But is the industry really at the point in which virtual real estate and financing deals can – or even should – take place? Not just yet.
In a recent Walker Webcast, Walker & Dunlop chairman and CEO Willy Walker acknowledged that the metaverse is gaining traction. However, “I’ve been asked whether Walker & Dunlop is thinking about financing real estate in the metaverse,” Walker commented. “I will be so long gone when Walker & Dunlop starts financing real estate in the metaverse.”
According to L.D. Salmanson, CEO of New York City’s real estate data management and analytics platform Cherre, “in the short term – two or three years, (metaverse) is a buzzword that provides zero value to real estate owners and operators.” He told Connect CRE that at this point, “scammers will use it to raise money for nonsense, and visionaries will use it to raise money for things that are too early.”
One reason is because of the current state of hardware and software. Salmanson explained that Apple, Meta and Google have their own hardware and software ecosystems and their own virtual reality and augmented reality environments. Using video games as an example, Salmanson said that shared universes are possible across different hardware types “if and only if the software developer decides to make this universe accessible from multiple hardware environment.
The metaverse, as it currently stands, isn’t a whole lot different. Even if virtual locations are accessible from different platforms, software vendors build their own, non-converging environments. “I can’t really picture one metaverse,” Salmanson said. “Rather, I see multiple, siloed hardware and software environments.”
Additional challenges include current battery technology that is “far behind what we need for this reality to exist,” Salmanson said. The costs are also high, and current central processing units (CPUs) and graphic processing units (GPUs) aren’t advanced enough to support a meta world. “The power consumption for these devices is astronomical,” Salmanson added.
All told, the idea of buying and financing anything, let alone real estate, in the metaverse is a nice fantasy, but far from applicable right now. “As operators and investors, we need to be grounded in reality,” Salmanson said. “We don’t have the luxury of futurism for futurism’s sake. That’s for science fiction writers to delight us, not for the immediate reality.”
But technology isn’t static, and it’s likely the metaverse won’t stay static, either. Salmanson said that as hardware capabilities advance and AR and VR moves beyond “the cartoon stage of quality,” this could “begin to provide rich experiences that can start replacing or enriching every day experiences,” he said. “But penetration here will be slow.”
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