Late last year, the values of lands in the Metaverse were sparked by a huge capital infusion from tech enthusiasts and business marketers as well as Meta moving into the space with its renaming. Star-studded alt-coin owners and CryptoPunk NFT collectors sought to justify skyrocketing costs by acquiring houses next to those of famous people, many of whom were using the metaverse for promotional purposes so they did grab their Metaverse Land to show off.
By offering a fresh viewpoint on digital transformation, the metaverse challenged several established digital norms. The idea of a shared, open world that everyone with a phone and internet connection can access is wonderful. On the other hand, it’s crucial to consider the benefits provided by the metaverse’s functionalities.
It’s interesting to note that recently, in the crypto and NFT world, metaverse real estate has become one of the most popular phenomena. Although it is no news that the physical real estate market is booming. In fact, some investors are paying millions for real parcels that are not in Beverly Hills or New York. In actuality, the Metaverse lands- digital plots don’t actually exist on Earth. Instead, the land is found online, in a collection of virtual worlds known as the metaverse. Since Meta stated it was investing heavily in virtual reality and even changing its business model, digital land prices have increased by as much as 500% in recent months.
At first glance, the price of a property in the metaverse could appear a little ludicrous. However, metaverse real estate in the form of virtual property has been sold for approximately $2 million. Yes, that high!
However, what are virtual lands, and why are they that expensive? You can learn the basics of metaverse real estate and everything you need to know about virtual lands in the coming explanation.
Virtual Lands- The Digital Real Estates
The possibility for virtual real estate are that it takes center stage as the excitement surrounding the metaverse intensifies. The American rapper Snoop Dogg might be your next-door neighbor if you purchase a high-end piece of real estate in that area. Not just any place, but one that the renowned musician himself has painstakingly bought land there. The plot of land only exists in the metaverse’s digital realm.
This property has a price, a very real and astronomical price, and there is stiff competition, just like any other physical property you own. Someone paid $450,000 to live next to Snoop Dogg in the Snoopverse last year. Snoopverse, which was created in the virtual world known as The Sandbox last year, gives fans an inside look into Dogg’s life, features a virtual version of his actual residence, and serves as a venue for virtual performances, events, and other activities.
Virtual Land Explained
The idea of owning real estate digitally in the metaverse extends beyond the fact that the land in reality does not even exist even at least physically but for its profitable financial option. However, a CNBC investigation shed some light on that notion when it discovered that since Meta switched to its new avatar, the price of virtual real estate has increased by as much as 500%, demonstrating the social media giant’s significant interest in the metaverse.
Simply, digital real estates are plots on digital metaverse platforms that are acquired with cryptocurrencies in the form of non-fungible tokens (NFT). They are now distinct, tradable digital assets with blockchain-recorded ownership. The metaverse ecosystem or a third-party exchange are two options for the owners to sell their land on a secondary market.
In the bitcoin community, the ecosystem for digital real estate has seen tremendous growth. Ironically, some of these land parcels are now more valuable as investments in physical real estate due to the price at which they are currently being sold.
The hype around Metaverse Lands
According to a report by the metaverse data business MetaMetric Solutions, real estate sales on the four main metaverse platforms—The Sandbox, Decentraland, Cryptovoxels, and Somnium—reach $501 million in 2021. According to the research, sales might approach $1 billion in 2022.
Atari sold land in The Sandbox metaverse to virtual land producer Republic Realm last year for a record-breaking $4.3 million, according to the Wall Street Journal. A plot of land in Decentraland was reportedly purchased by the Metaverse Group for $2.43 million in the same year. The Metaverse Group bills itself as the first vertically integrated real estate company specializing in the metaverse economy.
Users of the Metaverse are connected to one another in various spheres of their lives in a three-dimensional virtual world. Through a single web browser, users can view numerous websites on various platforms. In futurism and technological terms, the metaverse is a hypothetical iteration of the Internet as a single, universal and immersive virtual world that is facilitated by the use of virtual reality and augmented reality headsets
Through augmented reality and digital avatars, the metaverse enables users to take part in captivating, immersive experiences such as concerts, working spaces, interviews, games and many others. With a VR (Virtual Reality) headset, you can work virtually or unwind after work by playing games and doing all sorts of activities in the virtual space. However, it doesn’t require that those spaces be exclusively accessed via VR or AR. Virtual worlds—such as aspects of Fortnite that can be accessed through PCs, game consoles, and even phones—have started referring to themselves as “the metaverse.”
With the growing telecommuting trend, more people rely on virtual spaces and digital modes of communication like video and web conferencing to socialize and interact online. To take their existing digital experience to the next level, Metaverse brings a range of real-world capabilities to users in a 3-D immersive world. Along with providing gaming and social interaction opportunities, the metaverse also makes way for additional use cases such as decentralized governance, independent creator economies, and digital identities.
