Metaverse News

Disillusioned with buying a house, Chinese people turn to the “virtual real estate”?

According to the Beike Research Institute, as housing sales in China hit an all-time low while Evergrande defaults, virtual real estate becomes a “hot” asset.

Artist Huang Heshan started building virtual houses as an art project. Now, the boom of virtual assets makes him sell them at a very “real” price.

Huang’s project – TooRichCity, is a virtual city led by a bald man who is not real. This place is full of shimmering towers built from 3D concrete. Small shops that Huang designed based on the scenery of some low-class cities and villages in China.

Initially, Huang considered TooRichCity to be an “intellectual property”, which could be franchised for movies or dramas. However, it turned out to be a lucrative asset class when he brought the “city” to the metaverse in preparation for an event in July.

Huang sold 310 “houses” — digital images of buildings in the form of NFTs, or non-fungible tokens, within two days for 400,000 yuan ($63,000), mostly to young buyers. Each buyer receives a real estate certificate and an invitation to join a group for landowners on WeChat – just like any house buyer in China. The difference here is that property owners in TooRichCity have not been able to experience it yet, except by admiring them through pictures.

According to the Beike Research Institute, as housing sales in China hit an all-time low while Evergrande defaults, virtual real estate becomes a “hot” asset. This topic has appeared in many newspapers. For example, China Real Estate Business mentioned “metaverse property” for the first time in an article about “Top 10 industry news of 2021”.

Facebook’s recent name change to Meta has helped fuel hype for metaverse products of all kinds. Meanwhile, the word “metaverse property” is still a term with an unclear definition. Fans are looking forward to one day being able to own real estate in a virtual world like in the movie “The Matrix”. The market now includes everything from digital images of houses traded as NFTs to virtual reality houses in games.

Much of the enthusiasm around metaverse property is being driven by the success of Decentraland and The Sandbox – virtual worlds that provide users with the right to buy land and self-regulate such as gaming, storing on blockchain.

Projects developed by the American company have attracted impressive investments from some celebrities, including rappers Snoop Dogg and JJ Lin. These deals also made headlines in China. In recent months, several prominent investors in Hong Kong – such as Adrian Cheng of New World Development and Sun Hui Kang Properties – have also purchased properties on The Sandbox.

Now, a growing number of Chinese people are scrambling to buy up real estate inside Decentraland and The Sandbox. Carson, an early Chinese investor in The Sandbox, says this type of real estate is attracting three particular types of people: the opportunists, the investors, and the idealists. Carson added, the owners of the lands in The Sandbox and Decentraland can use them to build a world of their own.

However, this world is not accessible to all Chinese. Buying land on platforms like The Sandbox takes cryptocurrency, and all cryptocurrency transactions have been banned by Beijing since September. Therefore, they need a virtual private network and overseas bank account to buy in.

For the group of people who can afford to buy, real estate NFTs have so far proved lucrative. Over the last two months, the price of land in The Sandbox has increased over thirteenfold from around $1,175 to $15,612. It is not known how much of this money came from Chinese investors.

Chinese investors are still thinking of ways to buy virtual houses. Hu Qiaohao owns a virtual property with a view towards the Earth for only about 3,000 yuan: there is a bedroom, a living room, and a mini-fridge containing 3D images of his favorite drinks. This is a space created by the Beijing-based VR start-up Pico Interactive, which was recently acquired by Chinese tech giant ByteDance for 5 billion yuan.

Honnverse is a mobile game that simulates life in China. The 3D houses on the platform have been resold by some sellers on the second-hand trading app, for 980 yuan or 999 yuan. Meanwhile, Xianyu – a user from Guangdong province listed the price of a virtual seaside villa for 2,999 yuan.

The stock of Honnverse parent company In My Show surged after CEO Li Meng released a letter on the metaverse’s future. But the boom did not last long when the Shanghai Stock Exchange accused the company of misleading investors by describing its plans outside official channels. Xianyu quickly removed all products mentioning Honnverse after two weeks, including the seaside villa.

In addition to regulatory difficulties, virtual property owners also don’t really understand this technology. Chen Dongyao, assistant professor at Shanghai Jiao Tong University, said: “We are still a bit far away from the ultimate metaverse. An immersive user interface experience is one of the key missing pieces from a technology perspective.”

The shortcomings are gradually being improved as more and more people participate in the creation and development of this industry. But this technology will still not attract users unless they can come and see it. So metaverse companies are also courting content creators. Artist Huang’s team is in talks with The Sandbox and Decentraland to bring the TooRichCity IP onto a blockchain-enabled platform, so that prospective house buyers can tour their property and residential compound.

Refer to Sixth Tone



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