Introduction
Players, at every level of the business, are building their metaverses, somewhere in cyberspace. But why should anyone even “go” there, let alone spending or investing there?
People already spend a huge amount of time and money online, accessing the net from different channels, with different devices, for different services, sharing their online time among different uses and contents, like streaming, playing, browsing or else.
Why should they concentrate all their online time and resources in one single place, huge and appealing as it could be?
The answer is: they won’t.
Facebook/Meta just discovered it, the hard way. In February 2023, the way Zuckerberg publicly launched the new AI projects, de facto implied quietly shutting down their metaverse. But not before spending a whopping 36 billion dollars to set it up and failing, despite an almost unique and unprecedented customer base of some 1.7 billion users.
After all, the “internet” as we use it, is not a server or an online service. Is a just protocol suite, allowing all servers and clients to dialogue. So, what if the real metaverse will not be a “place”, but just a protocol to allow for full interaction among different metaverses?
Every business player will build their own “place” and users will be able to flawlessly move among them, cherry picking what they are most interested in and leaving everything else behind.
So, about Real estate, what could possibly be interesting, in the metaverse(s), for users?
Federico Garaventa
Chair FIBREE Genoa
...Or Will The Metaverse Come To Us?
We can try to classify the relationships between Real Estate and Metaverse in to 3 main categories which could also, roughly, represent the timeline in progress:
- Metaverse as a Virtual Reality (VR) representing real estate assets, as close to reality as possible. Applications are many and diverse but, of course, businesses are already building metaverses mainly to sell their real world assets. Not a new market, but a new tool for the existing market.
- Real Estate and Augmented Reality (AR) integration: while the Metaverse primarily operates as a virtual reality, it is crossing its path with AR.
- Virtual Real Estate in the metaverse. Relying on blockchain technologies, virtual land or property will be bought, sold and developed, creating a new market for virtual assets. A new asset class will be created, with no need for a symmetrical counterpart in the real world.
Let’s see them in details, anticipating the most easily foreseeable applications, by categories:
1 – Metaverse as a virtual representation of reality, a few examples:
- commercial operators will digitally replicate their assets in the metaverse. Customers will log on and step in, to virtually experience the benefits of buying, renting or staying. We are almost there, if not already.
- Online meeting rooms will be offered for renting, to virtually reproduce a whole meeting with people actually sitting at the table, full size. Full Body Tracking VR solutions are already available, for gaming. Online meetings already allow participants less travelling, less wasted time, but FBT and realistic avatars will provide a higher and deeper level of interaction, with better outcomes and higher productivity, enriching digital events with more and deeper contents. So, instead of scheduling a video call, they will apply for a reservation to rent a meeting room, which does not exist in the real world, wear their devices and virtually step into the meeting, sitting at a virtual table. No need to swap screen between slides and participants, anymore, as they will be sitting side by side, watching the slides together.
- Shopping online won’t happen anymore on a website, but virtually stepping into shops, eventually through interaction with the avatars of live sales assistants. Or even virtual ones, once bots and AI will be up to the need (you will never know the difference, anyway).
2 – Metaverse still as a virtual representation of reality, but with Augmented Reality it is possible to deliver a richer and more intense experience to the user. AR overlays digital information and virtual objects onto the real world and the interface devices needed to access AR or metaverse are, partly, the same. The integration of the metaverse and AR could impact the real estate market by enhancing property visualisation, virtual staging and providing more interactive property tours. Real estate professionals and buyers will use AR applications to explore virtual representations of properties before or, even, instead of making physical visits. While visiting a real estate property in the real world, as a prospective buyer, they can touch a door with a finger and nothing will happen. In the metaverse, when touching a door with a finger, the door will show its cross section and stratigraphy by materials, its anti-theft proofing and its alarm connections, its thermal performance, comparing temperatures on its inside and outside. Possibilities are endless and customers will buy into it, happily. Even walls will speak to customers, to sell themselves.
3 – Virtual real estate in the metaverse: companies and individuals will purchase virtual land plots to build their virtual houses or apartments and commercial units in the metaverse. Entailing an investment, it will require a profitable pay back. Main goal will be to monetize virtual experiences, such as virtual stores, venues for entertainment spaces. These virtual real estate markets will have their own dynamics, value assessment, investment and development opportunities. A new asset class, a new market, with no links needed with reality.
Right now, it may sound all a bit on the abstract side of things. But it is not.
And What If We Already Live In It?
To prove the point, I’ll share some personal experience. Many readers can relate, for sure.
Always been a passionate videogamer myself, during the 2008/2010 years I spent most of my gaming time playing World of Warcraft, the father of all MMORPG (massive multiplayers online role playing games). I used to spend hours and hours, every night, playing in the virtual world of Azeroth. I made friends there and, fighting dragons together, we shared a lot of great time together. Our bonds, playing together, grew so strong that, over time, we felt the need to meet in real life. Only to discover that we already knew each other well enough, from our online shared time.
