That isn't going to be feasible.
DisplayPort carried over USB-C is an alternate protocol which is implemented at the hardware level in the USB or Thunderbolt 3 controller, physically routing the DisplayPort signal from the computer's GPU to the appropriate pins of the USB-C connector, after negotiation between the computer and display to enable that mode of operation.
Virtual Machine software can intercept the USB protocol via its drivers running in the host kernel to allow a VM to "capture" a USB peripheral, but alternate protocols on USB-C are handled at a lower level in hardware and there is no point at which software can intercept and redirect the signal.
In effect you are trying to get a VM to take over a DisplayPort on the host. You can't do that for any type of display connector because there is no way for the VM software to feed a raw display signal to the connector.
Addendum:
Note that there are some USB peripherals which provide a display output. These are generally referred to as DisplayLink and they implement a simple GPU as a USB peripheral. This type can be controlled from a VM, because the display output is handled entirely within the peripheral and the VM can take control of it on the USB side.