The Metaverse Will Upend Real-Estate Assets. Are You Ready? Those who get in during the early days will see the greatest rewards.
By Kunal Lunawat Edited by Sean Strain
Opinions expressed by Entrepreneur contributors are their own.
Meta's recent announcement that its senior management will work remotely from different corners of the world, from Israel and New York, to California and the UK, symbolizes an exciting new era. The decision goes beyond embracing remote work; it's a testament to the efficacy of the metaverse, central to Meta's growth aspirations. By working in the metaverse, the company seeks to prove that teams can effectively collaborate and operate in an interactive, conversational and life-like internet. If successful, the move will once again upend the return to the physical office.
But here's what's interesting. The metaverse could upend not just the physical office, but also asset classes across real estate. Look at luxury retail landlords and mall owners, and then luxury apartment builders — all of them should begin examining how an immersive internet can redefine the way they sell property and engender customer loyalty. Here's a peek into what that means.
Related: 3 Ways to Build Sustainable Wealth in the Metaverse
Retail spaces and the metaverse
The pandemic and ecommerce's onward march has presented continued hardships for retail landlords and mall owners. In the face of record vacancies and store closures, tenants are increasingly in search of something more to lure customers back to physical spaces.
Look at Gucci, Burberry, Louis Vuitton, Balenciaga and Nike: Their exciting launches in the metaverse range from an ensemble of immersive experiences to limited-edition digital handbags. Other retail brands are quickly realizing they need to do something similar, and renting space in a virtual store that helps curate and build community is a surefire way to do it. But not everyone is Gucci, Burberry, Louis Vuitton, Balenciaga or Nike. And herein lies the opportunity.
Retail landlords and mall owners should build digital replicas of their assets in the metaverse, and then rent both the virtual and physical space together. By doing so, they enable tenants to create a robust interplay between the real and virtual worlds.
"Buy our limited-edition shirt in our virtual store to access our exclusive event at our flagship store" creates a fresh conversation with a customer and gives him or her a new reason to come back to the physical store. Of course, both the landlord and tenant benefit when that happens.
Related: Target Will Open Mini Apple Stores to Attract Post-Pandemic Shoppers
Luxury apartments meet the metaverse
When do luxury condos sell well? When they've managed to generate significant buzz — and the metaverse serves as a way for them to do just that.
Here's one way to approach it: Build a virtual replica of an ongoing residential development and allow interested buyers to own pieces of the virtual development through limited-edition NFTs, which then unlock preferential pricing and access for physical condos.
NFTs encode proof of ownership and can be rationed based on demand, helping developers reimagine the conventional wait list. Further, the same NFTs can be leveraged to create even more buzz, tying their ownership to exclusive perks, as the physical development goes live on market.
Scarcity and exclusivity enhance mimetic desires, and NFTs tied to virtual developments amplify that. It's a marketing strategy that we will see more of in the years to come.
Related: NFTs: The New Bedrock of the Virtual Economy
Hotels and the metaverse
Hotels work assiduously to differentiate their brands, and the metaverse offers a new way for them to accomplish that. Let's take the Four Seasons in Bali as an example and envision a digital wellness retreat hosted by the management in the hotel's new metaverse property. Thousands of users log in, walk around the digital property and partake in the activities online. Several share it with their friends and register this digital experience subconsciously.
Now, imagine a given percentage of these thousands of users (and their friends) plan a trip to Bali in real life. Are they more or less likely to book at the Four Seasons? More likely, of course. Digital familiarity enhances brand awareness, and the metaverse will enable hotels to improve their existing conversion funnel — a lifeline for their businesses.
The internet is entering a new, immersive era built on the metaverse, and it will have ramifications for stakeholders in the built world. Though its early days, retail mall owners, condo developers and hotel operators who take note of the opportunity will see enormous benefits in the long term.
