The biggest recent breakthrough in commercial real estate broker and developer Jay Gaudet’s career has come from seeing his daughter play Roblox. When she asked him for money to buy a virtual house on the popular global gaming platform earlier this year, it sent him down a research rabbit hole.
“It told me that everything that was done in the physical world should be duplicated in the metaverse, and that spoke to me a lot,” Gaudet said. “Kids have been ahead of adults for a while on this.”
Courtesy of Republic Realm
A rendering of Metajuku, a metaverse shopping experience created by Republic Realm.
Late last fall, 33-year-old Gaudet, who has 13 years of real estate experience in Baton Rouge, Louisiana, launched his own company, SuperWorld Realty, to focus on the metaverse, the series nascent growing interactive virtual platforms that have been the subject of a veritable land rush in recent months.
Tantalizing stories of massive purchases and asset appreciation have inspired many companies, brokers and speculators trying to find a way to access the real estate metaverse – in which chunks of digital space are turned into tokens not fungible and transferred as an act – despite the technology and graphics of early virtual worlds lagging behind the hype.
DappRadar, a site that tracks virtual land and NFT sales, saw $330 million in trading volume in Q4 2021 and lands on top platforms such as Decentraland and Sandbox, trading at 150% and 500% , respectively, compared to purchases of only a few months. before.
The profits have prompted many commercial real estate players to try to quickly seize the fast-moving, high-priced market, which developers say is akin to investing in Manhattan land 250 years ago. Even established advisory and investment firms such as McKinsey publish reports on the potential for investment in the metaverse and offer advisory services to top brands.
But discussions with early leaders in the virtual land sector, while optimistic about the future of the market, may dampen the enthusiasm of CRE professionals who believe their skills make them natural candidates to manage property and development. virtual.
“Just calling it real estate doesn’t make it real estate,” said Janet Yorio, CEO of Republic Realm, whose company owns millions of dollars in virtual real estate spread across more than 3,000 parcels. of land on dozens of platforms like The Sandbox. “It’s software engineering. It’s about buying a designated piece of code in what is actually a very interactive web experience similar to a video game.”
The traditional view of vertical development and construction must be set aside, said Yorio, who has a background as a property developer for Standard Hotel Group.
“It’s the same way game developers would be ill-suited to build Hudson Yards,” she said. The metaverse is more like “a hallucinogenic trip, as opposed to something where you take an elevator and walk on the floor. Why recreate the real world?
Gaudet said his customers are looking for something a little different. Gaudet’s company strives to provide investment advice, guidance and services within SuperWorld, a platform that mimics the real world and allows participants to purchase virtual versions of real locations.
“This particular platform is going to be exactly for people like me, who work in this real estate space in the real world, and even people who don’t work in the space who want to understand how to buy physical real estate in a digital way,” he said.
So far, his work has helped clients find ways to monetize land they’ve already purchased in the metaverse or figure out how to purchase property they may have missed in the real world but they could recover in a virtual world. He said he sees people starting with properties they know, places in their hometown or big cities, like the Brooklyn Bridge or the Superdome in New Orleans.
Despite Yorio’s proclamation, traditional investors see the potential in virtual ways to own existing buildings: Citi and UK investment group Abrn are exploring ways to buy and sell tokens of existing properties.
“Right now in the virtual real estate space, you see a lot of people running on FOMO,” Gaudet said, using the acronym for “fear of missing out.” “I want to be part of it. I don’t necessarily know what I’m going to do with it afterwards, but I want to get started.
Courtesy of Jay Gaudet
Jay Gaudet, a commercial real estate professional from Louisiana, just launched a metaverse-based brokerage.
Yorio said investing in the metaverse space more closely parallels art, entertainment and retail, and she pushed back against requests from investors in the built environment.
“We get calls from developers who want to get on the metaverse and think they’re going to make it legit,” she said. “It’s already legit, and no one cares about your 50,000 apartments. There’s no place for them in the metaverse.”
Value in a virtual world is where brands and advertising come together, said Andrew Kiguel, founder and CEO of Tokens.com, one of the largest real estate owners in Decentraland and other leading platforms. Kiguel is also one of the main owners of Metaverse Group, a virtual real estate company.
Brands are seeking a prominent place in the evolution of the attention economy and positioning themselves in front of a younger population immersed in games. For them, the metaverse is about billboards, not buildings.
He compares the process to pre-purchasing ad space on Facebook and Instagram that circulates through your social feed. Many housing projects and trophy residences are, for him, very speculative assets. No one needs your fancy virtual mansion, but there’s lasting value in having the right ad placement for Gen Z consumers.
Currently, the Kiguel-based company is working on the Tokens.com tower in Crypto Valley, which is expected to include a convention center, a Bellagio-like fountain, and most importantly, plenty of space for advertising.
Tokens.com will also help organize a massive virtual fashion event in the Fashion District of Decentraland, one of the biggest metaverse platforms, where it happens to be the biggest owner. Tokens.com owns the virtual land where this is happening and will lease it to brands looking to capitalize on the event.
“I don’t think it’s arguable that the metaverse is a real thing that people are going to congregate into,” Kiguel said. “We just buy ad blocks, and now we own a share of that community’s revenue generation.”
Yorio would disagree. For her, experiences have value. His company’s partnership with renowned New York residential brokers Tal and Oren Alexander, a pioneering example of bringing real-world real estate talent to the Metaverse, is to create unique, artist-designed Metaverse homes for high-end customers, she said. .
The company’s collection of virtual Fantasy Island villas in The Sandbox hit six-figure sale prices, and Republic Realm sold a $650,000 virtual yacht in Novemberpaid in cryptocurrency.
“Why is Google more valuable than your mother’s website? Because more and more people visit it and use it again and again,” Yorio said. “Money is not the limiting factor. There is a lot of money in this space. It’s the ability to deliver really complicated technology alongside a very holistic understanding of who the end user is and why they would actually want to interact with your thing. It’s immersive, interactive and social.
As the platforms and business case for virtual land purchases mature, it remains to be seen how important traditional real estate skills will be in the metaverse.
Kiguel sees a future for traditional real estate expertise, mainly in the rental sector. It recruits staff to sell virtual storefronts and explain the value of certain spaces and properties – many of the same skills one would encounter in the traditional real estate world, especially the storytelling skill. This is certainly not something Gaudet lacks.
“We use the analogy of Jeff Bezos and Elon Musk, and where they started with Amazon and Tesla,” Gaudet said of his pitch to investors. “If you were investing in Amazon in the 90s, you knew four generations would be supported at that point.”