If virtual cities are a question of when, not if, how can leaders prepare now?

The metaverse is set to enhance the experience of city life – and benefit residents and visitors in both the virtual and physical world.

As digitalization touches every aspect of our lives, stakeholders are teaming up to make smart cities a reality. Enabled by technological advances like the Internet of Things (IoT), cloud and edge computing, smart cities support smoother infrastructure, better engagement with citizens and management of public services. Looking ahead, smart cities are set to be complemented by the immersive virtual world of the metaverse.

What is the Metaverse?

The metaverse is a concept of a persistent, online, 3D universe that combines multiple different virtual spaces. It can be thought of as a future iteration of the internet. The metaverse will allow users to work, meet, game, and socialize together in these 3D spaces.

Even though the metaverse isn’t fully in existence yet, the potential and developments of this new tech are rapidly increasing.

The metaverse is already acknowledged as an exciting development – with high potential for businesses across industries. Indeed, the global metaverse market is forecast to be worth USD 783.3 billion in 2024 with a CAGR of 13.1%. Gaming and live virtual entertainment stand out as the primary markets, but stakeholders are also recognizing the potential of metaverse beyond entertainment, as reflected in the USD 13 billion already invested in metaverse real estate and tech.

To tap into this potential, cities around the world are pledging significant investment in programs to develop and implement their presence in the metaverse. Shanghai stands out as the most ambitious pioneer, aiming to grow a metaverse cluster worth USD 52 billion by 2025. Also in the race to fully enter the metaverse is the Seoul Metropolitan Government, which already announced its intention to invest USD 3.3 million in 2021. In the summer of 2022, Dubai unveiled its Dubai Metaverse Strategy, which pursues objectives including the creation of 40,000 virtual jobs and addition of USD 4 billion to the country’s economy in five years.

The trend is also clear in Europe. The Spanish government has promised to provide EUR 3.8 million to SMEs and independent contractors who are engaged in research, development, and innovation initiatives involving Web3 and metaverse technologies. It will be interesting to see what Switzerland, already home to three of the world’s top-ten smart cities (with Zurich, Lausanne and Geneva) according to the 2021 IMD-SUTD Smart City Index (SCI), does next as the journey into the metaverse becomes inevitable.

As a relatively new phenomenon, cities in the metaverse will open up new use cases as the number of users grows. For now, we highlight four areas with high potential:

Policy making and planning

Using the metaverse, city councils can include residents in the decision and policymaking process. They could also use the metaverse as an immersive tool to inform city residents about planned development activities – but also to gather real-time feedback. The result is a faster, more inclusive process with less discontent among the stakeholders concerned.

Digital twins

Within the use case of digital twins are numerous sub-projects. For example, governments could use their city’s metaverse digital twin to offer tourists a virtual travel experience. This may be particularly interesting for celebrations and festivities, enabling city locals and (virtual) visitors to take part in cultural events. On a more serious note, digital twins could be used to bring to life the impacts of climate change, increasing local stakeholder buy-in for environmental and sustainability action.

E-government and services

Rumours abound that metaverse marriages could soon be legal in the real world in some jurisdictions like Singapore. The metaverse offers a new delivery model for less binding civil matters as well. People with limitations don’t need to travel to access city services, while self-service avenues can be created for 24/7 availability. The immersive nature of the metaverse could also benefit healthcare, taking e-consulting to a whole new level.

VR and AR experiences and events

The technology and hardware empowering virtual reality (VR) and augmented reality (AR) has developed in leaps and bounds in recent years, enabling a lifelike, immersive experience at virtual events, from large-scale city celebrations to individual city tours.

The topic of the metaverse is clearly on the political agenda for some countries, and it seems only a question of time until other governments follow suit. The above examples merely hint at the range of applications we can expect to see as the metaverse movement gathers momentum. The first cities have already stepped forward with their metaverse ambitions, but it’s just a question of time until the metaverse is on the agenda for all. Creating a digital twin opens up a world of opportunity, but real-world cities may increasingly find they have to compete with new, emerging cities with no physical parallel. It means city governments will need to work out strategies to stay competitive and highlight the added value of a metaverse city with a physical counterpart.

How will the metaverse impact its residents?

Residents can look forward to increased information, more accessible services, more community connections and new economic opportunities. For example, they’ll save time due to the aggregation of scattered information and the option for self-service without leaving home. Virtual events are accessible to a wider audience than in the real world, and can ultimately help attract virtual visitors to the real-world experience.

In short, the metaverse is set to create a new digital economy, with new opportunities for content creators and entrepreneurs and new modes of income for residents. At the same time, governments should weigh up the risks and rewards and ensure they understand both barriers and enablers.