What is the metaverse and how is it going to affect the world of real estate? We put on our RealService virtual reality headsets and took a look into the future.
1 – What is the metaverse?
According to Deloitte the metaverse is the internet in 3D. “It’s a form of digital interaction where connected, virtual experiences can either simulate the real world or imagine worlds beyond it,” they say.
Simply put, the metaverse is a digital incarnation of a physical space and is the gaming industry taking the next leap from Fortnite or Minecraft towards new audiences in real-world adaptations.
So, instead of building empires or fighting aliens, we will be using these platforms for shopping, attending concerts, or even going to work.
The metaverse is the internet of 1993
2 – How developed is it now?
At the moment, the metaverse is in its infancy. If you had a Commodore 64 computer in the early Eighties or signed up for a free Hotmail account in the Nineties, you’ll know what it was like to be in at the start of something.
“The metaverse is literally the internet of 1993,” said Dan Reitzik, CEO of TerraZero, a metaverse land developer. (We’ll come back to what a metaverse land developer actually is later).
Dan was speaking at a BizNow digital summit on the metaverse and commercial real estate and what he meant is that in terms of tech and of usage, the metaverse is just starting out.
He also meant that in terms of potential, the metaverse is mostly untapped but is going to be limitless. We have all seen what’s happened with the internet.
3 – How is it affecting the retail industry?
Even though it is early days, it is having an impact.
Just as they got to grips with the importance of the customer experience and found innovative ways to attract consumers to their stores, shopping centre managers, developers, owners and investors are finding their experiential approach is being trumped again by the internet.
A shopping centre in the metaverse will give virtual visitors a feeling of being in a store. Retail brands love it because the average time spent in a metaverse store exceeds 20 minutes, compared to the two minutes or so for simple on-line shopping.
The metaverse is also a natural environment for hosting events. A concert in a venue like Wembley Stadium might hold 100,000 people, but a concert on the metaverse could be seen by millions.
4 – What about the office?
Its application for the world of work does not seem as advanced except in areas which improve communication and drive culture. Bill Gates has said he reckons Zoom will be dead in two-three years, and there won’t be too many folk mourning that, but that doesn’t suggest that we will all be back in the office.
On the contrary, the BizNow panel unanimously felt that hybrid working was here to stay but that having an office in the metaverse where avatars can meet and chat as if in person would be an advance on the two-dimensional Zoom or Teams experience.
One contributor said landlords were already being asked to provide a “digital twin” to their occupiers’ rented office space.
It’s an amenity for real-world properties
“It’s an amenity for real-world properties,” said Erin McDannald, CEO of Lighting Environments. “It provides a digital swing for tenants who are not ready to leave the physical world and ties physical spaces to virtual spaces.
“It is the nearest thing we have to meeting face-to-face and it allows a company to have a global culture.”
5 – How does it actually work?
There are several metaverse developers, notably Sandbox and Decentraland, who have created virtual worlds in which ‘players’ can buy parcels of land, build on them or rent them out.
The number of land parcels is limited, to create scarcity and competition so it becomes more valuable. Sandbox has 166,000 plots of land, each of which are 96m2.
After purchasing the land – in crypto currency only – it will be registered on blockchain as an NFT (non-fungible token). The buyer can then decide what to do with it, but whatever the decision, it will require considerable technical expertise from the platform designer to build the experience required.
In many ways the process mirrors real-world practice. An investor/developer/landlord will look for a prime location, design a building and rent space within it.
There is a mammoth project in Toronto to make an entire digital city
6 – How will this be a good thing?
It has already proved attractive to brands who have created virtual stores, allowing people to browse and buy in the way they would in an actual physical shop. One example from the BizNow panel was an American sandwich shop where shoppers could build their own virtual sandwich – and then have the real thing delivered to their door.
It’s going to be great for estate agents, or anyone wanting to show a property to someone who can’t get to the physical location. There is, for example, a mammoth project in Toronto to make an entire digital city so potential real estate purchasers in, say South Korea, can be shown around without having to get on a plane.
It’s also a potential boon for tourists who can play their way around Toronto before they get there.
Virtual reality is also already used in construction to bring two-dimensional plans to life.
7 – Is it a great leveller – and what does it cost?
You can have a swanky property in the metaverse so there’s no need to have a swanky property in a great physical location – is the theory.
In practice, there will still be parcels of land which will be more valuable than others because of their virtual proximity to key sites. For example, retailers want to be close to other prime retailers so competition for spots in virtual malls could be fierce.
According to Forbes, less than a year ago, the average price for the smallest plot of land available to buy on Decentraland or the Sandbox – two of the biggest metaverse platforms – was under $1,000. Today it’s sitting at around $13,000.
8 – So what are its problems?
Firstly, there are many metaverses out there competing for your cyber currency and if you remember the battle between Betamax and VHS, arguably the better product lost out to its better resourced competitor.
Then, your prestigious building or storefront cannot currently be transferred from one metaverse another – they are not ‘decentralised’ – so you would need a new design for each metaverse.
And another variable which is stalling the progress is that all transactions are carried out in cryptocurrency. This can be a step to far for major corporations who, according to Reznik, “don’t like to see these currencies on their balance sheet” and the recent volatility in that market is also not helping.
Finally, while the tech is improving all the time … those headsets!
9 – How can RealService help?
For retail owners/investors, working proactively with your brands is the best way to develop a partnership approach which can improve the experience of real-life shoppers and mitigate the draw to the virtual world.
Our Real-Insight interviews target brand decision-makers to give you a deep dive into how your offering is perceived, benchmark it with your peers and provide intelligence as to how you can develop the relationship for your mutual benefit.
The best way to attract occupiers back to the office is to engage with them about the experience they want when they get there. Real-Insight interviews can target both occupiers on the ground and the decision-makers who make the judgements on location and space. Our ability to provide clients with independent evidence is key.
10 – Where can I get more information?
Please contact Louise Freethy (Louise.Freethy@real-service.co.uk) or Justine Johnson (Justine.Johnson@real-service.co.uk) if you would like to know more about Real-Insight, RealService’s Voice of Customer research.
For more general information, please check out the websites below.