REAL ESTATE INVESTING FOR BEGINNERS
ASIA PACIFIC REAL ESTATE ATTRACTS A US$40.8B OF CAPITAL
According to the JLL Capital Tracker report for the first quarter of 2022, $40.8 billion of capital was deployed through direct real estate investment in the Asia Pacific real estate region during the quarter.
Investment volume increased most markedly in Singapore, South Korea and Australia. Retail and office real estate are two active sectors while logistics and industry real estate have an average growth rate of 3.5% year-on-year.
In which, Singapore commercial real estate recorded the largest investment growth in the region with an increase of 134% over the same period last year. Transactions mainly come from office building and retail space.
Asia Pacific real estate attracts a US$40.8B of capital / ph: pexels
Korea continued to record an 89% year-on-year growth in investment volume to US$8.2 billion thanks to a diversified investment portfolio in the office, retail, logistics and industrial real estate sectors.
Meanwhile, Australia announced the third largest annual investment growth with a 49% increase as investors deployed $4.7 billion of capital into this market focusing on the office real estate sector.
Japan remains the region's largest investment market with an investment volume of US$8.5 billion, although a 26% decrease year-on-year. China with a transaction volume in the first quarter of 8.3 billion USD.
The Asia Pacific retail region recorded the largest growth in the first quarter of 2022 with investments up 39% year-on-year. More than $8 billion in capital was deployed to retail properties during the quarter as customers returned following the easing of pandemic management policies in most markets.
Office real estate remains the most popular sector in Asia Pacific by total volume. This sector grew 9% year-on-year and ended the first quarter with $17.3 billion in direct investment.
Notable transactions include AlphaDom City Alpharium Tower ($846 million) in South Korea, Cross Street Exchange ($600 million) in Singapore and Darling Quarter ($453 million for 50% stake) in Australia - This clearly shows the optimism of investors.
While capital inflows into the commercial and office real estate sectors increased impressively, the logistics and industrial real estate sectors increased by 3.5% year-on-year, but this average growth rate only collected $8.3 billion in capital deployed in Q1.
The absence of large portfolio deals as well as a limited number of transactions have slowed investment growth in this sector despite receiving widespread attention from investors. Notable deals include the sale of the DLJ Greater Shanghai Portfolio ($717 million) in China.
A NEW TREND IN THE REAL ESTATE RENTAL MARKETS: SHORT-TERM RENTALS
The Covid-19 pandemic and the emergence of short-term rental companies like Airbnb gave birth to a new type of real estate - short-term residence rental.
This new wave blurs the lines between the hotel and residential segments, sparking developments designed from the ground up to serve dual purposes. On the one hand, they cater to the needs of buyers looking for a getaway. On the other hand, this trend helps investors or homeowners to earn passive income when they are not using the property.
A new trend in the real estate rental markets: Short-term rentals / ph: pexels
The CEO and founder of Miami, US-based short-term rental company WhyHotel, Jason Fudin believes the telework trend could change the way we approach the real estate market with a young generation around the globe. “Consumers demand short-term accommodation that combines apartments and hotels, especially when they can work anywhere they like. For example, people travel for work and stay for pleasure, especially in Miami, New York, and Nashville. Therefore, they are looking for apartment-style amenities plus hotel-like services to enjoy that lifestyle.”
According to Nicholas Perez, vice president of a well-known real estate corporation in the US, flexible living allows people to generate income even while having fun or eating. That's what short-term rentals can do.
At many locals, especially a new generation of young people who love to move as well as foreign buyers are grabbing the opportunity to own a property in one of America's fastest growing areas: Downtown Miami.
Some will choose to live here, while others see it as an opportunity to enter the booming short-term rental business without the challenges of independently managing these properties.
According to Harvey Hernandez, CEO of Newgard Development Group, a real estate developer operating in the North American market, teleworking also motivates people to move more which creates a sense of freedom to experience different lifestyles in many places - An unprecedented thing.
This freedom provides people with a great opportunity to utilize their homes to their advantage when they are traveling or exploring other places for short periods of time rather than leaving them alone.
