Securing assets has recently expanded beyond the physical. As a result of the world’s constant changes, it has progressed beyond acquiring what is physically attached to landed properties. What we now have are e-assets, which are virtual assets created in the metaverse. In the Metaverse, parcels of land are worth millions of dollars and belong to different people as they are obtainable in the real world.
You may wonder how this is done and want to know how virtual real estate is creating real-world value in the metaverse. This article has the technical know-how from bottom to top.
What Is Metaverse Real-Estate?
Metaverse real estate refers to those land parcels in virtual worlds. In the most basic sense, they are pixels. They are, however, more than just computer images. They are areas that can be set up in virtual reality platforms where people can meet, play games, sell NFTs, go to meetings, go to virtual concerts, and do a lot of other things.
An interesting fact about how virtual real estate is creating real-world value in the metaverse is that the virtual worlds within the Metaverse are made up of digital real estate segments called parcels, which can be bought and sold using the currency of a Metaverse platform. For example, on Decentraland, one can buy land using the cryptocurrency token MANA.
With the rise of the metaverse, it is projected that digital real estate would grow and extend as well. In fact, a metaverse real estate boom occurred in the fourth quarter of 2021 after Facebook changed its name to META and signaled a strong interest in the metaverse. The value of the metaverse real estate is expected to rise at a 31.2 percent CAGR from 2022 to 2028 as its popularity grows.
There are many platforms for virtual investments as far as digital real estate is concerned. Some of these popular platforms that investors can leverage are Decentraland, The Sandbox, CryptoVoxels, and Somnium Space. A metaverse is a place where geographical boundaries are removed and anything is possible.
The Importance of Digital Real Estate
More often than not, investors have invested millions of dollars in purchasing land in the Metaverse. There is no iota of doubt about how virtual real estate is creating real-world value in the metaverse. Most mortgage providers and borrowers are assisting clients in purchasing digital real estate, amounting to five major implications.
1. It Reclassifies the Value of Land and Deprioritizes Utility Variables.
In the real world, land is valued based on three key factors: size, area, and genuine utility. Be that as it may, in the Metaverse, one of these variables turns out to be less significant than the rest: genuine utility isn’t as significant when purchasing digital land, on the grounds that the purchaser won’t ever really possess the land or visit it face-to-face. Here, the size and area of the land are what matter.
2. It Permits a More Extensive Pool of Purchasers to Put Resources into Land
As opposed to what is obtainable in the real world, anybody can put resources into Metaverse land. Land parcels come in different shapes, sizes, and areas, and are accessible on an assortment of platforms, each with an alternate cost.
Purchasers from around the world can set up a digital money (cryptocurrency) wallet of their choice and begin investing. There are no limits to buying real estate around the world, and it is possible to buy small land parcels based on everyone’s budget.
3. It Is Forward-Looking and Expects the Metaverse to “Explode.”
One of the most important aspects of virtual real estate is that it anticipates the growing popularity of Metaverse platforms. Companies like Samsung and PwC have purchased advanced land in anticipation of a future in which everyone uses the Metaverse. Finally, some of the Metaverse platforms that are being developed today are gaining traction, while others may fade away, perhaps adding to the element of chance.
4. It Is a high-risk investment Movement That May Result In Losses.
As referenced, there is no assurance that all Metaverse platforms drawing in investments today will stay well-known in the future, prompting virtual real-estate into a high-risk speculation class.
Also, experts and people who talk about Metaverse land are still talking about the land’s value and because the utility variable isn’t very high, some investors might lose money in the long run.
5. It Reconsiders Several Real-World Exercises for Metaverse Land
As more land parcels are made available to be sold, there is an undeniable push to rethink the true exercises for virtual real estate. For example, career fairs and shows have been held in the Metaverse, where big events, sponsorships, and stalls have made money.
It would be a vivid involvement in chances for active connections, without requiring any travel or driving. Likewise, get-togethers, weddings, and cooperative work could move to the Metaverse, putting virtual real-estate to functional use.
Who Are The Realtors On The Metaverse?
The biggest land purchases in the metaverse are in the millions of dollars, with the biggest land sale in The Sandbox, by Atari, closing out at $4.3 million on December 8, 2021.
Unlike buying a house or looking for an apartment, where a realtor is involved, buying and selling land on the metaverse is often done peer-to-peer through a reliable community broker or secondary market.
Because transactions take place on the blockchain, there is no need for middlemen—in this case, real estate agents—to facilitate the process and paperwork because it is public and checkable.
These purchases are frequently made through a native or secondary market, or OTC (over-the-counter), which is a trading term used by crypto analysts when assets are traded peer-to-peer without ever being listed on the market.
Depending on the trading parameters selected, this type of trading is risky. While OTC trading may result in better deals, some users are duped at the end of the transaction because they put their trust in a person on the other end of the screen.
