“Real” Estate in the Metaverse
Randy Gilbert, J.D.
Chief Happiness Officer
Florida’s Title Insurance Company
(954) 500-Title (8485)
What is the Metaverse? The Metaverse is the next version of the internet. Interest in metaverses skyrocketed when Mark Zuckerberg announced Facebook is changing its name to Meta, and spending $10 billion developing its own metaverse. We have gone from desktops to laptops, tablets to cellphones, and now to VR headsets and glasses. We have also evolved from texting words and emojis, to uploading photos and .gifs, streaming video, and now we can enter virtual worlds surrounding ourselves with augmented realities. The metaverse is a Tron like technology. A digital world literally built around people.
The metaverse’s allure is that it allows users to live inside a mirage, which is completely surreal. Offering an out-of-body, mind-altering false sense of being physically present inside a digitally created alternate universe – a Metaverse. In the three-dimensional (3D) metaverse, users can virtually: walk around and explore, meet other users, work, learn, shop, create, socialize, entertain, game, collaborate, team build, relax, meditate, travel, chill out, and play. In fact, until now, the most common use for the metaverse was gaming like Fortnite and Minecraft.
Property in the Metaverse. Say Beatlejuice 3x and you may summon a trickster ghost from the netherworld. But if you say, “Location, Location, Location” you may accidentally transport yourself into the three-dimensional (3D) metaverse.
In this virtual world akin to MTV’s ’“Cribs,” users can adorn VR glasses and instantaneously teleport inside a palatially immaculate, virtually decorated, dream home-space. Graphically design your meta-mansion in any style you like; contemporary, modern, farm, colonial, medieval, the sky is the limit. Decorate your virtual mansion with photorealistic and lifelike recreations of priceless art, designer furniture, flooring, tapestries, fireplace, landscapes, water features, and any ornamental accessory your heart desires. Set your view to overlook mountains out of one window, a cityscape out the other, and the fantasy of sunsetting ocean view elsewhere. The opportunity for embellishment and extravagance is boundless.
Put up family pictures and videos. Invite friends over from Dubai, Chicago, England, Singapore, to play games, hang out, have a business meeting, or just watch a movie.
How to Access the Metaverse? There is no single app named the Metaverse that can be opened. Unlike the internet the Metaverse (or stated more accurately, “a metaverse”) is/are not interconnected. The Metaverse is actually different digitally created universes, currently existing on only a handful of platforms, some of which you will need special VR headsets to use.
Where to Buy Property in the Metaverse? People can buy, sell, develop, and lease virtual property on platforms such as: CryptoVoxels, Decentraland, Mirandus, Sandbox, Somnium Space, and Upland. Facebook plans to launch Horizon Homes as their virtual properties, marketing them as a custom social space.
Why Buy in Property in the Metaverse? Digital real estate can serve a variety of purposes, from retail showrooms, to event spaces, homes, and virtual offices. Luxury brands such as Louis Vuitton, Gucci and Burberry have already entered the metaverse through designer NFTs.
Toronto based Tokens.com, bought an estate in Decentraland in November for 618,000 MANA, the equivalent of $2,428,740.00 (i.e. $3.58 per MANA at the time). Crypto is highly volatile, so as of the date of this article the price of MANA was down more than $1.00 since the purchase. The purchase of that property was made up of 116 smaller parcels, measuring 52.5 square feet each, making 6,090 virtual square feet in size. The space is in the “Fashion Street” area of Decentraland’s map and Tokens.com said it would be used to host digital fashion events and sell virtual clothing for avatars. That’s right, people pay real money for virtual clothes. Virtual possessions generate real sales in the “metaverse.” Decentraland also has a shopping mall called Metajuku, and the Ice Poker Casino where users can gamble.
Shortly thereafter, Republic Realm bought a plot in Sandbox for the equivalent of $4.3M using the cryptocurrency SAND, from Atari SA, marking the biggest metaverse property sale. In the last week of November 2021, $70.6 Million in sales closed 4,400 metaverse properties. Luxury realtors Tal and Oren Alexander, reported to The Real Deal that they were partnering with Republic Realm to build “architecturally significant master-planned community that will span at least three of the virtual worlds.” And what metaverse property in Sandbox would be complete without a virtual mega yacht? That’s right, the MetaFlower virtual mega yacht sold for the equivalent of $650,000.
Metaverse Group, has a significant portfolio of digital real estate, and plans to spin off its holdings as the first Metaverse REIT.
Emcee Studios announced plans to acquire a 1.2M Sq. Ft. building in L.A., intending to hire tens of thousands of creators and innovators as part of the largest metaverse hub in the world.
Miami based venture capital firm CloudTree Ventures, which assembled in late 2021, foresees the crossover of technology used in gaming as the driving future for industries within the metaverse.