The birth of short-term property management and rental agencies has helped many people both travel and earn money, thereby promoting many people, especially young people to join the short-term rental market.
The length of stay for short-term rentals skyrocketed, up to 30 days or more.
In the coming time, more clearly designed additional changes and developments will help lift the short-term rental market to a new level that offers a huge pie attracting both investors and tenants.
WHAT CITY HAS THE MOST AFFORDABLE HOUSING IN THE WORLD?
Home prices have exploded during the pandemic, but in many cities around the world there are still affordable houses.
The Institute for Urban Reform (USA) and the Frontier Center for Public Policy (Canada) have released the 2022 edition of Demographia's International Housing Affordability. Based on a survey of 92 cities in the third quarter of 2021, the report published in Bloomberg Quint shows that the US is the most affordable country.
What city has the most affordable housing in the world? / ph: pexels
In the context of the increasing cost of buying a house globally, Pittsburgh (USA) was named the most affordable city to buy a house.
Discounted housing programs are quite popular in the US, especially for uninhabited lands. The condition to buy a house is to become a legal citizen of the city, commit to live in the new house for at least 3 years and have to invest a significant amount of money in renovations.
Oklahoma City and Rochester (USA) ranked second and third place on the list of cities with the most affordable housing prices. Sydney (Australia) and Vancouver (Canada) are also ranked in the list of cities with the most affordable living costs.
Hong Kong has long been the most expensive city in the world for housing, ranked last out of 92 housing markets in the Demographia study. New York ranks 73rd while London ranks 79th.
A sign of growing tensions in many markets is that Canada is barring most foreigners from buying houses for two years and offering billions of dollars to boost construction activity in an effort to cool down the surging real estate market.
[TRENDING NOW] THE COST OF RENTING AND BORROWING TO BUY A HOUSE IN THE US IS NEARLY EQUAL
The difference between the rental cost and the average monthly mortgage payment in the US has narrowed to $30. This record small gap makes the decision between renting or borrowing to buy a house has become difficult for Americans.
Specifically, the average monthly offer price increased 17% year-on-year to a record high of $1,940 in March. While the average monthly mortgage payments increased 34% - reached $1,910.
The cost of renting and borrowing to buy a house in the US is nearly equal / ph: pexels
Historically, the average monthly home loan cost has been much lower than the rental cost mainly because rental apartments are concentrated in expensive cities like New York and San Francisco. Meanwhile, houses purchased are often of low value due to their location in suburban and rural areas, but the disparity has evaporated after borrowing costs skyrocketed.
The difference between rental and borrowing costs in March 2020 was $322, but it has begun to narrow since the housing market surged due to the pandemic, especially in urban areas. It is worth noting that if getting a home loan, the owner will also have to pay other costs such as property taxes and utilities. This could push the cost of ownership even higher - According to Redfin chief economist Daryl Fairweather.
Many first-time homebuyers are forced to choose between renting or moving to a city with a lower living cost. For cities like Miami, Austin, Texas, and Portland, Oregon, real estate buying demand is boosted by the wave of remote labor came to look for housing. For traditionally expensive areas like New York, this become more serious by people flocking back to the city after the pandemic.
METAVERSE REAL ESTATE INVESTING MARKET EXPECTED TO GROW 31%/YEAR
According to investors and analytics firms, the value of Metaverse real estate investing amounted to $500 million last year, and could double this year.
If you've been following the flurry of buzzwords that have taken over the tech world lately, you've almost certainly heard of the metaverse. And if you've heard of that, then you probably know some people buying real estate in Metaverse in that technology, using non-fungible tokens (NFTs) in the digital universe.
Metaverse real estate investing market expected to grow 31%/year / ph: Cryptovoxels
From Metaverse land plots value of $450,000 in the rapper Snoop Dogg's "Snoopverse," to video game giant Atari's crypto casino in Decentraland - where a buyer recently shelled out $2.43 million for a plot of Metaverse land - more than hundreds of millions of dollars have been poured into Metaverse real estate investing - according to predictive analytics firm NWO.ai.
