In the metaverse, the real estate market is popular

This week, New York-based Republic Realm announced that it had spent a record $ 4,3 million to purchase land on The Sandbox, a platform providing access to a virtual world where participants can chat, play and even participate in concerts.

On the competing site Decentraland, the Canadian company Tokens.com, specializing in cryptocurrencies, had spent $ 2,4 million in November for a real estate purchase.

A few days earlier, Barbados, a small Caribbean country, had said it wanted to establish an embassy in the metaverse, this network of interconnected virtual spaces, sometimes described as the future of the internet.

Interest in the metaverse (contraction of meta and universe) has skyrocketed since October after Facebook's decision to make the idea its new business venture, with the group going so far as to rename its parent company "Meta".

This strategic turning point has "made discover the term to millions of people much faster than I could have imagined", recognizes Cathy Hackl, tech consultant for companies wishing to enter the metaverse.

According to the cryptocurrency database Dapp, more than $ 100 million has been spent in the past week on real estate purchases on the four main metaverse sites of The Sandbox, Decentraland, CryptoVoxels and Somnium Space.

For Ms. Hackl, the explosion of the market, which brings together landlords, tenants and land developers, is not a surprise.

"We are trying to translate into the virtual world what we know how to do with physical goods," she told AFP.

"5th Avenue" of the metaverse

While it will be some time before these sites become true metavers, allowing users to explore parallel worlds through virtual reality headsets, digital terrains already function as financial assets, much like real estate, Ms. Hackl explains.

"You can build on them, rent them or sell them," she says.

Tokens.com has acquired a prime plot on Decentraland in the Fashion Street district that the platform wants to turn into a destination for luxury groups' virtual stores.

"If I hadn't done the research and figured out that these are high value properties, that would sound completely crazy," admits Tokens.com boss Andrew Kiguel.

Kiguel worked for 20 years as an investment banker in the real estate industry. According to him, virtual lands represent an opportunity similar to real-world goods: they are located in a trendy and busy neighborhood.

“These are places for advertising and events where people are going to gather,” he explains, noting a recent music festival that drew 50.000 visitors to Decentraland.

Luxury brands are already venturing into the metaverse: a Gucci handbag sold on the Roblox platform for more than its physical version. Mr. Kiguel hopes that Fashion Street will become the equivalent of 5th Avenue in New York City.

As for knowing how to generate income, "it can be as simple as owning a billboard or as complex as having a store with a real employee," he explains.

"We could go home with our avatar, look at 3D models of a shoe we could hold in our hands, and ask questions."

Second Life 2.0

As early as 2006, a real estate developer had been talked about after having sold land for 1 million dollars in the virtual world of Second Life, a precursor site of the metaverse.

Second Life is still in business, but supporters of its newer rivals point out one major difference.

On Decentraland, all purchases, whether real estate or virtual works of art, are made via non-fungible tokens (NFT).

Some internet users have spent tens of thousands of dollars on these digital objects, with the concept arousing excitement and skepticism.

Mr. Kiguel believes that digital ownership will become mainstream in the coming years thanks to the technology of the blockchain ("blockchain"), which guarantees the security and transparency of transactions.

"I can see the history of the owners, what it cost and how it went from one person to another," he explains.

There are risks involved in investing, however, starting with the volatility of the cryptocurrencies used to buy NFTs.

In addition, if the virtual concerts on Roblox or Fortnite have attracted tens of millions of curious people, the scarcity of data on the metaverse suggests that the frequentation of sites like Decentraland is far behind that of established social networks like Facebook or Instagram.

The value of real estate investments in the Metaverse will depend on the number of people going to these platforms.

"I know that sounds a bit absurd," admits Mr. Kiguel. "But there is a vision behind it all."