Real Estate in Metaverse
The availability of virtual land in the metaverse in the form of NFTs has altered traditional perceptions of digital assets. Almost every element of our lives has been moving toward the virtual realm as new technological developments have appeared. The entire world learned how to move work and study to the digital realm in the face of a pandemic.
The idea of a metaverse is the best option for improving the chances of digital transformation initiatives. This is practically one of the justifications for thinking about the possibility of NFT-based real estate in the metaverse. Non-fungible tokens have emerged as distinctive players in the cryptocurrency market for the recently updated conceptions of ownership.
NFTs have been the one key tool opening up opportunities for a virtual property on the metaverse. As a result, in the metaverse, real estate basically refers to an NFT that represents a piece of virtual real estate on the platform. The relationship between metaverse real estate applications also makes a great connection between the actual real estate and NFTs for virtual real estate.
Sandbox, for instance, is a metaverse platform that takes shape as a game and a virtual world. Unlike traditional video games in which users simply play through the levels until they beat the game, in Sandbox, users have the opportunity to claim ownership in the world itself. Plots of “land” are bought, sold and traded.
Anyone can purchase in the metaverse, but it is important to identify your reasons for buying digital property and assess whether or not doing so is a good investment. For example, if someone wants to promote their business or invest in something tech-forward, the metaverse is probably a good choice. The metaverse also opens up investment opportunities for those who might not otherwise be able to do so since, in general, property prices are much lower than that of traditional real estate.
However, for those who are adverse to the unknown and risk, this might not be the appropriate investment avenue.
Similar to real-world transactions, metaverse purchases will go through brokers and property managers. But unlike real life, these brokers and property managers do not need a real estate license and are not regulated by any organizations. In this space, buyers and sellers will want to work with someone they can trust.
Why the hype around Metaverse Real Estate?
The first obvious thing you seek for in a guide to metaverse real estate investing is an explanation of the causes of the rising excitement around virtual world real estate.
- Unreal Pricing
The unreal cost of virtual real estate is among the important factor driving the unprecedented surge in interest in “what is virtual real estate.” The $450,000 paid by Snoop’s supporters is just the beginning. According to reports, about 65000 virtual real estate transactions were placed in 2021 on the Sandbox, the largest virtual world or metaverse platform in the world.
Nearly $350 million was the total transaction volume generated by the Sandbox’s virtual properties in the metaverse. Decentraland, a different well-known metaverse platform featuring virtual real estate, on the other hand, also displayed encouraging performance in terms of transaction volumes. In its metaverse, Decentraland recorded almost 21,000 transactions involving virtual properties in 2021, totaling $110 million.
In just one year, the average cost of virtual real estate has soared from $100 to roughly $15,000. From November 2021 to January 2022, there were roughly 8000 lands worth of real estate transactions in the metaverse each month. In these circumstances, the typical transaction cost is approximately 3.5 ETH, or roughly $13,000. However, starting January 2022, the average cost of metaverse real estate has increased past the 5 ETH threshold, or more than $18,000. Such improbable pricing projections demonstrate the clear cause of real estate’s rising popularity in the metaverse.
- Endorsement by celebrities
Start by noting the fact that a Snoop Dogg fan shelled out a stunning $450,000 to buy virtual land close to Dogg’s virtual mansion in the Sandbox metaverse. The well-known American rapper has been developing his own interactive universe in the Sandbox metaverse.
The so-called “Snoopverse” is a Voxel art rendition of Snoop’s actual California residence. Around 22 separate plots of land, three estates, and 67 premium plots of land have all been collected by Snoop Dogg. Celebrities’ involvement in metaverse real estate essentially lays out prospects for promoting the new trend’s adoption.
Investors Are Paying Real Big Money For Virtual Properties
Soon after, news of record-breaking sales broke, such as the $450,000 purchase by a buyer only known as P-Ape of a nine-parcel property adjacent to a Long Beach rapper. A single plot of 16 by 16 meters was purchased by an unknown buyer for 25 ETH, which at the time was worth almost $60,000, just down the virtual block.
Values peaked around the beginning of this year, but the bear market in the cryptocurrencies market and slower-than-expected adoption of the metaverse have decimated both prices down to 85% since January and buying volume is nearly nonexistent.
When it comes to investing in NFTs, or non-fungible tokens, Chris Adamo feels that he is a bit of a latecomer. Summer 2021 marked the first time he had one. But Adamo is ahead of the game when it comes to purchasing real estate in the metaverse. A virtual real estate broker was utilized by the Miami-based VC and a group of associates going by the name of the MetaCollective DAO to purchase 23 plots in The Sandbox, a user-generated, blockchain-based virtual world, for prices starting at 1ETH (about $3,000 then) eight months ago. About 42ETH, or $130,000, was paid for a nearby property.