According to MetaMetric Solutions, the value of Metaverse real estate investing across the four main Metaverse platforms reached $501 million by 2021. Metaverse data provider says that the value of Metaverse real estate investing in January 2022 have reached $85 million. MetaMetric Solutions estimates that at this rate, the value of Metaverse real estate investing could reach close to $1 billion by 2022. So far, Metaverse real estate investing have focused on the "Big Four" platforms - Sandbox, Decentraland, Cryptovoxels and Somnium.
The recent spike in Metaverse real estate investing was sparked by Facebook's October 28 announcement that it had rebranded itself as Meta to focus on the metaverse. Also a report from BrandEssence Market Research shows that the diversified Metaverse real estate investing market is expected to grow at a compound annual rate of 31%/year from 2022 to 2028.
Recently, a series of companies, big brands and investors have been flocking to the new Metaverse real estate investing craze, hoping to get into the ground floor of Manhattan or the next digital Monaco. Metaverse land value will be determined by what the owner does with a Metaverse property - like designing a famous attraction, museum, or place, in addition to the location of that Metaverse land.
A major factor driving Metaverse real estate investing is the growing popularity of metaverses and NFT digital assets. People join the metaverse like Decentraland and can use the ecosystem's digital assets to buy plots of Metaverse land. They can then buy, sell, or rent out the space.
There are two main things that are said to bring profits to Metaverse real estate investing: scarcity and location, two fundamental elements of Metaverse real estate. However, experts say that the Metaverse real estate investing is risky because the very scarcity is artificially built. That's why potential investors should be aware that their Metaverse real estate may not increase prices as they expect.
IS VIRTUAL REAL ESTATE INVESTING PROFITABLE?
A wave of blockchain-related technologies that aim to simplify the real estate buying process, primarily by eliminating procedures such as title insurance and legal documents. Some of the same technological changes we've seen in other industries like transportation and communications have eventually spread to virtual real estate investing.
These are not the only changes driven by global Internet connectivity. People now spend most of their time on screens, and the virtual world that existed only on computers is now changing. In these places, people can use profile pictures to gather and have interactive social experiences that is completely virtual. These online communities are called Metaverse.
In many ways, the structure of the Metaverse resembles that of a "real-world" city - characterized by town centres, communities, residential areas, and commercial districts. They are simply virtual. Recently, individuals well versed in this Metaverse market have discovered that these virtual communities can sell Metaverse land for real-world money. Virtual real estate investing has thus become very real.
IS VIRTUAL REAL ESTATE INVESTING PROFITABLE?
1- Is virtual real estate investing an opportunity?
Many people ask: Is virtual real estate investing an opportunity? The answer is Yes! This is an empty space where you can build anything you want. The important thing is that this is a real investment.
Is virtual real estate investing profitable? / ph: The Sandbox
At the real real estate environment. Real-world transfers of real money, real money exchanged for real estate, and transactions involving banks, financial firms, attorneys, and real estate companies.
In a similar way, virtual real estate investing is also exchanged, often with virtual currency, in the form of a non-fungible token (NFT). NFTs vary and are limited in number. These virtual real estate investing transactions are enabled by the blockchain which is a digital ledger that is replicated and distributed in a database. What you get is not a house key or pink book, but a password, and you are free to use whatever you imagine to develop your Metaverse land.
Besides the development of virtual currencies, the blockchain technology behind them is also evolving and now it is guaranteed that the tokens have an identifiable value.
Just as the number of tokens is limited (and monitored by the entire blockchain), the number of Metaverse land plots is also limited.
The skepticism of virtual real estate investing is entirely justified. One question is “Who can benefit from virtual real estate investing?” Before 2020, the answer might be “nobody”. However, the covid-19’pandemic has changed the way humans interact.
Humans are social animals, and they have an innate desire to interact. Virtual real estate investing allows people to securely socialize and interact with others, and it also has commercial value for Metaverse, especially for large scale businesses and even medium enterprises. Metaverse land allows these companies to market their products to new audiences in the new space and it also provides important CRM functions.
