The metaverse: enhancing our world, not disrupting it

COMMENT: AR and VR technologies have been in development for some time, but Mark Zuckerberg’s Meta rebrand last year has provoked renewed intrigue in the metaverse. As real life increasingly collides with the digital world, the way we design, build and experience physical space is being turned on its head. In a recent Pi Labs survey of mid-to-late-career real estate professionals, 40% of respondents said they expect the metaverse to have a positive or extremely positive impact on the real estate sector over the next four years. Yet the majority (54%) expect the metaverse to have no impact at all. So, is the real estate sector really ready for the metaverse? Primed but lacking expertise? Architects, designers, engineers and marketers – those involved in digital representations of buildings – are all primed to adopt the metaverse. Indeed, the real estate sector has been experimenting with new technologies such as extended reality (XR) and blockchain for years, including attempts at interior design applications, virtual tours of new builds and yet-to-be built spaces, and asset tokenisation. Despite this, just 15.9% of our survey respondents report any expertise in the metaverse beyond “I follow the headlines”. This sentiment is mirrored by a recent LinkedIn poll by Bright Spaces chief executive and co-founder Bogdan Nicoară, where 52% of respondents said “no”, the real estate sector is not ready for the metaverse. A serious business The metaverse is already serious business, with virtual real estate plots selling for vast figures – such as in the online world Decentraland, where a plot of land sold for a seven-figure sum in 2021. More recently, we have seen the launch of Bored Ape Yacht Club’s Otherside metaverse – an event which crashed the Ethereum network and amassed $1bn in virtual land sales over its first two weeks. This has prompted the Pi Labs research team to contemplate the valuation of virtual land, which seems more consistent with marketing assets than physical real estate. However, a factor that has remained eerily consistent between virtual and IRL land is location, despite the fact that metaverse users are often able to instantaneously teleport from one plot of land to another. In a sector historically slow to digitalise, we are now seeing traditional real estate companies making a play into the metaverse. For example, Digital Currency Group, one of the largest owners of virtual land in Decentraland, partnered with real estate firm Jamestown to recreate One Times Square in New York for New Year’s Eve. Millennium Hotels and Resorts is also among companies taking first steps in the metaverse with the aim of engaging guests through new immersive experiences and redefining the traditional hospitality model. In addition, BNP Paribas Real Estate has embarked on a highly ambitious collaboration with Unity 3D named WIRED (Wearable Immersive Real Estate Dataroom), beginning in Paris with plans to first extend to the rest of France and then to the rest of Europe. Real estate giant CBRE is taking exploratory steps too, with the launch of new high-tech physical offices with XR studios. Outside of our sector, Accenture is upending the traditional work model, having launched its Nth Floor virtual workplace in 2019 and with more than 150,000 expected to spend their first day in the metaverse in 2022. It is clear there are countless metaverse applications for our industry and beyond, and big sums at stake, but our survey suggests there’s a gap between expectations and actions. While 46% of respondents expect the metaverse to have an impact (whether positive or negative) on our sector, only 22% have taken any action. Similarly, in May, CBRE polled its audience on whether their business was developing a metaverse strategy, with 49% responding “no”. This gap could be put down to a lack of internal capabilities, biased advice, understanding of the metaverse, or prioritising more urgent concerns such as the state of the economy… or could it be down to fear? Impact on our future The big question is: how will the metaverse impact our future? Generally, most people don’t see the metaverse and/or XR as entirely replacing human-to-human contact. It’s true that some areas could be moving in this direction – for example, online retail is more immersive in the metaverse than on a traditional website. In fact, proponents of shopping in the metaverse have claimed that shoppers spend more time in these environments than on website catalogues or in physical stores. But, when applied creatively, the metaverse could enhance our physical world rather than disrupt it, opening up new digital lands and opportunities for immersive work, retail, leisure and marketing, among many other real estate themes. We believe the metaverse should not be feared, but embraced. Dent Reality, one of our portfolio companies, is transforming the retail customer experience with its AR platform. Its version of the metaverse is one which provides contextual information that enriches real world interactions, rather than replacing them. Businesses are increasingly understanding the opportunity to build digital layers in their physical spaces to create immersive personalised experiences. We forecast the demand for virtual real estate to continue, and expect significant innovation in using the metaverse to complement the built environment over the coming years. Faisal Butt is chief executive and founder of PiLabs Image © Xinhua/Shutterstock