Lynnette Sacchetto explains that if you haven’t started exploring this space already, you will be left behind.
If you could take a time machine back to 2006 when the Dubai freehold law was implemented, would you buy the property? If so, what properties would you buy? Would you invest in Emaar Six, JBR, or buy plots of land where Emirates Living or Arabian Ranches is today?
Looking at the metaverse today is no different, except you don't need a time machine as you are currently living in the time where things are coming to fruition in the metaverse. The metaverse is very relevant to real estate and PropTech, and if you haven't started exploring this space, you will be left behind.
Sales of real estate in the metaverse topped $500 million last year and could double this year according to investors and analytics firms. In January 2022 alone, sales topped $85 million.
There are four major platforms in the metaverse at the moment: The Sandbox, Decentraland, Cryptovoxels, and Somnium Space. All of them combined have a total of 268,645 parcels of land, which in my opinion is not much land compared to the rising demand. Just like in the real world, once someone buys a plot of land, nobody else can use that space unless they are prepared to rent or buy it from the owner. If there is high demand for that land, the prices will go up.
Several mainstream brands have invested in the metaverse and many are looking to secure space. Meta Platforms (Facebook), Microsoft, and Alphabet are pouring in billion-dollar investments to catapult the metaverse industry into a trillion-dollar industry. Prices have risen by as much as 500% since Facebook changed the name of its holding company to Meta in October 2021, with people paying millions of dollars to buy plots of pixellated land in this virtual world.
So what's the benefit you ask? Why purchase plots of land on the metaverse?
In the metaverse, the land where a lot of people gather, the popular hot spots, will be worth more, just like in real life. The value will be where brands advertise their products and services rather than the building itself on these plots, and buying land in the metaverse is for advertising space on the internet today.
It creates more opportunities for real estate investors, too. They can build rentable structures like kiosks or billboards, or land in prime places that can be rented to big brands trying to find their way in the metaverse for the first time. Think about the billboards on Sheikh Zayed Road, they are made out of wood yet brands pay millions of dirhams a month to display their advertising due to the millions of cars that pass by these billboards daily.
The sense of community, of people, coming, hanging around, and getting emotionally invested in these platforms is a large part of what will create long-term value and appreciation for real estate investors. It's just like in JBR, where people gather on the beach and in the local restaurants and cafes surrounded by pop-up digital advertising strategically placed and intertwined within this popular community.
I also firmly believe that location matters in the metaverse, just like in real life. The famous phrase 'location, location, location' in real estate will very much be relevant in the metaverse. Snoop Dogg bought his plot of land on the Sandbox platform last year for $300k and now it's worth $4.8M, and in December someone paid $450k for the plot next to his.
Very similar to today's real estate market in Dubai, time is of the essence when it comes to investing and demand is high while supply is low. There is much to explore in the metaverse, but bear in mind you are up against many factors including other investors looking at the same opportunities with a finite amount of space.
If you could go back and buy those Dubai properties in 2006, the question isn't if you would buy, but rather, how much would you buy?
About the Author
Lynnette Sacchetto is the Director, Data & Digital Transformation in Allsopps & Allsopps. Lynnette has been in the industry for over 25 years and is recognized as an expert and thought leader in UAE’s real estate market. She applies her unique blend of technology and real estate experience to optimize business performance through data and tech-driven strategies.
