Shopping used to be a straightforward yet tedious process – you go to a shop to look for what you want to buy, select the items you want and put them in your bag, pay for your items at the cash counter, and then go home. The internet and digital connectivity have shortened that entire process to the click of just a few buttons (or a few taps on the screen, in most cases nowadays) so you can buy groceries, meals, and anything else you want without even getting off the couch. But that’s just the first step in a digital metamorphosis – after all, why stop at physical products when you can buy digital assets too?
The metaverse is an idea that has been around for decades and has taken on new life in the 21st century when the world is smaller than ever. With the rise of cryptocurrency and more recently, NFTs, the present-day marketplace offers a mix of real and virtual products that can be purchased using real and virtual money. The next frontier in the metaverse? Virtual real estate, formerly relegated to the fantasy realm of video games, is now proving to be an incredible reality across the world. And now the metaverse is extending its reach into the Middle East courtesy of LuxuryProperty.com New York, one of the North American outposts of Dubai-based brokerage LuxuryProperty.com.
Mark Castley, who is overseeing operations across the New York office, wants to take the regional real estate market to the next level. “There are several different factors at play here that I think can come together perfectly,” says Mark. “Real estate activity across key areas of the world is following an upward curve, and demand for property is at its highest levels at present. We can also see growth in cryptocurrencies and digital assets – once considered fads, they are now just as valid in a transaction as a credit card or wire transfer.”
The idea of owning an asset that doesn’t physically exist may seem outlandish but, as many technology experts will tell you, even the idea of using your phone as an all-in-one tool for managing your daily life was viewed as absurd once. Metaverse real estate really caught on as a concept in 2020 when the entire world was shut off from itself and trying to navigate borders that were only 2 metres wide. Being unable to go out much in real life, many people turned to virtual words to satisfy their wanderlust. Then last year, Facebook rebranded itself to ‘Meta’ and effectively launched its own metaverse, giving the whole idea a new sense of legitimacy. The result was the blossoming of a niche market into something that is very nearly rubbing shoulders with the mainstream.
Several North American brokerages that deal exclusively in the metaverse have seen prices rise by 400 to 500% in late 2021. Grayscale, a leading manager of virtual assets, estimates that the digital market could be worth $1 trillion in the near future. It is the next stage in a grand vision that blurs the lines between the physical and the digital, creating a world that is interconnected in more ways than one.
“This is very much an emerging sector of the market, and one that we need to capture in its early stages,” says Riccardo Scala, who will be taking the lead on metaverse transactions for LuxuryProperty.com New York. “Virtual real estate has the potential to be huge, and any brokerage that understands that space and knows how to operate in it will open themselves up to a significant additional revenue stream. We are currently accepting expressions of interest for luxury real estate in the metaverse and are aiming to build up that side of the company over the course of this year.”
Could digital real estate be sold in Dubai some day? “The possibility is definitely there,” says Mark. “The UAE has always looked to the future and to be on the cutting edge of new technologies – there is significant investment going into developing robust blockchain infrastructure and enhancing AI capabilities. I believe that one day we could be looking at virtual Palm Jumeirah villas being sold in the metaverse, and awards being handed out for Best Broker in Virtual Sales, but the necessary legal and judicial frameworks will need to be established first. We might not see it happen for a few years yet.”
The metaverse is on a fast track to growth, but investors in this arena need to watch their step carefully. Virtual assets are volatile and subject to a lot of speculation, a fact that is underscored by the steep ups and down of cryptocurrencies like Bitcoin and Ethereum. “Any investment comes with a certain level of risk, and virtual real estate is no exception. In fact, the risks are higher because of the nature of this market. You need to be absolutely sure that this is something you want to invest in,” says Riccardo. In many ways the risk factor can be seen as a positive as it will ensure, in the short term at least, that only the most serious and well-informed buyers are going to go this route.
© Press Release 2022
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