Realtors who facilitate large purchases have been discovered in some communities. Real estate agents who work in these communities are often trusted members of the project. They have access to some of the project’s huge portfolios and know who owns the most valuable assets.
Realtors play an important role in assisting new investors who are looking for valuable deals that may or may not be on the market.
Choosing Which Parcel of Land To Buy
Location is important when picking a virtual territory in the metaverse, just as it is in the real world, where you have to consider how marketable, reserved, or developed the area is. These components inform prospective buyers of the determinant factors before making payment for any parcel of land.
As large brands 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 buyers of land adjacent to them or nearby have profited handsomely from their purchases as a result of merely sharing boundaries with them—Atari, Samsung, Miller Lite, and Adidas.
If you’re looking to invest in metaverse real estate, search for places with growth potential—where markets are. Places where people might assemble and be more valued than those in unremarkable neighborhoods. Consider land holdings that are close to developed areas, but not within them. You may get these properties for a reduced price, develop them, wait for prices to go up, and make a profit on them.
How To Buy Virtual Real Estate In The Metaverse?
There is no way of knowing how virtual real estate is creating real-world value in the Metaverse without first studying how to buy properties there. Therefore, it’s pertinent to let you know that:
Purchasing a metaverse property is quite similar to purchasing an NFT (Non-Fungible Token). On a blockchain, your deed of ownership is a one-of-a-kind piece of code. This number verifies your ownership or rights to that digital plot of land.
To begin your metaverse real estate portfolio, you’ll need your digital crypto wallet. Check out the platforms that use various cryptocurrencies for their transactions before signing up for a new wallet. After that, sign up for an account on the virtual metaverse site. You’ll need to link your digital wallet to the site in order to buy land and other assets. Select a piece of property and purchase it.
Metaverse land can be purchased through brokers and property managers, just like real-world properties. However, unlike in the real world, metaverse brokers do not require licenses and are not subject to any restrictions. As a result, be sure you’re dealing with reputable companies.
Statistical Data On Metaverse Real-Estate
We’ve compiled the most up-to-date facts on the market to give credence to our position showing how virtual real estate is creating real-world value in the Metaverse and for you to make a data-driven choice about whether or not to invest in metaverse properties. Examine these figures to see if the metaverse real estate is a good investment.
A parcel of land cost only $20 when Decentraland held its first LAND auction at the Terraform Event in December 2017. Fast forward to 2021, those parcels sold for an average of more than $6,000. By the beginning of 2022, prices had skyrocketed to around $15,000 per LAND token.
Because of the positive outlook for metaverse growth, businesses have been heavily investing in virtual land properties.
Tokens.com, a blockchain technology company that paid $1.7 million in October 2021 for a 50% stake in virtual real estate company Metaverse Group, took this act more seriously as well. In November, The Republic Realm set a new record when it paid $4.3 million for a property in The Sandbox.
Prices for metaverse properties have risen further as a result of increased demand. Digital land ranges in price from $6,000 to $100,000, with some reportedly selling for much more. The property adjacent to Snoop Dogg’s in The Sandbox was one of the most expensive sales last year. An anonymous buyer allegedly paid $450,000 for it.
All of these are clear indicators of how virtual real estate is generating real-world values in the Metaverse by simply increasing the price and worth of digital properties nonstop since 2017 and continuing to the present.
- Sandbox land increased by 15,000% by 2021. It also had the highest transaction volume in the same year, with a total of $350 million in virtual land purchases.
- In 2021, real estate sales on the four major platforms totaled $501 million. This year, they are expected to quadruple to $1 billion, which is a lot.
- According to a research study, the metaverse’s market size was valued at $47.69 billion in 2020, and by 2028, it will be worth $828.95 billion.
- The average price of a parcel has risen from $1,265 to $12,684 on major metaverse sites.
- Only roughly 25,000 individual crypto wallets contribute to Metaverse real estate investments.
The majority of metaverse real estate data appear to be positive. They show huge profits for early “settlers” on virtual platforms. Keep in mind, though, that some planets are fairly new and have not yet reached their full potential. Despite the fact that the numbers are enticing, you may need to dig deeper and look beyond the statistics.
Understanding how virtual real estate in the Metaverse generates real-world value necessitates knowledge of the underlying technologies, Blockchain.
Finally, Metaverse’s transformational potential is based on the blockchain architecture that supports it. Blockchain technology empowers real estate even in the absence of a virtual environment by embedding digital assets with non-fungible values.
Even outside of the Metaverse, non-fungible tokens (NFTs) constitute an important asset. NFTs are used to trade digital real estate in virtual worlds, bringing the same technology to them.
When NFTs and VR are combined, buyers can invest in digital land that they can own, view in 3D, and interact effectively with users without the land being technically “real.”
Photo by VAZHNIK