Would you fork out millions to buy a virtual property?

Construction industry worker using Virtual Reality for planning [Courtesy]

While people many countries, including in Kenyan, are struggling through thick and thin to acquire houses and land, there are some investors who are forking out millions of shillings just to own a piece of digital property in the virtual world.

As absurd as the idea may sound, so it is the amount of money being poured in by investors to own digital property.

In December 2021, a plot of real estate sold for Sh485 million ($4.3 million) in The Sandbox, a virtual metaverse where individuals play games, build and even own property. This is the highest amount of money one has ever paid to acquire a digital property.

For the same amount, you could buy 0.08 acres of commercial land in Upper Hill, Nairobi which according to buyrentkenya.com goes for Sh450 million or 4,047 square metres of residential land in Kilimani, Nairobi for Sh450 million.

There is also a 4.42-acre piece of land in Karen that goes for Sh309.4 million, a 1.7 acre in Muthaiga that goes for Sh400 million and 1.216 acres in Brookside, Westlands that goes for Sh435 million - all that fit the Sh485 million budget.

So why should one consider a digital property that can only be accessed virtually? Is it a worthwhile investment?

Would you consider buying a house or land that ‘does not exist and the only way for you to see and feel it is by purchasing special glasses, headphones and a haptic suit from Tesla that goes for Sh2.3 million?

Stanley Onyango, a specialist in information management and conversant with virtual technology notes that while the concept of the virtual world is new, it is bound to pick up as more people learn about it.

Onyango said the metaverse is still on its amorphous stage where things aren’t well defined.

It is a global conversation about the transition of whatever is going on in the reality space - extending it into a more digital kind of set-up – a simulation of some kind like driving a truck or how pilots train in a simulator as well as virtual sports.

“As it is, the metaverse is kind of vague,” he says referencing the onset of social media. “We did not know what social media was in 2007; we did not know what Facebook would grow into; we did not know what twitter would grow into and it is something we should really take key notice in having that one of the biggest companies in the world is betting on people to move into a virtual reality,” said Onyango during an interview with KTN.

According to a report published by CNBC on January 12, 2022, prices of plots in the metaverse have skyrocketed by 500 per cent in just a few months to January this year.

The CNBC report quotes The Metaverse, Grayscale Research released November 2021 that crypto cloud economies as the next emerging market investment frontier and metaverse are at the forefront of internet evolution.

“The Metaverse is still emerging, but many key components have started to take shape and are revolutionising everything - from e-commerce to media and entertainment, and even real estate,” it reads.

Like real state companies that rent and sell property, there are also firms that have invested in digital property.

One such is Metaverse Group which describes itself as a leading virtual real estate company offering exposure to the burgeoning industry via metaverse.

“We facilitate the acquisition of virtual property along with a suite of virtual real estate centric services that are provided by pioneers of the crypto, blockchain and non-fungible token (NFT) industries,” reads the company’s description in part.

The company specialises in buying and selling virtual real estate across metaverses, development of virtual land, expert-level consulting, finding a rental within metaverses, property management and marketing and advertising of businesses.

Decentraland, The Sandbox, Somnium, Cryptovoxels and Upland are the metaverses listed by the firm where one can rent and buy land.

In Decentraland for example, the real estate firm manages land in several districts among them Crypto Valley, Dragon City, Aetherian City, Vegas City, Fashion Street, and District X.

“From conference or commercial spaces to art galleries to family homes and hangout spots, Metaverse Properties offers land in premium locations for individuals, enterprises and institutions,” reads the firm’s sale pitch.

Since metaverse is a whole different universe, transactions of properties are done in metaverse tokens which can be converted into US dollars.

As of Tuesday, one metaverse ETP (exchange-traded products or securities that track underlying security, index or financial instrument) was equivalent to $0.1126 or Sh12.72.

Onyango says there are different metaverse companies.

The earliest recorded was Second Life which was founded in the 2000s. One had to subscribe to it but you had to acquire hardware – your 3D glasses but at this point, you can have the 3D glasses, headphones and haptic suits that are totally immersive you can get in and get lost.

He notes that information in this environment evolves quickly and one has to keep up. “In our lifetime we have seen the Internet move from just emails to content creation right now we are talking about a virtual world in a span of fewer than 30 years,” he said.

He says once you get into this world, you can create value from it by selling digital content anything that can be transformed into the digital world let’s say music, photos, nice graphic designs and 3D layouts (even a whole house).

“People are designing houses that are totally digital,” he said. To bring the idea of digital houses closer home, Onyango speaks of a company in Kenya that designs houses and when they do presentations, they let clients put on virtual reality glasses to experience how the house would look like.

“And it is cutting edge. It is one of two companies in Africa that do that,” he explains.