Developers could use NFTs to showcase a property, create an exhibition or virtual twins of physical projects in the metaverse, Colliers executive says. No Hong Kong or China property firm is currently using NFTs, but New World Development’s Adrian Cheng has recently invested in virtual real estate. — SCMP
Property developers are turning to art non-fungible tokens (NFTs) to generate interest in and to serve as promotional tools for their projects, underscoring what analysts said was a natural fit between real estate, the metaverse and cryptocurrencies.
With NFTs of homes, developers can showcase their project, develop an emotional connection between buyers and owners and their properties, and even find a new avenue of revenue generation.
“The interest for developers can vary and the ultimate value is yet to be discovered. But, one example could be to develop their NFTs to showcase a property, create an exhibition or virtual twins of physical flats or a development in the metaverse,” said Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong.
“It’s an added-value angle, an attraction to increase engagement with their customers, even leading to sales or revenue. Developers can utilise the metaverse to build their own flats to showcase, and sell their physical and NFT units,” she said.
One developer that has fully embraced NFTs is OXO Living, a Bali-based boutique property development and management services provider. The company said it was the “first to create and launch its own property NFT artwork collection for 24 properties in its portfolio with unique visual representations on the blockchain”.
Each piece of the OXO Property NFT Collection, or OXO Artwall NFTs, was initially offered at 1 Ethereum, which is equivalent to US$2,714 (RM11,378), last week. Owners of physical homes the piece represented had the right of first refusal, but anyone who had a cryptocurrency wallet could buy them.
“To use the latest blockchain technology in association with our properties is a natural fit. All NFTs that were for sale have been sold either prior to or within hours of the public sale. Currently, only one NFT is for sale as none of the new owners are selling,” said Johannes Weissenbaeck, founder and CEO of OXO Living.
Currently, there is no known developer from Hong Kong or mainland China that has ventured into NFTs, but Adrian Cheng Chi-kong, the third-generation scion of Hong Kong conglomerate New World Development, added virtual real estate to his growing investments in December.
In his personal capacity, Cheng invested in The Sandbox, a unit of Animoca Brands, a Hong Kong-based mobile gaming and blockchain unicorn. The Sandbox is a decentralised gaming virtual world, offering virtual real estate called Land NFTs. Cheng’s virtual real estate is one of the biggest plots in The Sandbox.
“The NFT art can be seen as a digital derivative of the physical property. Firstly, it creates an emotional link which is important for property owners. For example, we have one owner who loves to display his property NFT and even has a printed copy in his house in Europe, to showcase his lifestyle property in Bali,” Weissenbaeck said.
“Secondly, it is a store of value that is directly linked but physically separated from the actual property. People used to sell houses with physical artwork, now we do the same with digital artwork such as NFTs,” he added.
Homeowners are also slowly opening up to cryptocurrency as a mode of payment for their real estate. About 14 out of every 100,000 property listings in the US accept digital currencies as payment, according to London-based property agency Benham and Reeves.
On the other hand, it might take longer for developers to unlock the full value of NFTs for real estate, according to Kashif Ansari, co-founder and group CEO of Kuala Lumpur-based global real estate company Juwai IQI.
“Developers and property marketers have experimented with NFT art, NFT property-related documents and even in bundling the property itself into an NFT. NFT, cryptocurrencies and real estate are destined to merge, and it’s just a question of working out the right formula for success. To date, less than US$20mil (RM83.85mil) in real estate has been sold with NFT artwork, to my knowledge. When the industry discovers the right formula for success, that number will soar upwards,” he said.
“What you have now is a period of innovation and experimenting. Marketers and developers are exploring ways to meld the worlds of NFT and cryptocurrencies on the one hand and real estate on the other. Whoever is the first to find the formula that works will reap large profits,” Ansari said. – South China Morning Post
