Real estate in the metaverse is very similar to that in the real world, but at its most basic sense, digital real estate is essentially a bunch of pixels. However, they aren’t simply computer photos, and in the metaverse, their functionalities extend far beyond being building blocks for static images. They are programmable areas on virtual reality platforms where users can interact socially, play games, market NFTs, attend meetings, attend virtual concerts, and carry out a variety of other virtual activities.
Digital real estate is anticipated to increase in value with the growth of the metaverse. In fact, once Facebook changed its name to META and signalled a targeted interest in the metaverse, there has been a marked boom in metaverse real estate in the last quarter of 2021. The price of metaverse real estate is anticipated to increase by 31.2 percent CAGR from 2022 to 2028 as its popularity rises.
Why should you purchase land in the Metaverse?
While there are several kinds of digital real estate available, LAND is a non-fungible ERC-721 token on the Ethereum blockchain, or in other words, a piece of digital real estate in The Sandbox. Users can connect with others online thanks to metaverse real estate. People can socialise and play games on their digital property. By charging for access or selling their NFTs, creators can make money off the content of their works. Brands can organise virtual product launches, advertise their services, and offer distinctive customer experiences using their virtual assets. These digitally represented land parcels present a profitable prospect for real estate investors. Metaverse properties can be built, flipped, or leased just like real-world ones. In fact, there are a wide range of potential applications for metaverse real estate.
How is land valued in the Metaverse?
A piece of LAND cost only $20 when Decentraland staged its inaugural LAND sale during the Terraform Event in December 2017. In 2021, such parcels brought in an average price of over $6,000. Prices rose to over $15,000 per LAND token in the beginning of 2022. Businesses have been significantly investing in virtual land holdings due to the optimistic prognosis for metaverse growth. For $1.7 million, the blockchain technology firm Tokens.com purchased 50% of Metaverse Group, a provider of virtual properties, in October 2021. The Republic Realm set records in November when it paid a record-breaking $4.3 million for a home in The Sandbox.
Prices have risen further as a result of the increased interest in metaverse assets. The price range for digital land is from $6,000 to $100,000, but some deals are reportedly going for considerably higher prices. A property next to Snoop Dogg’s in The Sandbox has been one of the most expensive sales in recent memory. It was supposedly purchased for $450,000 by an unnamed buyer.
How do you buy land in the Metaverse?
Buying a metaverse property functions very similarly to buying an NFT. Your ownership deed is a special bit of code on a blockchain. This code confirms your ownership of or rights to that digital parcel. You will therefore need your own digital crypto wallet in order to begin building your portfolio of metaverse properties. Before creating a new wallet, you might wish to look into the platforms that employ particular cryptocurrencies for their transactions. After that, go to the online metaverse portal and register for an account. To purchase land and other assets, you must link your digital wallet to the site. Select a piece of land, then buy it.
You can also purchase metaverse land through brokers and property managers, just like you do with real-world properties. However, unlike in the real world, metaverse brokers are not subject to any laws or licencing requirements. Therefore, be sure to only deal with trustworthy parties.
Where can you buy LAND in the Metaverse and what should you buy?
The Big Four control the majority of metaverse real estate. Decentraland, Sandbox, Somnium Space, and Cryptovoxels are some of the key participants in the metaverse economy. These platforms are the owners of 268,645 parcels, including the most expensive ones on the market. Similar to real estate, location is crucial when picking a piece of virtual land in the metaverse. As major companies like Atari, Samsung, Miller Lite, and Adidas stake their claims on The Sandbox and Decentraland, the value of the parcels in these virtual environments keeps rising. Many early purchasers of lots close by or adjacent to them have profited greatly from their investments.
If you intend to invest in metaverse real estate, search for locales with growth potential. Locations near prospective gathering points will be worth more than those in unremarkable neighbourhoods. Think of lots that are close to developed areas yet outside of them. You can purchase these properties for comparatively less money, build on them, and watch as the value increases.
Metaverse Real Estate transactions till date
Metaverse real estate sales have been highly profitable, signalling the incredible potential it offers to early “settlers”:
- In 2021, Sandbox LAND grew by as much as 15,000%. With a total of $350 million for 65,000 transactions in virtual land, it also had the highest transaction volume in the same year.
- Revenues of metaverse real estate on the four major platforms amounted to $501 million in 2021; this year, sales are projected to quadruple to $1 billion.
- A research study that valued the metaverse market at $47.69 billion in 2020 predicts that the same sector will generate $828.95 billion in sales by 2028.
- Major metaverse platforms now charge an average of $12,684 for a shipment, up from $1,265 previously.
- There are a total of just twenty-five thousand individual cryptocurrency wallets that invest in metaverse real estate.
Investing in Metaverse real estate
Although the metaverse is predicted to expand significantly over the coming years, it is still an emerging field that is far from being stable. One reason is that all of your land and assets on a metaverse platform vanish if it goes permanently down. The question of valuation is another one. How to evaluate a piece of land with artificial scarcity and an unknowable future worth is a persistent conundrum. Metaverse land is vulnerable to fluctuating situations since its value depends on extremely volatile cryptocurrency.
High Risks High Rewards
Ultimately, investing in metaverse properties is highly speculative and might not always be profitable because of the numerous unknowns. However, the quick transition to complete digitalization in almost all businesses has the potential to produce significant returns on investments in metaverse real estate. Hence, the best way to do that is learn all you can about the metaverse before making any financial decisions, evaluating all the risks and challenges and balancing them against the potential advantages.
