Real estate in the metaverse: is it worth investing?

[AVIS D’EXPERT] Many companies are rushing to buy land in the Metaverse. Opportunity for retail investors? Transcript by our expert Bassel Abedi, founder of Horiz.io (ex-Rendementlocatif.com).

Immersive 3D virtual worlds, the metaverse or “metaverse” in English, are starting to make a lot of noise. Thus, this new technological tool is of interest to the largest investors, especially in real estate.

But should we really invest in the metaverse? Does this digital revolution represent the future of next generations? We will explain everything to you.

All About the Metaverse

Metaverse, what is it?

The Metaverse has been around for years. The Metaverse allows you to access a parallel virtual world and develop in it with the help of a personalized avatar. Thus, inside you can move, interact with other avatars and live there, as in the real world. To make the experience as close to reality and as immersive as possible, there are now digital virtual reality helmets, special suits or even gloves to feel the touch.

If that means something to you, that’s fine! Some filmmakers or writers have already explored the concept of a metaverse.

A bit of history

It all started in 1992. Neil Stevenson coined the term metaverse to describe a parallel world accessible through a helmet in his science fiction novel Virtual Samurai. The action takes place in a futuristic universe called cyberpunk.

In 1999, Lana Wachowski and Lilly Wachowski took on the job, writing the script for The Matrix saga and its cyberspace explored by protagonist Neo.

But it was Steven Spielberg who, in 2018 with his film Ready Player One, developed the concept of the metaverse. It develops the OASIS metaverse in which its protagonist, Wade Watts, becomes the hero of a parallel digital world thanks to a digital headset.

The largest companies launch the metaverse

The Metaverse no longer exists only in movies. Now you can get there thanks to a virtual reality headset from different games or applications that allow you to enter this virtual world, such as The Sandbox, VRChat, Rec Room, Horizon Worlds…

Thus, this digital revolution is attracting big brands that are already positioning themselves on it and investing heavily. The Metaverse market is currently worth about $46 billion in 2020, according to Strategy Analytics. Its market valuation by 2025? 280 billion dollars…

The Meta group, formerly known as Facebook, has also invested heavily in the development of the metaverse. But it’s not the only one! Epic Games (Fortnite) has raised $2 billion from Sony and Lego to build the metaverse. Many big brands have also entered the metaverse: Nike, L’Oréal, Disney, Gucci, Puma, Apple, McDonald’s, Carrefour or even Microsoft.

Each brand has invested in this technology, choosing one of the virtual worlds that can bring them the most opportunities depending on their purpose: travel, work, health, real estate, education…

Real estate in the metaverse, a good investment?

Everything is possible in these new virtual worlds. Many people (individuals or professionals) buy land or real estate in the metaverses. Some even spend several million dollars on one piece of land…

Carrefour and Adidas, for example, have already bought a lot of land in the sandbox metaverse (a real estate game where you can build, monetize, and own the game’s virtual assets).

Thus, the French retailer Carrefour bought a huge plot of land allowing the opening of about 30 supermarkets. Meanwhile, Adidas bought the land for $1.7 million.

If the strategies of these big companies are to be believed, they have real potential, and we must quickly position ourselves in the metaverse sector. Indeed, this technology, hitherto unknown to the general public, is in its infancy and in its infancy. Thus, by investing in metaverse real estate now, it would theoretically be possible to acquire land and real estate at a low price.

Of course, the owners don’t live in the metaverse. However, their virtual acquisition has its benefits: real estate can be rented for virtual events such as an art exhibition, concert, mini-games, or even business seminars. Subsequently, when the metaverse develops and becomes “normal” for the population, the invested goods can be resold with good added value.

Attention, however, it is not currently possible to calculate the return on this investment! And for good reason… This new technology has not yet been tested, and demand could collapse at any moment.

In order to invest in real estate, limiting risks, it is important to accurately calculate and know the return on your investments. It is this criterion that will allow you to determine whether your investment will be a good investment.

To estimate the final rental income, you will need to use an online simulator or calculate it manually, taking into account the purchase price of the property, the income received from renting it, any financing costs, etc.

But for now, we don’t have enough insight into the metaverse and the real future of these virtual worlds to assess what the return on investment in this type of real estate will be.

Bassel Abedi, founder of Horiz.io