The property, or pixels, actually, borders an Adidas-owned block of land as well as the grounds of the Bored Ape Yacht Club, a popular NFT neighborhood. As a tribute to Silicon Valley’s renowned Sand Hill Road and The Sandbox, the platform where this property is located, they are calling it Sandbox Hill Road. The plots’ value has increased by around ten times already, potentially making their holdings worth millions of dollars.
Similar to a real-time multiplayer video game, actual people interact in these virtual worlds as avatars or cartoonish characters. A long-term goal of Meta and other businesses is to create 360-degree immersive worlds that people will access through virtual reality goggles like Meta’s Oculus. Currently, people can access these worlds through a standard computer screen.
According to a recent analysis by cryptocurrency asset manager Grayscale, the digital economy may soon reach $1 trillion in sales. Major performers like DJ Marshmello, Ariana Grande, and Justin Bieber can be seen here performing as their own avatars. On her own digital island, Paris Hilton even provided the music for a New Year’s Eve celebration.
The Sandbox is equivalent to New York City, according to Adamo. “Like Soho or the Lower East Side right now.” It’s hip, or at least they have a lot of faith that it can be.
If anything that exists digitally, including digital art and virtual environments, is included in the metaverse, then the real estate plots that are being purchased can be considered as just one kind of metaverse investment, frequently classified as NFTs. Each of these virtual worlds like The Sandbox, Decentraland, Cryptovoxels, Earth2, Nifty Island, Superworld, and Wilder World all offers users something unique, including communities of particular early adopter types, hyper-realistic graphics, and game choices.
Big things are in store for MetaCollective’s empty squares. The goal for MetaCollective’s leader, Drew Austin, managing partner at venture capital firm RedBeard Ventures, is to turn this portion of the future internet into a learning facility or university for self-education on all things web3. He imagines a completely social experience, rentable dorm rooms, and virtual classes. In this new digital environment, “we can reconstruct what an instructional digital experience is,” he claims. All of the stuff has not yet been constructed or created. But the cash is genuine.
According to Andrew Kiguel, CEO of Toronto-based Tokens.com, which invests in digital assets related to non-fungible tokens and metaverse real estate, “the metaverse is the next generation of social networking.” You can visit a museum, a music festival, or a carnival, according to Kiguel.
Recently, Kiguel’s business spent about $2.5 million buying a plot of property in Decentraland, one of many well-known metaverse planets. Prices have increased by 400% to 500% recently, according to Kiguel.
Another popular metaverse setting is the Sandbox, where Republic Realm, a firm run by Janine Yorio, paid a record $4.3 million for a piece of virtual real estate. Yorio tells CNBC that her business last year sold 100 virtual private islands for a price of $15,000. Interestingly, she noted, “Today, they’re selling for approximately $300,000 each, which is the same as the average home price in America.”
The platforms and developers, who are raking in investment money from early customers, are the main winners—at least for the time being. The Sandbox creator Animoca Brands has announced that its valuation has increased to $5 billion from little over $2 billion in 2021. A more well-known game platform, Roblox, went public on the New York Stock Exchange in March 2021 with a $42 billion valuation. According to one study, the market for virtual gaming worlds alone might be worth $400 billion by 2025, with the metaverse business as a whole estimated to be worth over $1 trillion.
As a result of their dual investments in the platforms themselves and in personal bets like DAOs purchasing and developing additional land, many of the early purchasers of virtual real estate are ultimately acting in their own best interests. (Steinwold’s fund, for example, invests in both platforms and specific properties; Austin manages a fund that makes bets across five different universes.) The system is also in its infancy; Adamo is the first to concede that it will be a decade before it is widely used, and Austin says there is still a lot of “room for development,” from the user interface to the technically challenging process of purchasing real estate.
However, there is a demand for web3 investors. Since Facebook’s highly-hyped switch to Meta, virtual property prices have increased by as much as 500%, according to CNBC. Plots in certain virtual worlds are already priced similarly to houses in the real world.
However, there are more and more means to claim land and plans to develop property every day, despite the lackluster experience for ordinary users. A virtual representation of physical property will be created in The Sandbox by ONE Sotheby’s, with ownership transferring between the two.
Cynicism is appropriate if this all seems far-fetched. Even investors have a reasonable degree of skepticism around the existing incarnations of virtual worlds. Steinwold has garnered more than $100 million from investors for his funds, but he believes that most of the speculation surrounding the virtual world is currently overvalued. In fact, he asserts that overvaluation in web3—from NFT art to crypto tokens—is “true universally.” He continues to spend “at the company-building level” despite this, though.
