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Virtual real estate: will digital property take off?
Could virtual real estate be the future of property ownership? Find out about this new and exciting area of investment in our 5-minute read.
In 2014, science-fiction writer John Scalzi wrote a book about a group of people referred to as "Hadens". The Hadens are people who, due to a now-common affliction in the book, can't move because of paralysis.
Hadens used software to create and enrich a virtual reality (VR) environment where they could make homes and sometimes entire cities in which to live and function, in a way that their bodies couldn't. Scalzi's brilliant work explores what it would be like to put serious investment into the infrastructure of virtual real estate.
But virtual real estate is just science fiction, right? Think again. Virtual real estate, in our current reality, is a burgeoning enterprise growing by leaps and bounds even as we speak.
Virtual real estate is an actual business with legitimate brokers, big-time investors and an expanding market share – and it's all possible thanks to extended reality (XR) technologies.
What is virtual real estate?
In 2004,
World of Warcraft introduced many people to the notion of "massively multi-user online role-playing games" (MMORPGs). This was the first time that millions of internet users were introduced to the idea of everyone taking up space as an avatar in a common virtual environment.
This idea is key to understanding how virtual real estate works. It allows for areas in these types of large online spaces to be bought and sold like physical real estate.
The current shape of the virtual real estate market
Right now, the
Metaverse Group is the company brokering virtual real estate. That space is being sold on various servers including Sandbox, Somnium Space and Upland. These companies provide digital spaces for users to connect and find entertainment. Metaverse Group brokers deals to allocate the space.
What exactly do these entertainment spaces look like? The fact is that the Metaverse is an emerging virtual environment – and when users log into the Metaverse, they're faced with a range of options.
They could be hoping for a restaurant or bar-type space where they can meet with others. They could be looking to do business in virtual offices. Or they could be looking for a multi-player game, similar to
World of Warcraft or games you can get on VR headsets.
It's been said that virtual real estate is trickier to manage than its real-world counterpart because space is not limited like it is in the real world. But one could make the argument for the opposite.
Virtual space is much more limited than people realize. Pixels have to be housed on servers. And servers are much more expensive to maintain than you might think.
In fact, servers have some of the most complicated cooling systems in the world – and they're far from cheap to run. That doesn't even cover how difficult – and expensive – it is to keep data flowing to the right places.
This creates the kind of supply and demand issues that make traditional real estate enticing. The same factors, in fact, are driving the pricing models of virtual real estate.
The question, then, is who should put their money there.
The shape of the virtual real estate market
Virtual real estate gets
compared quite often to NFTs. While this is a logical comparison, it misses a key factor in the development of virtual real estate and misrepresents the reasons users are interested in the first place.
NFTs are "non-fungible tokens" that you can use to purchase a piece of art or media. You then keep your purchase as an asset which accrues value over time. What makes NFTs unique is their security. Because they're saved on a blockchain, they're extremely difficult to replicate or pirate.
Virtual real estate is similar, but not exactly the same. The key difference for virtual real estate is the user base. NFTs rely on a currency model. To some extent, they have an inherent value, but that value is limited to the desirability of a product that is largely static.
While virtual real estate is also reliant on desirability, it's also interactive. Not only can a user interact with their environment, but they can also interact with other users in it.
This makes virtual real estate much more stable as a currency. It can also make it more fun. So no matter how complicated the technology, the secret to making a good investment in virtual real estate isn't rocket science. It's the same principle that applies to physical real estate – what's on
the property matters.
The more entertaining you can make your virtual space, the more valuable it could be. People are already experimenting with virtual spaces kitted out with games, casinos and hang-out spots.
It's too soon to say exactly what's going to sell – but it's an exciting time for virtual realtors who are looking to make their digital plots as saleable as possible.
How do you get into virtual real estate?
If you're interested in virtual real estate, one of the best things you can do is find a company that's already well-acquainted with extended reality (XR). After all, you can't get your portfolio going without the right hardware and software.
One of the exciting things about extended reality (XR) is its breadth of applications. Here at Expand Reality, we stock devices that can be used in industries as diverse as medicine and construction.
The XR industry emphasises interoperability – meaning that it's unusual for software and hardware to be incompatible. The software you need to explore virtual real estate can be installed on the same devices that an oil rig worker could use for virtual training.
Virtual real estate is a new and evolving area of investment. We can't tell you where it will be in five or ten minutes, let alone years – but we'll keep you updated as we find out more.
Expand Reality is a UK-based supplier of assisted and
augmented reality products. Explore our range in our
online store – or
get in touch for a free demo.
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