Virtual Real Estate is Booming in the Metaverse: Here’s Everything you Need to Know
With the rising popularity of NFTs and the metaverse, virtual real estate has become a lucrative market for many in the digital space. Take Republic Realm — in November 2021, the metaverse real estate company bought a virtual property in The Sandbox which was worth $4.3 billion. There has never been such hype in digital properties. Thanks to the metaverse, investors are now paying billions to buy virtual lands in the metaverse.
This shift to metaverse real estate first became prominent during the pandemic when physical real estate markets took a setback. Recently, international rapper Snoop Dogg invested $450,000 in The Sandbox to buy real estate land. He named it the “Snoopverse.” Another blockchain-based company Tokens.com invested $2.43 million to buy a virtual plot of land in the Decentraland metaverse world.
The metaverse integrates a 3D virtual world using augmented and virtual reality (AR and VR) to create an immersive environment. Those who make purchases in the metaverse use non-fungible tokens (NFTs) as a safe exchange medium in the virtual world.
Understanding the role of metaverse and NFTs in the world of virtual real estate
The metaverse, though still in its infancy, could be a game-changer. It integrates the virtual world with the real world, and people can enjoy this new world with the help of VR headsets or AR glasses. The goal is to design a virtual space where people can interact, socialize, work, entertain, and enjoy real-time live experiences. Now, people can invest and buy real estate in metaverse virtual worlds like Decentraland, The Sandbox, and Axie Infinity.
Cryptocurrencies and NFTs can be used to trade in the digital world. In previous years, NFTs were mostly used to buy virtual artwork, but they can now be used to buy virtual houses and real estate plots in NFT platforms like OpenSea. NFTs record the ownership and also help to transfer ownership from the seller to the buyer.
Virtual land use cases
Landowners can use their metaverse real estate for several reasons such as:
- Social interactions — The main idea of the metaverse is to create a collaborative social platform where people could interact with each other. People can use this virtual land for partying, holding office meetings, and hosting house parties, gatherings, or community meetings.
- Advertising products and services — Popular virtual real estate which has a high density of visitors can be used for promoting services or products through advertisements.
- Gaming platforms — Axie Infinity, an NFT gaming space, sold nine land parcels at a record sum of $1.5 billion in November 2021. These lands can be used for hosting game wars where participants can earn rewards or invest in NFTs to buy avatars or gaming weapons.
- Hosting concerts or carnivals — As the pandemic hit us, life took a setback. Metaverse real estate can be used to host cultural events and carnivals where musicians can showcase their talents and earn money. Metaverse companies are also thinking of investing in digital real estate to conduct digital fashion shows and sell virtual clothing. This will generate a source of income for hundreds of musicians, technicians, and artists who can now earn money sitting at home.
- Office work — Companies can create virtual offices for their employees. PwC Hong Kong, has decided to buy virtual plots from The Sandbox for their Web3 advisory services.
What determines the price of virtual lands?
- The utility of the land — Virtual lands have multiple utilities. The price of virtual land depends on its purpose. Some lands are used for hosting events or for advertising a product or a service. If you are an owner of virtual land, you can rent a plot of the land for advertisements and get paid by advertisers.
- The type of platform — Prices also depend on the popularity of the NFT platform such as The Sandbox or Decentraland. Demand for plots in Decentraland and The Sandbox is much higher than the supply, so buyers have to pay hefty sums to buy a plot on these platforms.
- Speculate the market — The metaverse virtual land business is booming. A subsidiary company of Tokens.com called the Metaverse Group spent a record-breaking 618,000 MANA tokens, which equates to about 2.4 million, to purchase a plot of virtual land. The Sandbox is not far behind. They boast of having the highest number of active trades with a recent total trading volume of $86 million.
Factors to consider before buying a virtual land
Before you buy your NFT virtual land, here are a few factors to consider.
- Choose a reputed marketplace to buy your virtual land — Use a reputed NFT marketplace like OpenSea, Polka City, or SuperWorld, to buy your virtual real estate. You can also go to official metaverse platforms like The Sandbox, Axie Infinity, or Decentraland to buy real estate properties.
- Choose a wallet — Select a wallet that supports the platform’s cryptocurrencies. For example, to buy land plots in The Sandbox, you will need SAND or ETH tokens. Web-based or mobile browsers like Binance Chain or MetaMask wallets are popular and can be used on these platforms.
- Connect your wallet — The next step is to connect your wallet to the marketplaces. You can buy or bid on a land plot once you’ve transferred funds to your wallet.
- Decide whether you want to buy or rent land — If you are already an owner, then you can rent your land to a third party. Some people rent lands to conduct a specific event or advertise a product. The rental fee depends on the type of plot, size, and traffic generated.
Virtual real estate has emerged as a highly lucrative asset as they guarantee ownership to their investors. The metaverse is still a new concept and buying virtual plots in the metaverse world can be more expensive than buying physical real estate. As more and more investors and big companies are showing their interest in virtual land markets, the competition is high. It is best to study the market, ascertain the risks, and follow safety protocols.
Originally published at https://www.cryptohopper.com.