Commercial Branding in the Metaverse. As mentioned earlier, shopping centers are being built inside of the metaverses. JPMorgan opened a lounge inside Decentraland. Walmart, Adidas, Nike, Gucci, Disney and Warner Music, among others, plan to develop virtual storefronts, offices, and entertainment venues.
Metaverse for schools and education. Locally, the David Posnack JCC in Davie, Florida recently did a groundbreaking on its “George Gottlieb Holocaust & Jewish Education Program.” Visitors can walk through Anne Frank and her family’s hiding place in VR, just as if they were really there in Amsterdam.
Is the Metaverse a Fad? It’s hard to tell yet whether the metaverse will bubble like the dot.coms or start an entirely whole new asset class. The global pandemic fueled interest in the metaverse. When people were sheltered in lockdown, they began looking for alternate realities. But as COVID-19 cases downswing, and public and gathering spaces become fully accessible, the need for meeting within metaverses as opposed to physically becomes less necessary. But then again, IRL (short for “In Real Life”) there is a paucity of raw land, which is a limitation the metaverse does not have. Digital land sales overall surpassed $500 million in January 2022. Younger generations are not just gaming in the metaverse, but also living in it to an extent. And if that is not enough, corporate titans like Facebook, actually changed their name to Meta, and with billions at stake, are betting heavily on the metaverse.
How do You Buy Property in the Metaverse. Land and other items in your chosen metaverse are purchased typically with cryptocurrency. Some metaverses have their own crypto currency. Decentraland are sold in the form of non-fungible tokens (NFTs), a kind of crypto asset. Crypto enthusiasts buy land there as a speculative investment, using Decentraland’s cryptocurrency, MANA.
Valuing Property in the Metaverse. Similar to an appraisal users are advised to compare values of other like kind properties, look at statistics such as monthly active-user lists, see whether the company that launched the metaverse where the property is located had prior success in the video gaming or other platforms.
Are there Real Estate Companies in the Metaverse? Metaverse Properties purports to be the first virtual real estate company, offering to help consumers: buy, sell, and even lease properties on different metaverse platforms; develop virtual properties; manage properties; consult, and market metaverse properties.
Are Real Estate License Required to Buy, Sell, or Lease “Space” in the Metaverse? Probably not. Florida Statute §475.01(1)(i) defines “‘Real property’ or ‘real estate’ as any interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, subleasehold, or mineral right; however, the term does not include any cemetery lot or right of burial in any cemetery; nor does the term include the renting of a mobile home lot or recreational vehicle lot in a mobile home park or travel park.’”
Using the Metaverse to Marketing “Real” Properties. To entice buyers, developers are reportedly offering to build customers both a luxury home in Miami and a twinning digital replica on the metaverse. The idea being buyers could maintain a normal life at home and then while traveling have a digital version in the metaverse to host virtual gatherings from around the world.
Avatars in the Metaverse. Also, it bears mentioning, that the first thing you need to do before stepping into a Metaverse is to create your own avatar. Instead of static profile pictures, people represent themselves in the Metaverse using a wardrobe of avatar skins. Currently the avatars look cartoonish. But just like shopping in real life, you can customize your outfits, sneakers, style your hair, buy wigs, wear contacts to change your eye color, and even accessorizing. Imagine digital Nikes and a Gucci Jacket. People care what their avatars are wearing reported Reuters which produced a video of various wearables, and identified a virtual kimono vendor as making around $5K a week. Avatars are digital figurines used to represent yourself physical form in a metaphysical universe. Moreover, it is likely users will have more than one avatar. Using realistic looking avatars for work, a stylized avatars for socializing with friends, and a fantasy avatars for gaming. But significant developments are in the works to make Codec Avatars. Codec Avatars are a recent class of learned, photorealistic face models that accurately represent the geometry and texture of a person in 3D (i.e., for virtual reality), and are so indistinguishable from video that security measures are also being developed to prevent identity theft.
Conclusion. The metaverse is a revolutionary evolutionary three-dimensional virtual world for social platforms and connections. An ability to instantly, and digitally, float into a utopian society, to feel physically present in your own Shangri-La, or retreat and hangout with family and friends in a shared sense of space, regardless of how far apart they really are. A fully immersive out-of-body embodiment inside the internet. Currently, the technology seems a bit weak, with floating pixelated cartoony looking avatars but there is no doubt that will soon change once Facebook delivers on its promise of photorealism.
DISCLAIMER: Topics discussed are general concepts, not intended to constitute legal advice, accuracy, nor completeness, and may not be relied upon as such; consult an attorney or accountant. The author Randy Gilbert, J.D. is neither an attorney nor an accountant. FTIC is a national award winning title insurance company known for its white glove customer service and “No Junk Fee Guarantee.” ®