The metaverse is still a young concept. Investments in it carry significant risks. However, given the equally high likelihood of high profits, it might be worth the risks. However, you must conduct your due research before deciding to accept risks, just like with any other investments and business endeavors.
We provide you with a thorough overview of metaverse real estate in this article. Find out what it is, how it operates, what risks and difficulties you can encounter, and how you can turn it into a profitable investment.
What Is Real Estate In The Metaverse?
Land plots in virtual worlds are referred to as metaverse real estate. They are pixels in the most basic sense. They aren’t just computer photos, though. They are programmable areas on virtual reality platforms where users can interact socially, play games, advertise NF-Ts, hold 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 reality, once Facebook changed its name to META and signaled a targeted interest in the metaverse, there has been a 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 Buy Real Estate in the Metaverse?
Users can connect with others online thanks to metaverse real estate. People can socialize 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 organize 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. There is a wide range of potential applications for metaverse real estate.
How Much Is Real Estate in the Metaverse Worth?
A piece of land only cost $20 when Decentraland staged its inaugural LAND sale during the Terraform Event in December 2017. In 2021, such parcels were brought at an average price of over $6,000. Prices have soared to around $15,000 per LAND token by 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 I purchase a metaverse asset?
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 digital crypto wallet 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 platform. Select a piece of land, then buy it.
You can 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 licensing requirements. Therefore, be sure to deal with trustworthy parties.
Where Can I Purchase Metaverse Property?
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 of the most expensive ones on the market.
With 62 percent of the market, Sandbox now controls the majority of the metaverse’s real estate. LAND here currently costs $11,000 on average, with quality lots going for between $20,000 and $30,000. For a variety of uses, you can buy or rent virtual rooms. There are various-sized family residences, businesses, art galleries, and hangout areas.
Everything on the UGC-voxel platform is created by the community for the community. Voxel works are purchased, sold, and traded by sandbox developers and gamers. They purchase LAND and develop experiences there. They can also earn money off of these experiences by using NFTs and SAND, Sandbox’s utility token.
The Sandbox has developed strategic alliances over the past few years with game developers like Atari, financiers like Square Enix, brands like Shaun the Sheep, and famous people like Snoop Dogg. These collaborations have increased its appeal as an investment platform and a creative area.
A 3D VR platform called Decentraland was created using the Ethereum network. Ownership of land parcels is indicated by LAND NFTs that include the particular grid coordinates and a link to the parcel’s specifics. Users need MANA tokens, which may also be used to pay for in-world goods and services, to buy LAND.
Districts are grouped in the virtual world of Decentraland, and each one contains a certain kind of material. These spaces are accessible to users for interaction, content viewing, and sharing. These districts provide creators and brands with more tailored traffic, allowing them to reach more niche consumers with their content.
If you’ve been playing Minecraft, Cryptovoxels would be familiar to you. You buy land in this virtual environment and use monochromatic blocks to construct structures there. Add colors and other elements to your designs that you can buy with native $COLR tokens to personalize them. The platform also has built-in chat, avatar, and editing features.
Creators and corporations can buy digitized land on which to erect galleries and shops showcasing their carefully picked offerings. At Cryptovoxels, a lot now costs $5,000 on average, but depending on the size and location of the property, costs can reach over $10,000. Land ownership is permanently recorded on the Ethereum blockchain, just like it is in other virtual worlds.
A blockchain virtual reality metaverse called Somnium Space was created by the users. Users can access the 3D virtual world on computers and mobile devices, providing them with rich VR experiences.
Small, medium and extra-large pieces of the virtual area are separated from one another. To create your sanctuary, you can choose from the waterfront or roadside estates. You may monetize your digital assets by importing items like avatars.
Somnium’s in-game items and real estate are tokenized. The Solana and Ethereum blockchains are used to authenticate and record ownership. The average cost of a parcel in Somnium Space is $11,500. In February 2022, the most expensive lot went for $43,100. If you want to buy a parcel but don’t have the money, you can still buy a smaller parcel for $2,000 to $4,000.
There are already more than a dozen platforms that sell metaverse lands in addition to the Big Four. Tamagotchi, Bit Country, Star Atlas, and Axie Infinity are further options.
How Do I Decide Which Land Parcels to Purchase in the Metaverse?
Similar to real estate, location is important when picking a virtual land in the metaverse. As major companies like Atari, Samsung, Miller Lite, and Adidas stake their claims on these virtual worlds, parcels in The Sandbox and Decentraland continue to rise in value. 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 neighborhoods. 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.
Information about Metaverse real estate
We have compiled the most recent data on the market to assist you in making a data-driven choice on whether to invest in metaverse properties or not. Examine these figures to see whether investing in metaverse real estate is a good idea.
- In 2021, Sandbox LAND increased by 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 were $501 million in 2021; this year, sales are projected to quadruple to $1 billion.
- According to a research study, the market for the metaverse was valued at $47.69 billion in 2020 and is expected to 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.
Investments in metaverse real estate originate from just 25,000 unique crypto wallets.
The majority of metaverse real estate figures seem to be encouraging. They show that early “settlers” on the virtual platforms made enormous benefits. You must remember, too, that these words are still young and in the early stages of development. The figures may be alluring, but you might need to go further and consider other factors.
Challenges and Risks of Investing in the Metaverse
Although the metaverse is predicted to expand significantly over the coming years, it is still a young 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.
Large Risks with Large Potential Rewards
Investing in metaverse properties is highly speculative and not at all prospective because of the numerous unknowns. To say there are significant risks would be an understatement. You can quickly lose all of your investments in the virtual world. However, the quick transition to full digitalization in almost all businesses has the potential to produce significant returns on investments in metaverse real estate.
Learn all you can about the metaverse before making any financial decisions. Recognize all the dangers and difficulties and balance them against the potential advantages. Your choice should only be made after you have carefully considered all the advantages and disadvantages.