Metaverse Real Estate: The big opportunity for brands & investors?
How did the Metaverse Real Estate sector emerge?
Nowadays, more and more business models are evolving through the digital sector. This evolution is largely driven by blockchain technology and the defi-based apps that are emerging from it.
Blockchain has also led to the emergence of non-fungible-tokens (NFTs). NFTs are digital assets that are mapped on the Blockchain (such as Ethereum). They are unique and can be uniquely assigned to an owner through the blockchain. Their uniqueness is the reason for their value. As the demand for NFTs increases, their value is also likely to keep increasing. This is because, as with all other assets, the value of something is also determined by the supply and resulting demand.
NFTs have created many new business models for companies, digital artists and investors. The market and opportunities in the NFT space are evolving at a rapid pace every day. NFTs can represent physical and virtual assets such as video clips, audio clips, playing cards and even real estate.
One area of NFTs is the real estate market. The virtual real estate market represents real estate in the virtual world as NFTs. Every buyer of a virtual land in one of the Metaverse games receives an NFT that confirms his ownership of their land. These NFTs can be stored in digtal wallets and freely exchanged and sold.
How are brands adopting to the Metaverse Real Estate boom?
Many experts believe that the metaverse will become the place where people meet and spend time together in the future. Interest in the metaverse real estate market has been growing rapidly lately. New record prices are being achieved on a weekly basis. A pioneer in this regard is the game Decentraland. Recently, a piece of virtual land in the game Decentraland sold for $2.43 million. “The land is in the ‘Fashion Street’ area of Decentraland’s map and Tokens.com said it would be used to host digital fashion events and sell virtual clothing for avatars.” In the Axie Infinity game, a rare piece of land in a particularly sought-after area fetched $2.5 million.
These prices are indicative of the huge potential companies, and especially retailers, see in the metaverse. Tokens.com, for example, has stated that they want to create an AR/VR office building on their virtual land in the Fashion District. This building should have representative functions and also generate revenue by renting out rooms and advertising space. In addition, metaverse-based crypto conferences and events will be held there.
Another example of companies moving into the metaverse is Nike. Nike announced in early November that it will enter the metaverse and collaborate with gaming platform Roblox to create “Nikeland”. Nikeland is intended to become a place where Nike fans “connect, create, share experiences and compete,” with the “goal to turn sport and play into a lifestyle,” according to the announcement.
All metaverses are subject to the same principle: scarcity. There is always a limited amount of digital land that exists and can be acquired. And as in the physical world, only a small fraction of the virtual land is truly desirable and valuable because of its location.
Opportunities (and risks) of the Metaverse Real Estate Market
As outlined above, the Metaverse offers a wide range of opportunities for companies and investors.
Companies will be able to use the Metaverse to connect even more intensively with their customers. Should Nike’s vision become reality, the Metaverse could open up huge investment opportunities that actually bring people, celebrities and brands closer together. A research report released in late November by industry giant Grayscale predicts that the value of the Metaverse sector could grow to $1 trillion in the coming years as mainstream audiences actively engage with and immerse themselves in these burgeoning virtual worlds. (https://cointelegraph.com/news/3d-metaverse-marketplace-metamundo-aims-for-2022-launch-with-new-funding )
We are still in the early stages of this evolution. For brands, the question already needs to be what their strategy is for the metaverse. As a company, it won’t be enough to just secure a piece of land in a hip neighborhood in the Metaverse. It needs a strategy that can be worked towards in the long term but at the same time is flexible enough to be able to react to the regular innovations.
This could also be the biggest opportunity for investors. While it is now almost impossible for a normal investor to secure a piece of land in a coveted metaverse like Sandbox (at the beginning of December we are talking about almost $12k for the cheapest piece of land in Sandbox on opensea.io). However, there are still ways to get land. Public sales are held regularly at The Sandbox, where you can get a piece of land at a cheaper price if you’re lucky. There are also other metaverses that have just started or are still in development. The key here is to do your own research to discover potentially promising metaverses and secure well-positioned virtual land early on.
Another possibility to invest in the emerging metaverse real estate market are the in-game currencies of the metaverses. At The Sandbox this is the SAND token, at Decentraland the token is called MANA. To be sure, these tokens have risen massively since Facebook announced it was changing its name to Meta. Still, it may well be that we are only seeing the beginning of a development here that still has massive potential for growth. Using this method, it is possible to invest in the metaverse even with a smaller budget.
At the same time, the risk of a bubble should not be underestimated. Much of what we hear today about the Metaverse was already said about the game Second Life in 2007. After a very successful time and companies that had invested there, this metaverse has now been abandoned by its users. There is always the risk that a metaverse will not catch on or that the technology will not or only slowly be adapted by users.
Conclusion
The NFT market is evolving every day, bringing new opportunities and innovations. The digital world and enterprises are just beginning to understand this evolution. This provides an ideal time to engage with the Metaverse real estate market and its huge potential and explore the many opportunities as a business and investor. The important thing here will be to identify the most promising metaverses and to keep a constant eye on the rapidly changing market conditions. A long-term strategy with room for adjustment will help here.