The Value of Real Estate in the Metaverse
The benefit of developing distinctive digital experiences for particular virtual properties creates better prospects for advertising. A piece of real estate in the metaverse, for instance, provides a suitable base for building billboards or erecting digital museums to showcase NFT collections. But the viability and potential of virtual real estate areas to act as marketing places will be greatly influenced by location.
Real estate values across various metaverse platforms don’t always correspond to average prices. The value of metaverse property, on the other hand, is primarily concerned with what you can do with it. For an understanding of what may be done with virtual real estate, let’s use the Sandbox metaverse as an example.
On some well-known marketplaces, users can exchange the metaverse’s real estate using non-fungible tokens, or NFTs. In these circumstances, increasing the metaverse experience in various virtual lands is the main goal of virtual real estate in the metaverse. However, it can also give designers the freedom to incorporate essential artistic components.
Virtual real estate is allotted in the Sandbox metaverse as a token that acts as a digital proof of ownership. The metaverse allows users to own virtual properties to which they may add their own games and other assets. Users of the Sandbox or brands may design the tokens used to assemble user-generated content.
For virtual real estate owners, the metaverse has a wide range of additional potentially beneficial ramifications. Owners of virtual properties may, for instance, construct many kinds of gaming environments in the metaverse. Now, the landowners might charge for the experiences or provide them for free to other people.
Getting Hands-on Virtual Real Estate In Metaverse?
A good picture of virtual real estate is painted by the astounding popularity of metaverse real estate and its prospective use cases. One might also ponder the optimal method for getting access to the metaverse at the same time. It’s interesting to note that finding real estate in metaverse platforms doesn’t require extensive searching. Speaking of metaverse platforms, you can begin the process of purchasing virtual property by registering on a well-known metaverse site. The two most well-liked options for stepping into the metaverse’s world of virtual real estate are The Sandbox and Decentraland.
You would then require a digital wallet with the necessary funds to buy virtual property. It’s interesting that you can buy, rent, sell, or even flip virtual real estate in the metaverse. The validated NFT title assigned to each virtual real estate renders all ownership issues meaningless.
Without any complications, you can try your hand at investing in metaverse real estate by following the easy procedures listed below.
- Visit the metaverse portal to look through their real estate section.
- Look through the various virtual properties and contrast them according to price.
- By clicking on the desired virtual land parcel, you may review its details. You might discover details on the cryptocurrencies accepted for the purchase, for instance, ETH, Bitcoin, Dogecoin etc.
- The next step is to connect your digital wallet to the metaverse platform account. Metamask naturally enters the conversation as one of the most appropriate digital wallets for transactions involving metaverse real estate. It offers seamless connectivity with a variety of metaverse property platforms.
- To buy virtual real estate, make sure you have the precise coins needed for the transaction. From several exchanges, you can buy the desired quantity of cryptocurrencies, which you can then safely keep in the digital wallet.
- Once all the necessary steps have been taken, all you need to do is choose the virtual property on the metaverse platform and make the necessary payments using your digital wallet. You can obtain an NFT as proof of ownership of the virtual property after buying. The NFT would be delivered right to the online wallet you have connected to the metaverse platform. Your metaverse property is viewable in your digital wallet under the NFTs page.
It is admirable that purchasing virtual property in the metaverse is such a straightforward process. For buying real estate on different metaverse platforms, you don’t need to go through any authorization processes or acquire any technical knowledge. All you need is a functioning internet connection, a digital wallet, and a metaverse account or equivalent wallet with the virtual property. You can purchase the virtual property of your choice by exchanging the necessary amount of cryptocurrency in just a few easy steps.
The overall perception of the value of metaverse real estate paints a positive image for the expansion of virtual real estate. The focus of the conversation is slowly shifting away from the definitions of virtual real estate and toward the benefits it provides. Virtual real estate can be quite important in the metaverse, where many brands are attempting to advertise.
There are increased chances for its acceptance due to the simple accessibility of virtual property across many metaverse platforms. The future of real estate in the metaverse appears promising thanks to strong answers to questions about how to value it in terms of utility.
In my opinion its currently more hype and idea and super speculative to buy so-called metaverse land, because you are betting that the ecosystem in which you buy it will make it and even that is unsure.
Quick and even big gains can be made but be careful when investing here, high risk high reward.
In the future, the tech and metaverse and its so called land plots will surely be interesting long term for many cases, like store frons, advertising and so much more.
Moritz Pindorek (Moritzpindorek.com)
Social Media, Marketing & Blockchain
Crypto/Web 3 Advisor, Top 10 Crypto Influencer 2022(Forbes Monaco) & Top 10 Entrepreneur 2022 (Forbes Monaco)
Owner and writer for Cryptouserguide.com