Is Virtual Real Estate Dead?

The Real Estate Espresso Podcast

Is Virtual Real Estate Dead?

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Is Virtual Real Estate Dead?

Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show, we’re talking about the death of virtual real estate and indeed anything else that experiences tepid demand and unlimited supply.

In October 2021, Facebook announced it was changing the company name to Meta to emphasize the shift in brand identity and to focus on the metaverse, the virtual universe that exists in the cloud. Now, I was slow to report on virtual real estate, partly because I frankly didn’t understand it, and it’s not that I’m a technology laggard, far from it. I come from the world of technology.

So back in the middle of January 2022, I posted an episode about virtual real estate. In that episode, I noted the following; it’s hard to know if this is a passing fad or if this is something that’s going to endure. Owning some virtual land in a good location as an early adopter might be a good gamble, it could be a winning speculation, but I’ll stop short of calling it a good investment.

I’m a real asset investor. I’m a real estate investor. I see the opportunity for a first mover or maybe a fast follower to develop the market. But being first to market is not necessarily a guarantee that you’re going to win. In business, I want to invest in the proven business models.

Ever since then, I’ve never met anyone who’s spending time in the Metaverse. I’ve not spoken with a real person who has ever brought up virtual real estate in a conversation.

One of the factors that drives the notion of value is scarcity. Computers make millions of copies of anything. If scarcity exists, it’s through artificial means. The net result is that, for example, the music industry is generating far fewer revenues each year.

In fact, the income generated by the music industry has been declining pretty much every year, at times even as much as 15% a year.

I had the same concern about cryptocurrency. Now, for now, the maximum number of Bitcoin in existence is fixed, but that statement is true until it’s not.

So, in the past few months, several companies have written down their investments in virtual real estate. Several examples include eXp Realty.

eXp Realty discontinued its Metaverse arm called Verbella! They sold it back to its founders in November 2024. I’ve spent time with the leadership of eXp Realty in their virtual offices and have attended lectures in their virtual auditorium.

Now, for an organization like eXp which is 100% virtual, I can understand the appeal. But here, too, I didn’t bother keeping the application current for more than a few months. It was in the would-be-nice category. It wasn’t something essential to me.

Disney laid off employees working on its metaverse projects as part of a broader restructuring effort. Microsoft shut down one of its virtual reality worlds and laid off the employees working on its Metaverse projects.

And then, finally, the company that changed its name in order to anticipate the future adoption of Metaverse technologies has also taken a partial write-down on the value of its investment and laid off some of the staff associated with those projects.

I don’t believe that virtual real estate is ever going to take off. I do believe that Metaverse technologies will play an increasing and integral role in the evolution of gaming, whether it consists of virtual reality or augmented reality. As we saw in the very popular Pokemon Go application, it’s probably too soon to tell.

As you think about that, have an awesome rest of your day. Go make some great things happen. And we’ll talk to you again tomorrow.

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