After recently attending a real estate summit in Amsterdam, I find myself writing an article on the metaverse, something which I’ve struggled to get my head around. There were a series of sessions on the future of real estate, returning to the office, ESG and amongst all of these sessions, which remain interesting, but are somewhat over discussed, there was a session on the ‘Metaverse’. So I went, sat for an hour, listened intently and took a ton of notes and, whilst still not an expert, I am somewhat wiser and clued up on the metaverse and (kind of) understand its role in the world of Corporate Real Estate.
So, what exactly is the Metaverse?
For those who are clueless on this concept (like I was), the metaverse is a public virtual world, accessed via the internet, which creates a ‘virtual world’ experience by simulating human emotions and gestures. For example, you put on your virtual reality headset, you visit a shop or a café, you e-meet with your friends or you go and watch a concert which is performed in the digital world. Very futuristic I know, but it’s time to get on board, as McDonald’s have said that they expect us to spend at least 30 minutes a day in the metaverse by 2026 and have even filed 10 trademark applications outlining that the chain will provide “downloadable multimedia files” for artwork, audio and video applications, as well as NFTs.
But there isn’t just one metaverse, to make things even more confusing, there are multiple virtual worlds which you can visit. Companies are creating these and there is a goal to one day link these so you don’t have to choose and can move across these worlds easily. A more popular example is Decentraland which is a leading metaverse platform launched in 2017. I’m not entirely sure what makes one metaverse better than the next, but to enter, you need to sign up for a wallet that works on whatever blockchain the world is built on, then link it to your internet browser. Easy.
‘Visiting’ the virtual real estate
We’ve seen real estate trends develop, and the way in which we build and furnish change depends on the needs of a consumer, but the metaverse is a phenomenon that sees real estate in a whole new light. This is virtual real estate and not physical, no bricks and no mortar. The metaverse is a replica of the physical world we live in and so presents a landscape of digital real estate to be bought and sold. Whilst much of the ‘space’ in the metaverse is yet to be bought, companies are investing and predictions are that prices will go up.
What I couldn’t get my head around with these trends and ‘opportunities’ in the metaverse, is why companies would want a ‘space’ there? You can’t buy physical goods, you can’t eat physical food so what’s the benefit? Well, the experience, advertising and what you can learn from these digital twins. Samsung launched a metaverse location based on its Samsung 837 store in New York which you can go to and experience all of its products, games and live performances. PricewaterhouseCoopers also purchased a plot of land. They have said that they don’t intend to win business in the metaverse but they don’t want to miss out on an innovative new business model – whatever that may be – and a new and exciting way to engage with customers. Even just owning a shopfront in the metaverse provides an opportunity for advertising as you stroll around in this virtual world and pass by these virtual shops. Some investors are buying up space just because they think value is going to go up, meaning they will have a large real estate holding to ‘lease’ to future tenants. Risky perhaps, but the way things are looking, a sound investment should the demand be there in the future.
However, the metaverse isn’t fool proof, and real estate investment will have its own challenges. It needs to attract the consumer, there is no point in having virtual real estate if nobody wants to spend their time or money there. The metaverse currently requires expensive VR tools which people aren’t necessarily going to want to invest in. Also, businesses need to generate value. This may take a little longer to explore as companies find new ways to engage with customers, show off their products and deliver products in the physical world after an experience in the virtual one.
The Digital Twin
The Digital Twin concept merges the virtual world and the physical world where a building, a room or a product will get a dynamic and digital replica. You could document a room from the build, use the Digital Twin to help with design, by putting on that VR headset and having the ‘real life’ experience of the room as designed, move things around (without having to actually move anything) and document the whole process right up until completion. It is essentially a simulation which lets you experience the end product, rather than just seeing an image on a computer screen. And this is already in play! When recently out shopping for a new kitchen, Wren sent me off to a VR room where I could experience and ‘walk around’ the kitchen that we had designed on a computer together. I was able to see the finished look without having to order, pay and wait for the install to decide if I even liked it.
In the retail sector, Digital Twins are being used to enhance customers’ experiences. Digital Twins of the customers are created; allowing items to be tried on without having to visit a store. They also help better in-store planning and security implementation. Digital Twins are similar to smart buildings, in that they optimise operations and improve a customer’s experience. The system allows for predictive modelling to make proactive adjustments to space. It will no longer be sufficient to just design, build, and lease a space. The space will need to think for itself and react to the world around it. And these large-scale changes, enabled by the predictive capabilities of a Digital Twin, will be the drivers behind a disruption of the real estate industry in the years to come.
Everybody is talking about the metaverse and it’s clear that it’s going to have an impact on future real estate, but what impact that will be and the use cases that businesses will find for real estate in this virtual world is yet to be seen. There is definitely ambiguity around the metaverse and, whilst some people are excited about it, others are not quite. They just don’t buy it. It’s certainly an exciting, but rather terrifying, time. But that said, I’m not rushing out to buy my VR headset just yet.
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