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A luxury property is a high-value, one-of-a-kind asset that functions simultaneously as a home, a symbol of prestige, and a lucrative investment. Viewed in those terms, it’s really not so different from a non-fungible token (NFT). Perhaps it should come as no surprise that these two spaces—ultra-luxury homes and unique digital items—are starting to overlap.
As a top producing agent and Vice President at ONE Sotheby’s International Realty, I’ve cultivated a diverse portfolio over the past two decades—from pre-construction and new construction sales, to commercial transactions and acquisitions, to property management and redevelopment projects. But soon, for the first time, I’ll be part of a sale for an NFT home.
When I tell clients and colleagues about this, some of them don’t know what to make of it. For many, NFTs are still a novel concept, yet interest in this space is surging among buyers, sellers, and investors. It’s important for agents to be ready to answer their inquiries and prepare for what could be part of the future of luxury real estate.
The fundamentals of non-fungible tokens
To sum it up simply, an NFT is a unit of data that is inimitable and non-interchangeable. This differs from a fungible asset, such as a banknote. For example, a $100 USD banknote can be traded for another $100 USD banknote, or two $50 USD banknotes, or an internet transfer of $100 USD, without losing any value. Non-fungible items are designed to be inherently one-of-a-kind.
How is this possible for a digital file which can usually be copied and saved by anyone at any time? With an NFT, the proof of its authenticity and ownership is recorded publicly—and indelibly—on a blockchain, so there’s no ambiguity about its validity or who it belongs to.
If you’ve been following the news, then you may know that many of the most prolific NFTs have taken on the form of artworks and other types of digital collectibles. So where do luxury homes factor in?
A mansion in Miami—and in the Sandbox
With its permanent storage in a digital ledger, an NFT could easily serve as the deed to a property—and that’s exactly what Meta Residence is doing through a pioneering collaboration with a team of digital and real estate innovators, including ONE Sotheby’s International Realty and Voxel Architects.
By the end of 2022, an 11,000 square foot mansion will be constructed in one of Miami’s most affluent and coveted neighborhoods. The rights to own this property will be sold exclusively on the Ethereum blockchain, which is currently the home of most NFTs. And because the deed is attached to the blockchain, the property can be subsequently resold there in the future. It’s elegant, logical, and forward-thinking—and it also comes with a first-of-its-kind twist.
“As luxury agents, we specialize in helping buyers and sellers find the perfect place where they can live out their dreams, fantasies, and aspirations. Why shouldn’t those places be virtual as well as physical?”
Voxel Architects will replicate the residence from top to bottom, from structural design and fine details to its seven bedrooms and nine bathrooms, as a fully virtual counterpart. While one home occupies a prestigious one-acre plot in Miami, its digital mirror will be located in a metaverse known as The Sandbox, and whoever owns the NFT will own both the physical and digital properties.
Metaverses are virtual worlds built with virtual reality (VR) technologies, which enable communities to explore, engage, and interact with each other in immersive virtual settings. In a metaverse, individuals can own collectible data assets such as NFTs, and now we’re entering a world where they can also own digital homes. For agents, this is worth paying attention to.
Why real estate in the metaverse matters
We’re accelerating towards VR experiences and virtual worlds faster than ever as they evolve in their accessibility and sophistication. Here are three reasons why agents should be keeping an eye on NFT homes, and the metaverses where they will partially exist.
1. It’s a new frontier for luxury living and lifestyle: The home is where people enjoy their spare time and entertain company—and if they’re doing those things on virtual platforms, then it’s only natural to embrace the concept of a virtual home.
2. It’s a way for individuals to interact and transact: Today, the NFT space is dominated by collectibles such as digital art and items, which could potentially be displayed in an NFT home, spurring new opportunities to create, curate, and sell.
3. It’s a point of connection for a new generation: There’s a new cohort of digital natives who are reaching the age where they’re getting ready to purchase properties of their own, and NFT homes could hold a unique appeal for them.
As luxury agents, we specialize in helping buyers and sellers find the perfect place where they can live out their dreams, fantasies, and aspirations. Why shouldn’t those places be virtual as well as physical? For those willing to break with tradition, the rise of NFT homes represents a potential business opportunity that can expand and enrich real estate as we know it.
Celebrated as a visionary in his field, Michael Martinez is Vice President at ONE Sotheby’s International Realty, and has been acknowledged as a Top Producer for the last 8 consecutive years. Michael is ranked #1 Top Producer at ONE Sotheby’s International Realty for 2020 and 2021 and is recognized as the #1 Real Estate Agent for total sales volume in the Village of Pinecrest for 2018, 2019, 2020, and 2021. In 2021, Michael closed out the year with an impressive $230,737,000 in total volume, of which $168 million were in total closed sales, $38 million in referral volume, and $23 million in pending sales.