Technology

Effect of Web3 and Metaverse in Real Estate Future?

Almost everything you read about technology these days has something to do with web3 and the metaverse. Since I work in proptech, I’ve been especially interested in the topics from a real estate point of view.

But before we dive in, I’m working on the basic idea that web3 is the third wave of the Internet and is focused on collaboration and decentralisation, all of which is based on the blockchain. And that the metaverse is how the Internet of the future will be used. This is mostly done through virtual worlds now. We’re talking about them together because they go together like peanut butter and jelly. The growth and usefulness of the metaverse will depend on how blockchain, cryptocurrencies, and non-fungible tokens (NFTs) change over time.

When we think about the different waves of new technologies, the real estate business hasn’t always been at the forefront. Few people would disagree that it is a traditional industry that tends to be slow to adopt new technology. For instance, technologies like artificial intelligence, machine learning, virtual reality, and blockchain are still in their early stages. In fact, when talking to traditional real estate players, there is often a disconnect between the problems they want to solve (such as getting rid of Excel, making it easier for people to work together, and keeping track of data) and the “solutions” they are offered through technology. Workflow automation software, especially in commercial real estate and construction, is still very important (arguably the residential real estate market is a bit further along).

What do real estate people in the real world think about Web3 and the metaverse?

If we’ve established that web3 and the metaverse are all about the “new Internet” and the digital world, why would well-established, traditional property companies be thinking about them when there seems to be so much uncertainty about what they are, how they will change, and how they might be used?

Because blockchain technology is decentralised and has a lot of new ideas, it can be used in a lot of different ways and will make real changes. Even though we don’t know all the ways that Web3 will change the business world yet, no one wants to be behind the ball.

Real estate companies can’t ignore the metaverse because 25% of people are expected to spend at least an hour a day there by 2026. But the metaverse itself is full of problems, as one journalist found out when he tried to find out what all the fuss was about. There will be problems in this area, that much is clear.

Dean Hopkins and Taylor Clark at Oxford say the following:

“We’re keeping a close eye on it, but we haven’t seen a traditional landlord set up shop in the metaverse by buying large plots of land or starting a big project. At the moment, it looks like they are trying something out by making a copy of a physical asset in the metaverse.

For example, when Covid told the owner of One Times Square, Jamestown, to limit the number of people who could attend its famous New Year’s Eve party, Jamestown recreated the property and party in the metaverse. About 3.7 million people from all over the world took part in the December 2020 virtual party. The live event in Times Square could only fit 15,000 people, or 58,000 people in a year without Covid.

So, it’s clear that businesses of all sizes are taking this change seriously, even if it’s just on a theoretical level. When traditional real estate terms like “land,” “plots,” and “development” are used to talk about the metaverse, it’s hard for traditional players to ignore it.

Figuring out what might happen

Even though there are sure to be many Web3 uses that haven’t been seen or thought of yet, some have already been put to use. Some web3 apps will just improve how things are done now, while others will completely change how things are done now. One way to figure out what effect web3 and the metaverse might have is to think about the web3 real estate software development lifecycle, starting with how organisations do business.

Today, getting and proving ownership of real estate is hard, takes a long time, costs a lot, and involves a lot of middlemen. Some of this trouble could be eased by using blockchain technology. Dean at Oxford says that “the increased digitization of deal artefacts, such as smart contracts and digital records of ownership (NFTs), provides immutable data and has the potential to streamline the transaction process, increase transparency, and require fewer intermediaries, thereby reducing transaction costs.”

On the payments side, if digital forms of payment keep getting more popular, landlords may be forced to accept cryptocurrency as a valid way to pay rent and pay vendors, contractors, etc. On the investment side, real estate tokenization, in which ownership of physical assets is split up and recorded on the blockchain, gives small investors access to an asset class that was previously only open to institutions and accredited investors. A distributed open ledger enforces fractionalized ownership. This reduces the number of middlemen and eliminates the risk of fraud, making it easier for ownership to be traded.

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