And you thought Boston house prices were high. What about properties in the metaverse?

Welcome to the new world, where there is physical real estate So last century and virtual land swap transactions are carried out in cryptocurrency instead of dollars. The idea behind the metaverse is that this will eventually be the next phase of the internet, where people will socialize and do business virtually and need better places than Zoom.

Still confused? Just ask your kids to explain the game platforms Fortnite and Robloxa kind of virtual reality that the universe has already taken over, er, metavers.

But if metaverse real estate ever gains traction with the wider public, how can one even praise it?

In real life, Boston is a very expensive real estate market, largely because of the scarcity of available housing. But the metaverse could theoretically never see a housing shortage if you could just keep coding more space.

“Scarcity has been the most important factor in determining the price of land over time,” said James Scott, director of the MIT/CRE Real Estate Technology Initiative. “Does that scarcity exist in the metavers? Or is it just the illusion of scarcity? Regulations and policies will need to be more clearly defined and implemented before this scarcity becomes a reality.”

It seems that the illusion of scarcity is already driving up sales volume, even though the metaverse is still some way off of a product for everyday users. Today, it’s akin to a digital frontier where early operators run on a modern version of “Go West, young man.”

Selling real estate on the four major metaverse platforms (sandboxDecentrallandVoxelsand Somnium spacea total of $501 million in 2021, according to MetaMetric Solutions. Prior to the crypto crash of the past few weeks, sales were predicted to exceed $1 billion this year.

Perhaps the best-known example of increasing focus on the metaverse arrived last year when Facebook rebranded its parent company as Meta, signaling where future resources would largely be concentrated.

But a lot of these are vague, big things. How big is this going to get, and how many Bostonians will really care? There are only so many lots of e-land for sale next to a hypothetical virtual Tom Brady mansion.

“The buyers of these things are mostly crypto speculators,” said Janine Yorio, CEO of Everywhere, a metaverse real estate investor and consultancy. “The price of Metaverse real estate ranges from about $500 per lot to as much as $10,000 per lot. So while it’s expensive, it’s still very feasible for the vast majority of people who have an interest in doing this sort of thing. do – so there are individual buyers as well as larger corporate entities.”

The pool of buyers is also often small: a report earlier this year by Everyrealm discovered that only 25,000 crypto wallets held metaverse real estate.

“While there are many different entities that hold the asset class, it is actually concentrated in the hands of a very small number of people and companies,” Yorio said.

Of course, a lot has happened in the economy since many of the metaverse real estate sales agreements happened earlier this year. Experiencing the Overall Cryptocurrency Market a write-off of approximately $2 trillion between last November and early June, Bloomberg reported.

But not everyone is sounding a warning siren for the metaverse just because a huge source of funding collapsed.

“While the crypto market crash is certainly not a good thing for the market as a whole, we believe that in the long run the metaverse is very independent of crypto as it is more about social media, video games and new media outlet than it is.” on crypto speculation,” Yorio said.

So what are the nuts and bolts of buying virtual real estate? Transactions usually involve cryptocurrencies linked to one of the leading metaverse platforms. For example, MANA cryptocurrency is used to buy real estate on Decentraland.

A potential buyer could make an offer on any land listed on Decentraland’s marketplace. When a seller accepts a bid, the purchase is registered through a nonfungible token (better known as an NFT). Buyers need a digital wallet that can hold NFTs to store the ownership record. †MetaMask is a popular digital wallet.)

But some analysts warn that it may be too early for the average investor to make important choices for business or personal real estate investments in the metaverse.

“If you talk to a number of people in the real estate world, especially on the [venture capital] side, who are generally on the high side of finance when it comes to this investment element, would say themselves that it is too early to make major investments in the area,” said Scott, of the Real Estate Technology Initiative at MIT. “The technology, regulation and understanding are not there yet to see this as a true value investment.”

Long story short: the average Bostonian probably isn’t thinking about a metaverse land grab instead of buying a house in the suburbs.

“There are too many unknowns to overcome as to what role real estate plays in the metaverse right now,” Scott said. “But there is no doubt [that] social interaction, collaboration, retail and individual experience will lead the movement towards adoption of this innovation.”

Yorio urges caution before budding investors even consider making a deal for real estate in the metaverse.

“It is ultimately an early stage venture investment built on top of a crypto layer,” she said. “It is both very risky and highly volatile and while there may be the possibility at some point in the future to generate recurring income in the form of a rental or similar or other form of income, it is a fact that it is a very volatile, very risky investment, and in that way it is nothing like real world real estate.”

The real estate metaverse game is certainly long, but experts say it’s a generation too.

“Think about how much time kids play on Roblox, and they’ll expect to live in these virtual worlds,” said Jake Steinerman, head of community at the cultural metaverse platform. Spatial† †[They] spend so much money on their virtual clothes [and] on worlds they are building. They spend an insane amount of money.”

The days of building with a completely fictional wallet on Sim City? We barely knew you – but maybe not dismiss the metaverse as a viable place to do real estate transactions sometime in the future.

Cameron Sperance can be reached at: [email protected]† Subscribe to Globe’s free real estate newsletter – our weekly digest on buying, selling and designing – at pages.email.bostonglobe.com/AddressSignUp† follow us on twitter @GlobeHomes

Leave a Comment

Your email address will not be published.