All the travelling across Europe which happened to get in touch with each other, proves that boundaries between virtual and real life relationships are becoming thinner and thinner.
Same goes for boundaries between virtual and real economic values…
When we used to play, we had a meeting place, a (virtual) tavern in the (virtual) city of Dalaran. We often took time off the actual game, to hang together and chill, chatting and having a good time. We still remember those times together in Dalaran. The virtual place was nothing different from the ones on different servers, but that one was “ours”.
We even used to log online, once in a while, not to play but just to meet at our (virtual) place, hang out, share once again old memories, as if we just met in real pub.
Daralan tavern nowadays, almost empty. And yes, the horned one, being “me”
Why am I sharing all these personal memories? Why am I overstressing and repeating the word “together”?
Because, as long as relationships among human beings matter, we were together for real, then and there.
So, what could have been if Blizzard, the game company, could “sell” those “places” to players? Or companies? If the game happened to be blockchain-based, it could be entirely possible, as is now in some of more modern games.
I am pretty sure that, if our Dalaran tavern went for sale right now, even after all these years, we would call us up, bunch together some money and literally race to buy it, before anyone else could. Once owning the “place”, next step would be getting back playing together or scheduling online events among us
The game used to have 14 million active players. What if the company would sell “the” Dalaran Tavern, readdressing all servers on one instance, made unique by the blockchain? How many players could be interested? Once again, we were 14 million users, all playing together with passion. All with memories, time and money online. Quite a market, for some bidding competition.
Or, what if, in those years of World of Warcraft hype, a company could buy the Dalaran Tavern and host the players in their place? What kind of services could they offer, what kind of events, how life in Azeroth could have been richer and a more rewarding experience, if companies had ways to enter that world and entertain people there? And which kind and size of potential customer portfolio could they capture, in Azeroth, to channel them into other businesses of theirs? Already clustered and targeted by itself, moreover.
Opportunities are endless and the potential customer base is worldwide.
Sharing my personal gaming experience is to prove that nothing is abstract, here. People will, and do, invest an already huge amount of time, money, emotions and personal resources in online virtual life.
It is a well-known fact that online activity is mainly community driven and this is why I wanted to mention my gaming experience in a MMORPG, as a real life example.
Now, will these new technologies be neutral, for real estate markets? How will they affect the real-world estate industry?
As long as the metaverse will help real life business to thrive, all will be good. It’s an industry known to be the least liquid market, with a great degree of local diversity, hindered by transactional frictions. So every new tool helping to overcome or mitigate those limits, is welcome and will create value.
But there are negative effects too, not to be underestimated:
- every virtual business meeting will negatively affect the value of a square meter of a real office, somewhere in the world
- every “Dalaran reunion” among oldtime besties, will negatively affect the value of a square meter of a real pub, somewhere in the world
- every online purchase will negatively affect the value of a square meter of a real shop, somewhere in the world.
At the end of the day, the more people will allocate their time and money online, the less they will physically move to real places to spend time and money there, eventually affecting values in real life.
There is more, as we still did not mention the elephant in the room: user interface.
As long as people will have to live the metaverse through a keyboard, a mouse and some flat screens, experience will be quite limited and unsatisfactory. Implementing more sophisticated interfaces will require new hardware on the customer side of the experience, in everyone’s homes. Before more sophisticated interface systems will be widespread, some time will be needed since visors, wearables, omnidirectional VR treadmills require not just money but some space to be used, too. Real life space, in every family’s house. Youtubing for “VR fails” or “oculus fails” will explain more than words can. Private homes will need more dedicated rooms, to set up the environment where to log into the virtual world. The big screen shared smartTV in the living room won’t be enough anymore, as logging into the metaverse and interacting will typically be an individual instance, requiring individual sets and spaces.
Maybe “Internet Café” will become ”Metaverse Café”, for some services, growing in size and developing in bigger businesses. But this will likely be a second-best solution, where money and space aren’t available. Architects and designers will have to change the layout of spaces we live in. So, growing virtual spaces online will involve the shrinking of real square metres somewhere but require more space elsewhere. Values will follow the trend. Right now, it’s not an easy task to guess what, when, where and how much.
Conclusion
What’s for sure, is that the virtual, digital side of the relationship is able to react and adapt immediately to the needs of new markets. Quite the opposite, the existing stock of real buildings will not be able to follow on the same schedule. This will, soon enough, create some form of imbalance, where reality will struggle to match the quickly changing requirements of virtuality. As professionals of the industry, our mission will be to help business players to anticipate the new paradigm.