Virtual Properties, NFT and Metaverse- What Is The Future of the Real Estate Industry?
The real estate market has undoubtedly had its fair share of changes over the last couple of years. From technological shift—real estate professionals embracing what the digital world has to offer, to the unstable real estate markets due to the pandemic.
All of these raised some important questions about what the future of the real estate industry holds.
With the rise of AI and more automated solutions available for buyers and sellers, and real estate market prices at an all-time high, real estate agents wonder how the real estate industry will transform and what will the next shift be?
In this article, we will talk about one of those possibilities. The possibility that doesn’t seem so far-fetched and already has some foundation.
Let’s dive in.
A New Real Estate Niche Emerging?
This article talked about the most lucrative and profitable real estate niches. What if I tell you, there is another niche on its way to steal the top spot—virtual real estate. Virtual property deals are surging right now and attracting high investment.
In February of this year, a piece of virtual land around nine adjacent blocks sold for 888.5 ether, roughly equal to 1.5 million dollars. It was one of the first huge deals of that kind. The person who purchased it, explained his decision via Twitter:
“… We’re witnessing a historic moment; the rise of digital nations with their own systems of clearly delineated, irrevocable property rights. Axie land has entertainment value, social value, and economic value in the form of future resource flows.”
This deal marked the largest digital land sale in the history of NFT and there have been more since then.
The digital land selling that seemed so far-fetched and far from the real estate industry is slowly spilling into the physical real estate industry. For example, Republic Real Estate—a company that is purchasing physical distressed condos, is now planning to launch an invite-only fund to seek investors interested in buying virtual lands. The plans go as far as purchasing several lands across different metaverses to develop them into virtual hotels, stores, etc.
Real estate agents are also participating in the digital selling of metaverse lands. Shane Dulgeroff for example, put the physical property and its digital replica alongside up for sale. He was asking for 1.4 million worth of Ethereum. Even though Dulgeroff got a 1.1 million offer, he decided to wait for a better deal.
So far, one of the first virtual real estate firms—Metaverse Real Estate, was established by Canadian cryptocurrency entrepreneurs Michael Gord and Jason Cassidy. Metaverse real estate focuses exclusively on selling, renting, and investing in virtual real estate.
As we see, the line between the virtual and physical world is gradually blurring more and more.
Some call it a new land rush— new Wild West. The promise of one day owning a prime digital real estate, when the whole world will go entirely virtual, seems alluring to many consumers. However, there’s no real guarantee that people will be able to access digital real estate lands, which doesn’t stop digital enthusiasts from purchasing virtual lands.
So, Who Are Key Players in the Virtual Real Estate Market?
- Axie Infinity
And many more.
NFT– aka non-fungible token, is a piece of digital content, described as unique and not-interchangeable. Yes, everyone agrees it’s a confusing term. NFT can be a unique digital piece of content that nobody else has, but also you can buy an NFT tweet or YouTube videos that are literally available online. So, what’s the catch here? Why are people spending a crazy amount of money on NFTs?
Well, some can say the allure is just participation in a new trend. Others think this is the future of art collecting. But look at it from a different angle. Even though there are hundreds of different copies of Mona Lisa, once you buy a Mona Lisa, you’re the actual owner. With NFTs, you’re doing the same. You’re buying the rights to own a specific piece of digital content, and no amount or duplication changes that you own it. In the case of digital real estate, your NFT will be a piece of virtual land.
Metaverse– As Zuckerberg said in the Connect keynote, “…the best way to understand the metaverse is to experience it yourself, but it’s a little tough because it doesn’t fully exist yet.” Metaverse promises a more immersive experience of the Internet. Metaverse will become a shared space, where people can do anything and everything.
But unlike the internet, metaverse isn’t infinite, and that’s why people are so keen on buying virtual properties now. Imagine owning land that can become the next Paris or Manhattan in the future.
The Legal Real Estate Issues that Come With NFTing Your Real Estate Property
The NFT and its connection to the real estate industry is uncharted territory. Every country has complex legal procedures that back up real estate transactions, especially in the US.
From one point of view, blockchain technology can help out the real estate industry with title transfer and transactions since the technology ensures that transactions are unique.
It can help resolve some critical issues with property ownership and legal claims.
But at the same time, it raises some very unique questions:
- Is NFT a commodity or security in the US?
- What are the cybersecurity risks that NFT purchase poses?
- What kind of intellectual property rights do you get purchasing NFTs?
- Should the physical real estate transaction rules apply to NFTs and the metaverse virtual real estate transactions?
One thing is apparent, NFT and metaverse are emerging assets that real estate buyers and investors are highly interested in. And the legal framework is just catching up with the high demand.
So, Is There a Future for Real Estate Agents?
That is a one-million-dollar question. Our answer is yes. Maybe the Ready Player One world will become a reality in the future. But that won’t change the need for professionals to help customers purchase or sell the property efficiently. The question is, what kind of properties will the real estate agents be helping out to buy/ sell.