The Metaverse is the new buzzword for a potential virtual life for everyone. While altogether unfamiliar to the world at large, it entails having a virtual equivalent for everything online. This includes real estate. How it will function and what purpose it will have in everyone’s lives is still unknown.
Here is everything you need to know about digital real estate in the metaverse.
What is Metaverse Real Estate?
The concept of the metaverse is hardly new. Living online and having a digital life is a concept that has been explored in films like The Matrix and Ready Player One. Even its real-life manifestations like Second Life have been functioning for years. However, Facebook’s (now Meta) announcement has brought it into the mainstream.
With that has come to the concept of virtual real estate within the metaverse. The closest thing in existence to metaverse real estate which has reached mainstream success is perhaps Minecraft. While still a game, it’s one that has become just about the most played on Earth. And the structures built on it include things ranging from small cabins to gigantic mansions, castles, and libraries.
In fact, there are entire cities in Minecraft modeled after functioning cities in the real world. Players have invested billions of hours into building these cities as a collective. The game and its parent company Mojang was bought by Microsoft in 2014 for $2.5 billion.
This tells us 2 things:
- Virtual life is something that human beings are investing hours of their lives in
- It is something that companies are ready to pay billions for.
You may wonder why this is since these virtual cities are just pixels and pieces of code after all. Well, yes, but then so is everything that runs on your phone that you can’t live without.
Metaverse real estate promises programmable spaces which can be used for socializing, gaming, and even business. Think of adding every feature you could ever think of to your zoom call. Picture having a virtual meeting room identical to that in your office, except on your computer. Now think of that concept, just on the scale of a neighborhood, a city, or even a country.
What is the Value of Metaverse Digital Real Estate?
Digital real estate is expected to grow due to the huge stake that companies are placing in it. The value of the metaverse real estate market is predicted to grow with a CAGR of 31.2% from 2022 to 2028.
You may ask where these numbers are coming from and who’s investing. Well, a company called Republic Realm acquired a piece of virtual real estate in 2022 for $4.3 million! The acquisition was made from Sandbox, currently the largest metaverse real estate platform. That’s not all though, digital real estate has experienced a boom in the past 6 months. In fact, Metaverse real estate sales estimates reached $500 million in 2021.
The boom in this market has definitely been fueled by Facebook’s Metaverse announcement. However, the scale of its surge shows that the market had been burgeoning for many years. Without the infrastructure and the prevailing interest, such a surge would’ve been impossible.
How Did the Metaverse Digital Real Estate Boom Begin?
Decentraland, an NFT marketplace held its first digital real estate auction in December of 2017. It was called the Terraform LAND auction and it’s been an annual event ever since. At the first auction, a parcel of land cost a mere $20. By 2021, those same parcels of land were selling on the open market for $6,000 apiece. By 2022, the prices had risen to $15,000 per LAND token.
You should think of these pieces of land as just another form of NFTs. However, unlike paintings and digital art, these pieces of land are ripe for development. You can build houses, hotels, resorts, and even skyscrapers on them. Since the digital world is literally a wonderland for your imagination, you can do as you please on your piece of land. The top trends in real-world real estate need not apply.
Sandbox is currently developing 100 islands called the Fantasy Islands on its platform. These islands have their own villas and a market of jet skis and boats. There may even be green homes out there featuring environmentally friendly architecture. On day 1 of their sale, 90 islands were sold for $15,000. Some of them have been listed on Open Sea for $100,000 each.
The trend has become so mainstream in the business world that JP Morgan, Samsung, and PwC have gotten in the game. Even celebrities are jumping into the market. Snoop Dogg, who has been dabbling in NFTs, has almost 200 virtual land parcels in Sandbox. Why? Well, he’s constructing something he calls “The Snoopverse”. He even recently gained a neighbor in the metaverse when someone bought a plot of land next to him for $450,000.
Clearly, this is a trend that is catching fire.
Should I Buy Land in the Metaverse?
This is where the concept of the metaverse gets tricky. At the moment, the metaverse looks like the playground of the rich and famous and of tech entrepreneurs. Everyday folk looking for home probably won’t have any use for a virtual plot of land.
Right now, most virtual real estate is owned by the Big Four. These are the biggest players in the metaverse economy and consist of Decentraland, Sandbox, Somnium Space, and Cryptovoxels. Together, they own over 268,000 parcels of land. Some of them include the highest-priced virtual real estate assets on the market.
Sandbox, the largest owner, currently owns virtual land parcels at an average of $11,000. Premium plots are selling for an average of $20,000-$30,000. They even offer land for rent including homes, commercial spaces, hangout spots, museums, and art galleries. If you’re looking to buy virtual land that can turn a profit, the Big Four have the best-valued plots in the business.
Should you buy some of this land? Well, not if you don’t have the first clue about what to do with it. Right now it’s more of a business opportunity than anything else. If you open up Sandbox or any of the other Big Four websites on your browser, you’ll see a flat map. The environment currently resembles old, low-res RPG games like the original Pokémon games.
If you don’t have the time to learn, buy, or sell these assets, don’t invest. However, if you do have the vision, you can invest in these lands to build something incredible in the future.
Take for example, Drew Austin. He’s a managing partner at RedBeard Ventures, a venture capital syndicate. He’s a leader at MetaCollective, a Decentralized Autonomous Organization (DAO) which bought 23 land parcels at Sandbox. Drew has plans to turn those plots into learning centers, or universities for virtual learning.
What Should I Buy in the Metaverse Digital Real Estate Market?
Any “expert advice” in this area should be taken with a heaping helping of salt. NFTs, virtual assets and the concept of the metaverse is still new and untested. Just like certain NFTs, virtual land parcels may become worthless in the future.
Hence, only invest in real estate that you plan to build on or would like to play with for yourself. Don’t look at them as investments unless you have the time or the patience to delve deep and sell at a profit. This is a market that you should treat as more volatile than the stock market itself.
That being said, if you want to buy, purchase from one of the Big Four. Their products are at least reliable and highly valued by the virtual community.
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Our real estate agents are waiting to get you in to your dream home. All you need to do is contact us at Michael Gailliot Homes. Together, we can begin your journey towards dream home ownership today.