! The main players in the sector have quickly evolved their approach towards a more technological and digital approach, allowing them to differentiate themselves and successfully navigate through the pandemic. This has ushered in a new era of proptech solutions that could 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 wide applicability to the real estate industry, the technology could be a game changer!

An interesting aspect of commercial real estate in the virtual space is that with the help of AR and VR technology, players in this field are able to present available properties to potential investors in a digital world. This particular trend change can be attributed to the deadly Covid-19 pandemic that has changed the entire world over the past 2 years. Covid-19 is also the main reason for the accelerated adoption of technological innovations, even in sectors that have traditionally been more physical in nature, such as the real estate space.

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The evolution of the metaverse is responsible for a rather peculiar trend shift that might be a bit difficult for many of us to understand. Now digital properties are designed, built and sold to investors in the virtual world. Decentraland is one such platform that offers approximately 90,000 plots of land measuring 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 property in the virtual world. Apart from these, there are other digital platforms that even sell virtual versions of real properties. For example, a platform known as SuperWorld allows potential investors to purchase land featuring real landmarks, or even their childhood homes in the metaverse.

Yes, it’s hard to understand the logic behind assigning values ​​to things that require real-time wealth to buy and are still very artificial in nature. But, consider the fact that the valuation of these virtual properties stems from the millennial psyche that places equal value on virtual interactions, in the same way as in-person interactions. For this tech-savvy generation, a property in the virtual world can be as important as any property in real life.

Due to the factor mentioned above, even digitally rendered properties built in the metaverse become valuable. This is supported by the fact that real estate sales on the four major Metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions. That figure could double this year to nearly $1 billion, according to projections by investors and analyst firms. Another report from BrandEssence Market Research suggests that the real estate market in the Metaverse is expected to grow at a compound annual rate of 31% per year from 2022 to 2028.

Despite all these positive indicators, many industry experts are still wary of this trend. Many believe that Metaverse is still far from foolproof and may turn out to be just a fad without substantial wealth opportunities. Many believe that just because there is a rush and everyone seems fascinated by this new avenue of investment, many unknowing investors are lured into buying these projects which could eventually turn out to be a waste of money. resources. The main reason why such suspicions arise is because the availability of real land is limited, while virtual land can easily be created with code and that too without the limitations of land availability in real life. Essentially, one can potentially build an infinite number of spaces in the metaverse.

The Metaverse can find its way into our world and become more understandable as a real estate concept for investors, or it can turn out to be a real disaster, only time can tell. But whatever the outcome, 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’s only a matter of time before the truth comes to light, but until then, industry experts will need to closely monitor every development in this space as it will be important to learn from this experience to the future.

(The author is founder and CEO of MYRE Capital. The opinions expressed above are those of the author and not necessarily of financialexpress.com)

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