What is Metaverse Real Estate?
The Metaverse is designed to be a virtual reality where people can interact, play games, and in some cases collaborate.By leveraging rapidly improving technological capabilities, the Metaverse will It allows users to have a virtual place to gather, a kind of digital public square. Assuming that happens, these cosmic universes could become very hot assets.
Various virtual worlds have begun selling land to the public. And over the past two years, the idea of virtual land as an investment has started to gain traction.
In early 2020, rapper Travis Scott gained widespread recognition when he held a concert in the world of the Fortnite video game. This has opened many eyes to the possibilities of the virtual world. Celebrities such as Paris Hilton, Jake Paul, and Snoop Dogg have since established properties. and business within the metaverse. For example, Snoop Dogg built a mansion in his Sandbox metaverse, which sparked speculation as fans rushed to claim open space around Snoop Dogg’s compound. Reported in Fortune magazine.
It’s not just celebrities who are participating. Corporate money is also starting to get involved.
Coca-Cola (KO) has joined a promotion that includes the Metaverse platform Decentraland. Gucci established the Gucci Garden site within the Roblox (RBLX) community as a unique form of marketing. Nike (NKE) plans to launch a digital goods store within the Roblox universe. Samsung, Atari, Adidas (OTCQX:ADDYY) and others are buying virtual land holdings for future business development.
Advantages of purchasing Metaverse Land
There are several reasons why investors choose to purchase land in the Metaverse.
1. It is an emerging field.
Some investors liken this to buying land in Manhattan 250 years ago. Although the cryptocurrency and metaverse ecosystem is currently very new, this technology as an asset class is still in its infancy.
2. It’s a leveraged bet on cryptocurrencies
Another feature is that Metaverse land acts as a kind of leverage bet in the cryptocurrency market. The price of virtual land is usually quoted in cryptocurrencies. As the price of cryptocurrencies increases, the value of land in the Metaverse may also increase.
3. Opportunity to reach younger consumers
For those launching businesses in the Metaverse, this virtual land offers a way to reach younger consumers. For brands looking to market to a younger audience, affordable Metaverse land can provide an attractive advertising alternative to real-world options such as malls, TV ads, and billboards. Quite a few prominent consumer brands have created Metaverse stores and other similar items to try out this new marketing angle. If the use of this virtual real estate gets into full swing, landlords will be able to enjoy higher rents.
4. Acts as an inflation hedge
If virtual land becomes a major asset category, it should act as an inflation hedge. Most virtual worlds have a certain amount of land. As demand increases over time, the value of each parcel should also increase. Skeptics may argue that there is an infinite supply of virtual land because more virtual land can be easily created. However, over time, most users are likely to wind up in the most popular metaverse, potentially increasing the value of landing in those winning ecosystems.
Metaverse land price
The price of land in the Metaverse varies widely. Major metaverses such as Decentraland and Sandbox are seeing rising prices. You can also acquire land in smaller, less popular metaverses at a cheaper price. As with traditional real estate, location is everything.
Prices climb into six and even seven figures for the highest-end lots. One NFT collector famously spent $450,000 to purchase land adjacent to Snoop Dogg’s property in a virtual world. Some cryptocurrency companies are even spending millions of dollars to purchase land packages in virtual worlds.
Some Metaverse investors talk about buying land in dozens of different universes as a kind of diversification strategy. By purchasing real estate for each project, you avoid the risk of which projects will ultimately be successful. Given the vast number of cryptocurrency projects currently in existence, it is still difficult to quantify the exact price or fair value of Metaverse real estate, and the market can be highly volatile.
How to buy virtual real estate in the Metaverse
Most virtual real estate is bought and sold using cryptocurrencies rather than fiat currencies. Therefore, the first step for a potential virtual real estate investment is to acquire a cryptocurrency popular in DeFi applications, such as Ethereum (ETH-USD) or Solana (SOL-USD), so that it can be used for subsequent trading. That’s it.
Paying for Metaverse properties using cryptocurrencies
Metaverse real estate brokerage and Metaverse mortgage loans are also starting to appear. However, for now, these traditional financial industry options are still not widely available in metaverse land sales.
Primarily, people acquire Metaverse real estate by purchasing it directly with cryptocurrencies. Many virtual worlds have stores or applications that sell land in exchange for virtual currency. These land parcels are often structured as non-fungible tokens (NFTs), so they can be bought and sold like any other NFT.
Generally, buyers need to connect their digital wallet to the virtual world where they want to acquire land. It’s also important to make sure you’re getting the right cryptocurrency, as many land sales are done in crypto specific to that metaverse rather than a broad-based token like Ethereum. With a digital wallet and the appropriate cryptocurrency, buyers can proceed to take delivery of their desired property.
Where you can buy space in the Metaverse
Given that the Metaverse and virtual real estate adoption cycle is still in its early stages, it is difficult to predict which ecosystem will ultimately become the most popular.
That said, as of this writing, Sandbox and Decentraland have become leading options, with more high-profile participation and, as a result, increased investor interest.
Don’t count out gaming companies either. Roblox wasn’t designed to be a crypto-native metaverse, but its digital world has attracted significant interest from major retail brands. That could lead to interesting investment implications in the future. Other major game publishers may also make significant metaverse plays and create high-value virtual lands as well.
Is purchasing Metaverse properties a good investment?
The answer to this largely depends on the investor’s risk tolerance. Considering how new and unproven this field is, there is a very real chance of losing all your potential investment in virtual land.
These risks include hacking/theft, purchases into virtual worlds that fail to spread, or loss of value for cryptocurrencies in general. While physical real estate typically doesn’t lose all its value, it remains to be seen how virtual real estate will hold up during an industry downturn.
That said, for investors with a strong stomach, virtual land may be a good diversified investment with the potential for significant returns. It seems likely that at least some metaverse or virtual reality ecosystem will take off. These properties can potentially become multi-baggers. You may also be able to take advantage of gains if the value of the cryptocurrency underlying your virtual asset increases relative to fiat currency.
Additionally, depending on how far companies are drawn into the metaverse, there could be good opportunities to generate rent and other income streams from real estate in addition to capital gains. For now, these business models are conceptual, but they have the potential to build wealth. This is a new technological frontier with significant risks and associated extreme rewards.
Companies like Meta Platforms (FB) are investing tens of billions of dollars to popularize the Metaverse. If these efforts are highly successful, large-scale virtual economies could develop in these ecosystems. If this happens, virtual real estate owners could potentially reap huge profits.