Despite a housing affordability crisis, Miami is emerging as a hub for cryptocurrency activity and a forthcoming luxury property sale could show what the South Florida real estate market of tomorrow looks like.
ONE Sotheby’s International Realty and Voxel Architects are collaborating with developer Gabe Sierra for Meta Residence, an 11,000-square-foot Miami mansion that will have a virtual counterpart in the form of a non-fungible token, or NFT. A digital token can be bought, sold, exchanged in various forms including images and audio.
The virtual counterpart will exist inside the metaverse on digital platform The Sandbox. The person who buys the NFT at auction later this year will then gain rights to the physical property expected to be finished by the end of the year.
ONE Sotheby’s International Realty agent Michael Martinez plans to execute the property’s sale on the Ethereum blockchain. The property’s reserve, or minimum, price has yet to be determined.
Sierra created the Meta Residence concept and has a construction management background. He has worked in luxury housing development for 10 years after learning from his father, developer Felix Sierra, who has worked as a developer for the past 30 years.
By having a house accompanied by an NFT of it, digital currency users can buy the house directly via blockchain. They would also later have the ability to transfer ownership of the house through smart contracts secured by blockchain.
“My vision of where this ends up is builders and creators building out digital extensions of real-world experiences,” Sierra said. “Whether it’s a house or hotel, you can build a mirror and extend on that for a digital extension of these real-world environments.”
A big question, though, is whether or when real estate NFTs will become mainstream in the Miami-area housing market for the properties middle-class residents can afford to buy. For now, homes like the Meta Residence are for people who can play in the luxury real estate arena.
With a replica of a real world home existing in the metaverse, Sierra said clients from all over the world could virtually tour homes without having to travel to their physical locations.
“A big thing about building NFTs of properties in the metaverse is that you can show off properties much more early on in their buildout to people around the world,” he said. “Traditionally, people have to look at a picture or a rendering. Now we can show people homes in the metaverse.”
Sierra is a proponent of Web 3.0, the next generation of internet that’s unfolding in which users can create and have ownership of the digital space. He sees the Meta Residence as a convergence of the digital space and real estate. He thinks while NFTs will streamline the home-buying process, they will not make real estate agents altogether obsolete.
“A real estate agent still serves a purpose,” he said. “They would have to drive you to 20 houses, whereas now you could have a portfolio of houses they could show you in the metaverse. They would still show where they could buy land. This will make the buying process quicker. It’s just going to evolve how real estate works.”
Attorney Daniel Stabile has taught a blockchain regulation class at the University of Miami since 2018 and also wrote a textbook on the subject. As a member of the Miami-Dade County Cryptocurrency Task Force, he said that crypto can remove the need for certain intermediaries in business transactions like banks with digital currency being reliant on peer-to-peer engagement.
Stabile thinks that inefficiencies in how transactions are traditionally done amplify how crypto can be used in real estate. Many communities around the country are already looking at putting real estate titles on blockchain, he said. Putting real estate deeds on blockchain, he said, could be more secure than having paper records that can more easily be destroyed.
“We have a traditional database system that creates inefficiencies to the point you need title insurance,” Stabile said. “A blockchain is basically a database and can be public. People can have a high degree of confidence in it and it’s a good way to keep track of records.”
The concept of a property like the Meta Residence in Miami makes sense to Stabile, who says he thinks society is not far away from a world in which people seek financing to buy land in the metaverse.
He used the example of a high-end condominium sale to explain how digital tokens — NFTs — could change how real estate business is done.
“If when buying a high-end condo, instead of using cash, you could create a digital token to represent (it),” he said. “A reason for that is you could trade (the NFT) more rapidly and get liquidity 24/7.”
Anthony Varrell is the founder of Only Gems, a Fort Lauderdale-based company that is bringing asset-backed NFTs to the commercial market. His company possesses tangible collectibles such as a Dan Marino rookie Miami Dolphins card and creates NFTs to go with them. Many NFT exchanges only trade digital tokens that represent an actual item as opposed to having physical and digital versions.
Varrell eventually sees NFTs becoming necessary as identification cards like drivers’ licenses and binding legal documents such as property deeds. With the peer-to-peer communication structure of blockchain, he agreed with Stabile that intermediaries such as title companies that add costs to real estate transactions can be eliminated altogether and make the home-buying process less expensive.
“There’s no real reason for there to be a title company involved or any of the intermediaries involved,” he said. “However, if you really look at how the world works, I really think it’s going to take a while for that to take place because with the legacy systems, you can’t just say you’ll be making deeds into NFTs.”
Coldwell Banker regional vice president Nancy Klock Corey does not see the metaverse having a widespread effect on Miami real estate and the home inventory shortage anytime soon, since physical people and assets can’t be used in the metaverse.
Corey said having easily accessible information is essential for communities of all backgrounds to better understand how NFTs are bought, sold and exchanged.
“Whether the consumer chooses to invest in the metaverse or NFTs instead of (physical) real estate (similar to someone opting for the stock market versus buying real estate) still remains to be seen, but is certainly a possibility,” she said.
As Miami-Dade County becomes home to more technologists and finance professionals from other parts of the country and world, Stabile is aware housing in the city has become unaffordable for many of its longtime residents.
Stabile thinks educating residents about cryptocurrency can help more people utilize it as a resource, including to streamline real estate deals. He would like to see Miami-Dade partner with community organizations and activists to provide those educational opportunities.
“Blockchain at its heart is something that can help people,” he said. “A lot of populations are getting punished for not having a traditional banking relationship. With crypto, you can move this money for a fraction. We don’t want this technology to be one for the rich and powerful, we want it for everyone.”