Don’t fear the metaverse.
That’s the view of Michael Phillips, president of Jamestown, the real estate firm behind real-life developments such as Manhattan’s Chelsea Market, Brooklyn’s Industry City and Ghirardelli Square in San Francisco. The virtual world is a natural extension of the internet and “smartphone culture” that will probably complement traditional real estate in the same way as mobile technology, he said.
“I don’t know how many steps forward and how many steps back it takes to get to full adoption, but it’ll be faster than we think,” he said. “Great spaces are great spaces, whether online or in person.”
Phillips was speaking at Propel by MIPIM, a real estate technology conference in midtown Manhattan, where the burgeoning metaverse market was a hot topic — even though it wasn’t on the agenda. Jamestown has already invested in “programming companies and in a variety of solutions to facilitate our movement” in the metaverse, Phillips said.
Now that behemoths like Meta and Microsoft have opened their wallets, the virtual world is evolving into an asset class from a fringe marketplace. Plots in Decentraland and The Sandbox have sold for as much as $4.3 million, virtual architects are popping up to design digital property and luxury brokers are even seeking to hawk virtual mansions.
The metaverse has detractors, many of whom see it merely as a pricey virtual reality game like The Sims, where transactions are primarily conducted in crypto currencies that themselves have existed for only about a decade. They call it a fad or bubble, and decry the steep prices investors are paying for property that is easily replaceable and constructed of only ones and zeros.
Real-world investors note that property is all about scarcity, something being irreplaceable and material. The metaverse flies in the face of that.
“I thought our license was to sell REAL estate???” one Colorado realtor posted on Instagram. A commenter from Dallas noted, “Simms3 is only $9.99 at Gamestop.” A Boston broker said, “So we are going to waive home inspections? Who’s going to appraise said land?”
Phillips shrugged off the notion that investors are overpaying as they take an early foothold. He expects a crop of exclusive districts and neighborhoods surrounding highly trafficked or otherwise desirable locales ,just like real-world real estate.
“It’s about where you think you’re going to aggregate people and pathways and squares in this virtual third space,” Phillips said. “It’s the same monopoly that we play in real life.”
At the same time, It isn’t a perfect substitute for the office or shopping mall, he said. As a transaction platform, the metaverse isn’t “sexy,” he said.
“There is a real need for people to be in physical places and to connect with people,” he said. “I think people still want to finger the fabrics, they still want to be with their friends.”