After shaking things up in the art market, NFTs are now a force to be reckoned with in the world of real estate. On June 21, Artcurial will auction ten iconic buildings and locations in Cannes in the form of non-fungible tokens. Are we entering the era of property 2.0?
This is the first time an auction house has put real estate up for sale in the form of NFTs. Artcurial has teamed up with the Cannes City Council and Cannes-based company Pertimm, which specializes in artificial intelligence, to model 10 of Cannes' legendary sites in digital form. Among them are the Palais des Festivals et des Congrès, the Croisette and the Old Port. This collection of places and buildings will be integrated into blockchain, and then sold, as unique and non-modifiable intangible assets.
The goal of this unusual initiative is to make these emblematic sites of Cannes part of the metaverse, this digital double of the physical world where one's avatar can attend concerts, shop for this digital self or even buy virtual land. The future buyers of these immaterial goods will be able to integrate them into the metaverse platform of their choice, and make commercial or cultural use of them. In other words, it will be possible to build buildings in the metaverse on the Croisette and to organize a (virtual) exhibition at the La Malmaison art center.
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For Arnaud Oliveux, associate director and auctioneer at Artcurial, the auction of these intangible assets is not just "a mere NFT sale; it is a future experience to be had in the metaverse that we will offer buyers and investors, a way to project oneself into another dimension but based on the very tangible reality of 10 iconic landmarks of the city of Cannes," he said in a statement.
4.3 million dollars for a virtual land parcel
While we'll have to wait until June 21 to find out how much these NFTs will fetch, it's a safe bet that they're worth their weight in gold. As proof, the company Republic Realm bought a piece of land in the meta universe The Sandbox in December 2021 for $4.3 million. An anonymous person spent 450,000 dollars to buy a plot in The Sandbox. Fun fact: that parcel is located next to that of the American rapper Snoop Dogg.
However, analysts believe that the metaverse real estate market is still in its infancy. More and more companies have been buying digital land or property than individuals. "For now, we have a market with a very small number of owners and a small number of users -- not at all on the scale of large social networks," explained Robin Rivaton, essayist and investor in proptech, to French financial publication Les Échos.
While the metaverses are not rendering real estate investments accessible for the time being, blockchain seems to be having the opposite effect. Start-ups such as RealT, Olarchy and Equisafe offer individuals the opportunity to buy real estate through "tokenized" property. The principle: a real property is divided into several parts, or "tokens," to be sold to one or more investors through a blockchain. This practice is rather widespread in the United States where any buyer can acquire a "tokenized" property by going through a third party company. It is then this structure that will buy the property in its name and be attributed the rights attached to it, such as rent if it is rented.
It's a practice that cannot yet be done in France, even if some companies use roundabout means to propose real estate investment to the greatest number of people. For instance the Wincity start-up sells real estate-backed NFT cards. Four levels of cards are available (Regular, Rare, Mythic or Unique): each has a different value and offers different benefits. Holders of these cards can earn money in several ways. For example, they receive a monthly rent proportional to the value of the digital card in their possession. They can also resell it to generate capital gains.
Although the way tokenization works is not the easiest to understand, this new technology has the potential to start a real revolution in the real estate industry. As do NFTs and the metaverse.
