Virtual real estate investment is on track to triple this year compared to last year, an expert predicted during a panel discussion at the Mansion Global Experience Luxury conference on Wednesday.
“In 2022, there were over $1 billion in virtual land sales,” said Noah Gaynor, co-founder and CEO of Parcel, which offers tools for finding housing in the metaverse.
The virtual event focused on the intersection of tech real estate with input from expert panelists who explained how the sector is adapting in an increasingly digital and high-tech landscape.
The concept of a metaverse, i.e. online platforms with virtual experiences, as opposed to the real world, as well as realistic aspects including currency, savings and property, can be difficult to grasp .
“A lot of people are in there and don’t realize it,” said Marc Norman, associate dean of New York University’s Schack Institute of Real Estate. “Whether it’s playing solitaire in a casino or playing a sim in a game. I think one way of looking at it is like a flight simulator, being able to do something and think about it but not not be there.
Real estate sold in the metaverse, whether on a platform like Decentraland, Otherside, or Sandbox, is mostly empty plots where people can build, say, a virtual store or a digital art gallery. But a new wave of demand is coming for prefabricated buildings, experts said.
“We’re starting to see designers and architects creating these,” Gaynor said, adding that he expects to see this trend grow over the next couple of years.
It was taken over by Michael Gord, co-founder and CEO of global digital asset and capital markets investment advisory firm GDA Capital. “There is a lot of demand for [prefab property] and there are new marketing tactics like build-a-thons,” he said.
While differences may abound between virtual and real estate, at least one factor overlaps and that is how they are rated.
“What we actually saw is quite similar to the real world right now,” Mr Gaynor said. “Just like in the real world, there’s more value if it’s near a road, near water, or near a place with status. Right now it looks a lot like this that we intuitively think would make the earth valuable.
And, just like in the real world, this value can fluctuate.
“Virtual real estate in terms of price has gone down,” Gaynor added. “However, we find that real estate sales represent a greater proportion of NFT sales.” Virtual real estate would typically make up 5% of all NFT transaction volumes, but this past quarter it stood at nearly 14%, he said.
Investors can, however, position themselves favorably by developing their virtual land.
“Like in the real world, if you just buy a piece of land and don’t do anything with it, your returns will be less,” Gord said. “If you want to deploy capital into the earth, it’s a high-risk, high-reward investment, but it’s higher risk if you don’t build on it.”
For those debating a buy, “on a fundamental level, the fundamentals are stronger than ever, the development around the world is stronger than ever,” Gaynor said. And with prices so low off the peak, virtual real estate is “a great opportunity right now.”
Back in the real world, simplicity and security are hot topics in home automation, having emerged at the top of buyers’ wish lists.
“At the very heart of all our projects is the client’s brief, ensuring that we deliver what the client has requested,” said Natalia Miyar, founder of Natalia Miyar Atelier, during a panel titled “The future of home design and automation.” And increasingly, that means a sophisticated yet simple solution, she said.
“Our customers are looking for the simplest control. Back when there was an iPad in every room, that no longer works for our customers. They want an on-off button,” she said.
In California, “our customers are definitely looking outward when it comes to home automation,” said Jaqui Seerman, CEO of Jaqui Seerman Design. “The exterior of the house, the foyer, the pool lighting, the music, any kind of ambient lighting. All of this is equally important.
And simplicity also reigns on the outside. “Everyone wants that really light touch, where they can tackle everything from their phone, without having to run around the yard,” she added. Whether indoors or out, homeowners want control of their automation at their fingertips, Ms. Seerman said.
Security is increasingly important to customers, according to Francis Nicdao, director and chief creative officer at Pembrooke & Ives. It’s “super important these days, the kind of thing that allows [clients] sleep at night.”
And with more peaceful sleep on the cards with carefully vetted security, it’s no surprise that there’s also been a surge in interest in master bedrooms.
“Maybe parents want to escape from their children, I don’t know what it is,” Mr Nicdao said. “But most importantly, the master bedroom has become a sort of command post, where they control security, lighting, whatever. [It’s] almost a kind of escape or a way to monitor your kingdom.
In the world of sustainability, “sustainable luxury is here to stay,” said Scott Morris, director of carbon sequestration at Marisol Malibu. “These are the Teslas and Patagonias of the houses.”
While green buildings may be considered austere, “I think that’s completely wrong,” added Aandreas M. Benzing, founder of AM Benzing Architects, during a conversation titled “Zero Energy/Passive Home Innovation.” .
“I think for luxury it’s a must,” he said. There’s no reason why we can’t build nicer or bigger.
Indeed, sustainable choices can be made in a luxury home. “A lot of interior designers like to select French white oak,” said Morris, who uses an American white oak from the Alleghenies in Pennsylvania instead. “We didn’t skimp on luxury, it’s still a luxury floor, but better for the environment.”
Homeowners looking to combine luxury with eco-friendly practices may need to modify some of their expectations slightly, according to Juhee Lee-Hartford, founder and managing director of River Architects. This “can be difficult, customers want lots of windows or large volumes of space, so we have to find a balance”.
One thing they don’t need to worry too much about is cost.
“The cost is always hard to pin down, but generally it doesn’t cost much more to build a passive house,” Benzing said. Homeowners can expect a premium of 0% to 5%, depending on the size of the building, he added.
And the costs of adding energy efficiency measures are quickly recouped in savings, experts said.
For upscale Southern California shoppers, seclusion is king, according to Aston Rose co-founder and former basketball player Rod Watson.
“Privacy is always the most important thing,” he said during a panel titled “Future Players in the Market: Athletes Become Agents.” His clients are looking for gated properties with “limited access to see or even tell what’s going on there”.
Other amenities at the top of wishlists include open-plan layouts, swimming pools, hot tubs, gyms, movie theaters and, for its NBA guests, basketball courts.
But while Michael Jordan’s massive, highly-customized home in suburban Chicago with a full basketball court has languished on the market for a decade, the same wouldn’t happen under Mr. Watson’s watch.
“It’s just about being honest with the customer. I’ve been in a situation where I’ve had to tell clients, “I don’t think it’s going to benefit you to pay that much or have that much house,” he said. “I think you just have to be honest and tell them it doesn’t make sense.”
This doesn’t happen often though. Shedding the ‘dumb jock’ stereotype, “today’s generation of athletes and entertainers are savvy,” he said.
The competitive nature that once aided these real estate experts in their former careers as professional athletes still helps today.
“It’s just about having that competitive drive, which transfers for sure. Be persistent and results-oriented,” said Viktor Simco, Vice President of Acquisitions at SRG Properties and former snowboarder. “I don’t mind hunting and getting into the weeds and finding the right deal.”