The real estate industry has recently experienced a spark in interest for metaverse. And it can really benefit immensely from the metaverse. From breaking ground on the construction of a new home to its reselling years later, the metaverse can have a major impact on the real estate sector.
After Facebook’s announced that it was rebranding as Meta in October 2021, real estate sales in the metaverse surged nearly ninefold, to $133 million in November, which marks an ever more increasing interest for the new technology. A new report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31 percent a year from 2022 to 2028.
The potential impact the metaverse technology can have on the real estate market, was stated again during the Dubai Metaverse Assembly. Speakers stated that real estate developers stand to be among the biggest beneficiaries of the metaverse, putting a particular emphasis on digital twins of their properties that are seen to help drive marketing and sales.
A recent global survey conducted by consultancy Accenture, stated that 71 percent of respondents see shifting to the metaverse as having a positive business impact.
There is a whole collection of use cases for real estate in the metaverse; it’s a very interesting space. It’s an addition to what they’re already doing in the real world, adding new ways to engage their customers in the real world,
says Guy Parsonage, metaverse lead at PwC.
This year only, Dubai has experienced a rapid surge in new offers in the metaverse from real estate developers. Dubai property brokerage Union Square House said in April that it planned to sell the region's first “metaverse mansions”, where buyers can own a non-fungible token with and without the bricks and mortar asset.
At that time, Gaurav Aidasani, Managing Director of Union Square House, said that a number of lenders already started offering mortgages to support customers in buying virtual properties.
The same month, Damac Group, one of the biggest developers in Dubai announced plans to invest $100 million to build "digital cities" in the metaverse.
Over the past two years we have been aggressively driving our digitisation efforts, and this new initiative into the metaverse will only further leverage our digital footprint,
said Damac General Manager Ali Sajwani.
At the Dubai Metaverse Assembly in September, Sajwani added that digital twins of the properties can push sales.
It can also give them [customers] an idea of what the future looks like in real estate
Different government agencies are now also establishing their presence in the metaverse. This is the case of VARA – Dubai’s Virtual Asset Regulatory Authority. VARA MetaHQ serves as the primary channel for engaging Virtual Assets Service Providers to initiate applications, enable young licensees to enter the Metaverse, share knowledge with consumers and similar regulators.
Police officers are also keen to explore the new virtual world. Ajman, another UAE emirate located close to Dubai, launched a project to establish police's presence in the Metaverse. The Ajman Police General Command's initiative aims to involve customers and stakeholders in developing services and gathering opinions, suggestions and comments to improve and develop the services provided. Meetings with customers will take place through a virtual reality platform that connects them with police officers without the need to be present at the police station in person.
Governments can establish virtual embassies there, as, for instance, for small countries it can be costly to build overseas facilities, and a virtual equivalent can instead serve the purpose.
Apart from adding new channels for communication with customers and promoting real world real estate, some companies have already started selling parcels of land in the metaverse itself. Here Dubai has a long way to go, since the market has been concentrated on the “Big Four” — Sandbox, Decentraland, Cryptovoxels and Somnium.
However, there are some voices that doubt that one can benefit from owning land in the metaverse.
Firstly, some experts say that the Metaverse is still under development, and there is no guarantee that it will ever become commercially successful on a large scale.
Secondly, it is doubtful the virtual land can have any value in the long term. While physical land is finite, which is fundamental to its value, virtual land can be created indefinitely with code. That means there’s no limit to the number of new Metaverse platforms that can be launched. People buy physical real estate because they need a place to live or work; there is no need to stake a claim in cyberspace, and if the trend fizzles, or if there is an economic downturn, demand for digital real estate could dry up.