The Metaverse, though the subject of a lot of hype in the digital landscape, is still a relatively new and misunderstood concept.
Often championed as the next generation of the internet, the metaverse isn’t a single online environment, app, or platform, but a decentralized collection of technologically enhanced spaces. Within these spaces, innovators have an opportunity to build their own ideal landscape, leveraging tools for collaboration, customer service, and immersive experiences.
As interest in the metaverse has grown, countless business leaders and investors have begun looking for ways to purchase their own land in well-known ecosystems. Real estate in the metaverse essentially gives buyers access to an infinitely flexible environment, where they can construct anything from digital twins of office spaces to virtual reality worlds.
Here’s everything today’s digital pioneers need to know about metaverse real estate.
What is Metaverse Real Estate? An Introduction
On the surface, metaverse real estate is really just pixels and code. Essentially, it’s a form of digital real estate, which provides buyers with access to packages or parcels of land in virtual worlds, often managed on decentralized, blockchain ecosystems. Similar to most assets in the metaverse, real estate is typically bought and sold using cryptocurrency.
Though the environments companies and investors can build in the metaverse don’t occupy a physical space, they can offer phenomenal value. Innovators have purchased space in the metaverse to host events, create virtual workplaces, and even to design new online communities.
Metaverse real estate involves purchasing a dedicated space, often in an existing metaverse landscape, such as the Sandbox, or Decentraland. These programmable platforms can leverage extended reality, artificial intelligence, and community features, giving buyers the freedom to build a digital world however they choose. Each environment built in the larger “metaverse landscape” is basically a metaverse itself, contributing to the overall virtual ecosystem of the future.
As interest in metaverse landscapes continues to grow, digital real estate is expected to increase in value in the years ahead. According to some studies, metaverse real estate value is expected to increase by a CAGR of 31.2% through to the year 2028.
Why Do People Buy Metaverse Real Estate?
It can be difficult to understand the value of many digital assets gaining attention in the metaverse. When NFTs first emerged on the market, many people couldn’t understand why people would want to buy virtual art pieces and images. Similarly, the desirability of metaverse real estate can be challenging to quantify. Essentially, the value of metaverse real estate doesn’t come from the land itself, but what’s built on top of it.
Metaverse real estate offers people a way to create their own virtual landscape, where they can connect securely with other people, and develop unique experiences. Creators can monetize their property by charging users for access or selling NFTs. Brands can use virtual landscapes to advertise their services, deliver customer service, or organize digital product launches.
While metaverse real estate is still a relatively new concept, it’s already captured the attention of a huge selection of businesses and brands. HSBC purchased land in The Sandbox to create a unique service experience for future metaverse customers. Samsung created a virtual world in Decentraland, where it hosts events like the #RecycleUp Fashion show. Even Nike has its own digital store environment, built on Metaverse real estate, where users can interact with games, check out new products, buy NFTs, and more.
How Much is Metaverse Real Estate Worth?
As mentioned above, the value of metaverse real estate is growing, but there’s no one-size-fits-all price for property in this landscape, as of yet. When Decentraland held its first LAND auction in 2017, a single parcel of metaverse real estate only cost $20. In 2022, that cost had increased to around $15,000 per LAND token. The value of a piece of metaverse real estate depends on various factors.
First, the reputation of the larger metaverse realtor makes a difference. Popular platforms with millions of existing users, such as The Sandbox and Decentraland tend to fetch the highest bids for property, because they offer buyers access to a huge, existing community.
The utility of the metaverse land, or what users can do with the space they purchase is important too. For instance, many metaverse ecosystems allow buyers to customize their virtual environment with games, communication tools, avatars, NFTs, and other features.
What’s more, what a company or buyer actually chooses to do with their real estate can determine its increasing value over time. For instance, when the UAE launched the Dubai Metaverse Assembly, they promised to develop land in the metaverse that would create up to 40,000 jobs, and contribute billions to the economy in the next few years.
How Do You Buy Metaverse Real Estate?
Purchasing a piece of metaverse land is similar to buying an NFT. The “deed of ownership” attributed to each buyer is connected to a unique piece of code in the blockchain. To start a metaverse real estate portfolio, users need to set up a digital wallet, purchase cryptocurrency, and request access to a blockchain code from a metaverse real estate vendor.
Some platforms have their own specific cryptocurrencies specifically designed for purchasing NFTs and real estate packages, while others use more commonplace currencies like Bitcoin. Additionally, as the metaverse landscape continues to evolve, the number of brokers and real-estate agents specifically focusing on selling land in decentralized environments is increasing. It’s sometimes possible to purchase real estate directly through a property manager.
Similar to purchasing any real estate or investment asset, there are risks involved with buying land in the metaverse. Though the average price for a parcel of land in the metaverse is currently increasing, there’s always a chance that a platform’s loss of popularity, or decline could reduce the value of the property a user purchases.
Despite this, some early investors are already benefitting from the growth of the metaverse. One plat of land located next to Snoop Dogg’s metaverse property sold for around half a million dollars.
The Rise of Real Estate in the Metaverse
Although purchasing real estate in an environment with no physical spaces can sound confusing, it’s a growing trend in today’s digital landscape. Interest in metaverse land is increasing all the time, as more companies, investors, and creators look for ways to claim their own section of the emerging metaverse.
While it’s difficult to know for certain whether the value of metaverse real estate will continue to soar, it seems certain that interest in this digital landscape will continue.