In this sense, the digital economy is taking shape in the Metaverse, because in this environment you can really attract tourists and turn them into powerful brand ambassadors in the real world.
This Metaverse space is especially valuable to digital artists who can safely exhibit their works in virtual museums and virtual galleries where visitors can become buyer. As digital real estate becomes more and more popular, the line between physical and virtual is becoming increasingly blurred.
2- Is virtual real estate investing profitable?
As with all investments, nothing is guaranteed, but it has been shown that virtual real estate investing might be a source of profit for individual investors. There are several Metaverse platforms and each Metaverse platform has its own cryptocurrency. But, basically, they work the same way.
Virtual real estate investing is highly speculative. But so far, we have seen a large number of institutional investors entering the crypto market and making huge profits.
The high volatility makes crypto-currency-based investments attractive, as significant increases in value can happen very quickly.
Currently, despite a lot of controversy and mixed opinions, the macro trends that seem to be in favor of cryptocurrencies and digital real estate provide a new way to approach these trends.
WHAT IS FUTURE POTENTIAL OF METAVERSE REAL ESTATE INVESTING?
Metaverse real estate investing is a concern of many investors. Hundreds of millions of dollars have been invested in this Metaverse real estate field, so what makes this unique Metaverse real estate sector so attractive? And What is Future potential of Metaverse Real Estate Investing?
WHAT IS FUTURE POTENTIAL OF METAVERSE REAL ESTATE INVESTING?
1- What is Metaverse Real Estate?
Metaverse has caused a fever in the technology world especially when Mark Zuckerberg, changed the name of Facebook's parent company to Meta. To understand the concept of Metaverse we can imagine that it is a virtual world created to perfectly simulate the real world we live in. This space is a combination of the physical and digital worlds to create a vivid and ideal universe.
In Metaverse, by effectively applying blockchain technology, participants can own the infrastructure right in the game. They can spend money to own a Metaverse land and are free to build, trade, do whatever they want to do on that Metaverse land and make real profits. This is a huge difference from traditional video games. Specifically, Metaverse land owners can:
- Make Metaverse land purchase and sale transactions to make a profit
- Get an extra passive income by renting out Metaverse property
- Build your own building like a shopping mall or store or hire a Metaverse land developer
- Run and own a virtual business/store by yourself that generates real profits
- Gather together to form a society
2- The development of Metaverse Real Estate
Currently, many investors are seeing the promising future of the digital real estate market, so they accept risks and bets. In the past time, we can easily "spot" many million-dollar deals that have been done on Metaverse. This has made the digital real estate market hotter than ever. Currently, many investors have recognized that the assets in the Metaverse virtual universe are real assets that can be profitable and that they really have value.
What is Future potential of Metaverse Real Estate Investing? / ph: The Sandbox
Referring to the record deals in the digital real estate market, it is Republic Realm. This company has invested 4.3 million USD to own a digital land plot on The Sandbox platform - a virtual universe game that helps people interact and participate in concerts. This has made many experts increasingly believe in the further development of virtual reality technology.
In the game Axie Infinity, a piece of Genesis land in the world of Lunacia was sold for up to 550 ETH (worth $2.3 million). Along with that, 9 pieces of land on ETH in February were also transferred for the equivalent of 1.5 million USD.
Not only that, selling and buying real estate in Metaverse universe is also extremely competitive. Recently, a company Tokens.com in Canada did not regret spending up to 2.4 million USD to gain ownership of a prime plot of land on Fashion Street. This Metaverse land is created by Decentraland platform thanks to the application of blockchain technology. This company is aiming for a strategic goal that is to become a place to trade and sell products of luxury fashion brands in the future, and consider this as a long-term oriented plan.
In the Asian market, specifically in China, China's Metaverse real estate project called Rainbow Universe also resonates as it is on the rise and aims to successfully sell 350,000 virtual homes on "P planet P" ". The price will be spread over 13 different levels.
Although the prices listed are extremely expensive compared to real real estate in real life, these Metaverse real estate projects are still invested a huge amount of money. Based on current analysis, early digital real estate entrants are transitioning to being sold and reassigned to latecomers. And there were even old houses on the Rainbow Universe platform for sale for 9,000 yuan, much higher than many real-life real estate.
