What factors influence the pricing of land in the metaverse?
Land prices in the metaverse are determined by a variety of factors.
These are metaverse-related technical aspects that influence supply and demand, and consequently pricing.
Joel John, a fintech and DeFi expert, described these elements.
John reminds out that real estate trading in the metaverse has been all the rage recently, but it only accounts for about 10% of overall NFT trade by volume.
Overall affluence, memetic proximity, geographical context, financialization, and art are the key elements that influence prices.
The overall turnout was good.
The same logic holds true for physical locations, such as those found within cities: the number of people that visit them. To put it another way, the more people who spend time on these grounds, the more valuable they become.
However, because this component changes with time, a landowner must make an effort to attract people to his or her property in order to enhance its worth.
The value of a piece of land improves when it is close to another desirable piece of land. In fact, if the surrounding areas are already heavily utilised, this makes it easier to attract people to one’s own location.
John also claims that the value varies based on the amount of footfall/eyeballs present in the metaverse. That is, buying land dilutes the amount of attention they can devote to each particular piece of land, thus buying too much land is not a good idea.
The geospatial context reveals the metaverse’s proximity to commercial businesses. Indeed, when enterprises are concentrated, there is more money circulating, increasing the possibilities of extracting value from one’s land.
This is comparable to what happens in traditional real estate, when multiple businesses frequently strive to unite to concentrate clients. As a result, the metaverse may see collective groups cooperating to purchase enormous areas of land in the future.
The metaverse’s activities and land prices are expected to be influenced by financialization.
These are actual financial acquisition tactics, such as renting or selling sections of land at higher prices, with the goal of both holding and creating returns.
This factor is primarily related to video games. The level of creativity and artistic level associated with land that is part of a game can have an impact on the pricing in the gaming industry, therefore the level of creativity and artistic level linked with land that is part of a game can have an impact on the price.
Because real estate in the metaverse has a high barrier to entry and owners typically have an incentive to develop it rather than sale it in the short term, John believes it will not trade in the same manner as tokens in crypto markets.
As a result, unless property is split up or buying clubs are created, costs for retail consumers may become excessive in the future.
Indeed, he believes that collectives will play a vital role.
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Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.