Damac sets aside $100m for construction of digital cities in metaverse

Damac Group, parent company of Damac Properties, plans to invest $100 million (Dh367.3m) to build digital cities in the metaverse.

The project, which will be run under a unit called “D-Labs”, will be led by Damac general manager Ali Sajwani, who will assume the role of chief executive, the company said.

The initiative forms part of the company’s ambitions to move into digital assets and non-fungible tokens (NFT).

“We are keen to pioneer the possibilities that the metaverse offers in ways which allow us to be more connected and involved with our customers,” said founder Hussain Sajwani.

The company delisted from the Dubai Financial Market last month and went private as it struggles to remain profitable. Maple Invest, a vehicle fully owned by Hussain Sajwani, submitted a notice last year for the mandatory acquisition of all its shares to take the company private.

Damac Properties narrowed its net loss for the 2021 financial year to Dh531m, from Dh646m recorded a year earlier. Since last year, Damac Properties has been offering prospective homebuyers 3D virtual tours of properties that use virtual reality (VR) and augmented reality (AR) technology.

Damac Group intends to branch out to virtual homes and digital property, digital wearables and digital jewellery through the company’s acquisitions of Swiss jewellers De Grisogono and Italian fashion brand Roberto Cavalli, the company said.

Mr Sajwani said last month that he would invest $1 billion to build a global network of cloud data centres as the conglomerate diversifies its operations to include the fast-growing digital sector.

The metaverse is a digital space where participants, represented by three-dimensional digital representations called avatars, interact. In other words, it is an online equivalent of a person in a virtual world – performing, interacting and transacting.

No one owns the metaverse, not Meta (formerly Facebook), even if it named itself as such.

As is the case with the internet, the metaverse can be expanded under internationally adopted regulations.

Sales on the four major metaverse platforms for “property” reached $501 million last year and are expected to double this year, according to MetaMetric Solutions.

Property in the metaverse is, for now, bought and sold through NFTs – which serve as a proof of ownership – that one has claim to a certain space on a given metaverse platform. This is a contract with the metaverse provider, which is not subject to the same property laws or rights of traditional real estate.

The size of the metaverse real estate market is expected to grow at a compound annual rate of 31.2 per cent from 2022 to 2028, Brandessence research said.

In February, what was thought to be the world’s first metaverse mansion was put on sale in the form of Hampton Hall in England.

Dubai property broker Union Square House said this week it plans to sell the region’s first “metaverse mansions”, where buyers can own an NFT with and without the bricks and mortar asset.

The broker is looking to capitalise on Dubai’s “high level of familiarity” with the virtual world, it said.