Not only developing and becoming attractive to ordinary people, authorities of many countries have begun to pay special attention to Metaverse real estate investing. Specifically, it is the small island nation of Barbados in the Caribbean that has widely announced its plan to create a virtual embassy on the Decentraland platform. There people can freely play, meet many other people in the form of virtual incarnations. They can even buy and sell Metaverse real estate and experience whatever experience they want.
3- Future potential of Metaverse Real Estate Investing
It can be seen that the Metaverse real estate investing trend is receiving attention of many investors around the world. This is a trend that can develop further in the future and they are gradually becoming a lucrative piece of cake.
According to data from Dapp, in just 7 days, about 6000 transactions related to Metaverse real estate investing took place. And more than 100 million USD is the proceeds from Metaverse land plots successfully sold on the 4 largest virtual universe platforms today including Somnium Space, CryptoVoxels, Decentraland and The Sandbox. In the opinion of many industry experts, with the current rate of development, Metaverse real estate investing can completely generate revenue of up to 1 trillion dollars a year thanks to Metaverse land plots.
It can be seen that today, Metaverse real estate investing is still a risky field. But in the future, maybe this Metaverse real estate investing channel is a potential and promising sector for future profitability.
IS METAVERSE REAL ESTATE A GOOD INVESTMENT?
With the rapid popularity of Metaverse, more and more people are paying attention to the concept of “digital real estate”. So should Metaverse real estate be considered as a potential investment channel?
IS METAVERSE REAL ESTATE A GOOD INVESTMENT?
1- What is the Metaverse?
In terms of etymology, Metaverse is a compound word. Where the prefix 'Meta' means 'beyond' and the suffix 'verse' is derived from the word 'Universe' (meaning universe). The word Metaverse was first mentioned by Neal Stephenson - an American writer in his novel Snow Crash published in 1992. Accordingly, he defined Metaverse as a computer-generated virtual universe, existing in parallel with real life and allow individuals to remove cultural and economic rigidities and rewrite social norms.
Is Metaverse real estate a good investment? / ph: pexels
Until now, with the breakthrough appearance of the internet combined with supporting tools such as VR (Virtual Reality) technology, augmented reality (AR) technology, Metaverse is no longer a literary concept that is widely known as a network of 3D virtual spaces aimed at encouraging social interaction. To put it more simply, Metaverse is a virtual world that recreates real-life environments such as houses, shopping malls, amusement parks, schools, etc. Along with that, real people will create their own great characters look like real people, role-play and interact with each other in virtual space. Living in the Metaverse world, users can buy, sell, perform other exchange transactions or even cryptocurrency mining.
2- How much does it cost to invest in digital real estate?
In its infancy, the Metaverse was simply a place for people to meet, explore cyberspace, and have fun. Until there is a strong and popular development of the blockchain platform, players can build a virtual economy, using NFT (Non-Fungible Token, roughly understood as an asset encrypted with digital chain (blockchain) and non-fungible and cryptocurrency to buy and sell in-game features. Typically games like Decentraland, Roblox allows users to purchase plots of digital real estate and design their own spaces. Factors that determine the value of digital real estate will be similar to real real estate, including: location, lot size, ready-built infrastructure and the law of supply - demand.
3- Is Metaverse real estate a good investment?
Unlike real-world real estate, investors are not dependent on digital real estate. They don't need digital real estate to build a house. The buying and selling process is also simple, complicated documentation procedures are completely omitted. Additionally, according to the statistics, it can be seen that digital real estate on Metaverse is an investment that could generate super profits over time.
However, the "huge" return comes with an extremely high level of risk due to the erratic volatility of the digital space. No one can predict whether the game platform will continue to be hot, attracting more investors or not. If investors choose the wrong Metaverse platform, the risk of losing money will be huge.
Investing in digital real estate is very risky. Investors should consider carefully before deciding to invest in Metaverse real estate.
REAL ESTATE INVESTING FOR BEGINNERS
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