Thai real estate companies are moving into sales of digital property within virtual metaverses, an emerging sector fueled by one of the most online populations on the planet.
But it is unclear just how big a business dealing in real estate that exists solely in the realm of cyberspace will become.
Property Perfect initially looks to host virtual previews of real-world sites in a metaverse by 2024. The project features the company’s luxury housing near resort areas such as Khao Yai National Park in Thailand’s northeast.
Potential customers will take virtual tours of the homes via avatars. Seasonal landscapes can be changed at the touch of a button.
But by 2027, Property Perfect intends to sell metaverse-exclusive buildings and plots of “land.” The company will market this to department stores, universities, and even businesses seeking virtual office space for telework.
Property Perfect’s revenue last year totaled THB 11.6 billion (HKD 334 million). The developer wants metaverse real estate to account for 20% of its revenue by 2027.
Rival real estate company Magnolia Quality Development is building a virtual town called Translucia with Thai animation production business T&B Media Global. The buildings will use T&B’s animation skills, while Magnolia sells the digital structures. The project is expected to cost more than THB 10 billion.
Non-fungible tokens, or NFTs, are the key to developing metaverses. The data registered in NFTs is all but impervious to falsification or replication, meaning that digital property can generate the same value as physical real estate. Owners can sell or lease virtual property to third parties.
Thailand prohibits foreigners from buying land, but no such laws cover the metaverse. Real estate companies here have an opportunity to expand their customer base beyond a market composed mainly of Thai citizens.
Major global metaverse games settle payments using cryptocurrencies. Such virtual currencies are in a position to become mainstream in Thailand as well.
Metaverse Thailand has operated a virtual version of downtown Bangkok since October. Last month, the platform started allowing the cryptocurrency coined by Bitkub, Thailand’s largest crypto exchange, to be used for trading virtual land.
In Thailand, 20% of internet users aged 16–64 own some form of cryptocurrency, a report published in January by Singapore’s DataReportal shows. This is the highest share anywhere on the globe.
The average Thai spends nine hours and six minutes on the internet daily, seventh longest among nations. This all suggests that Thailand has wide room for growth in the metaverse business.
This new sector draws players from across industries. Cafe chain Class Coffee launched the Velaverse metaverse in February. The community models the central part of Nakhon Ratchasima Province in northeastern Thailand. About 30,000 virtual plots of land are available, each sold for THB 300.
Thai metaverse designer Brandverse has teamed with over 50 companies and brands such as mall developer Central Pattana and convenience store chain 7-Eleven to collaborate on metaverse business operations, including sales of digital assets and holding virtual events.
But one risk in the field is that a large percentage of virtual currency owners hold the assets purely for investment purposes. Speculative metaverse land purchases might take precedence over actual demand.
The virtual land value in The Sandbox metaverse exploded by a factor of 300 between January 2019 and January 2022, a study by the Thai central bank and Chulalongkorn University found.
“Vague expectations for the metaverse are driving up prices,” said Kanis Saengchote, associate professor at Chulalongkorn University. Kanis adds this warning for investors: “We are still researching what the actual values are, and several uncertainties remain.”
Even replication-proof NFTs do not solve the risk of an oversaturation of metaverse communities, which would drive down the prices of virtual land and buildings. A metaverse’s success likely will hinge on how many online residents it attracts.