Today, a new universe is on the horizon. This artificial universe, called the metaverse, is a digital platform on the internet where users interact and communicate as cartoon avatars in a 3D-rendered community.
The metaverse made a significant appearance in October 2021 when Facebook rebranded as Meta. And since then, companies have repurposed themselves to either accommodate a metaverse-driven world or build their businesses on the metaverse. In addition, investors and firms alike are taking shots at the metaverse real estate market with the hopes of revving up their investments in the near future.
What is the State of The Metaverse Real Estate Economy?
According to a 2021 report by Republic Realm, landed property sales across the major metaverse platforms totaled $187 million as of November 2021, doubling the total sales as of November 2020. Additionally, from January 2021 to December 2021, the cost of a plot of land jumped from an average of $100 to $15000. This increase in virtual land sales led to a price hike in in-game tokens.
The logic of metaverse real estate investing is that virtual lands and gaming tokens will increase in value as the metaverse draws more attention. This explains why the SAND, The Sandbox currency, increased by 748% in value, bringing the 1 SAND from $0.99 to $8.40.
These investments come from the conviction of metaverse investors in the enormous potential of its real estate. So far, Sandbox, the largest metaverse platform, has closed 65,000 transactions, summing up to $350 million in 2021 alone. Meanwhile, Decentraland, coming next to The Sandbox, completed 21,000 transactions, totaling $110 million. As of January 2022, metaverse real estate transactions had totaled $85 million, and current projections suggest sales could double this year.
One of the most vital points of the metaverse is that its economy operates independently of governments, banks, or similar external authorities. Users are in control of the cost of digital properties. Again, the metaverse accommodates users who aren't necessarily interested in grand real estate purchases but are happy to secure a social space for friends, fun, and games. Nevertheless, it's worth remembering that metaverse platforms have limited pieces of land, which explains why Decentraland has only 90,000 parcels of land.
Why Metaverse Real Estate Investing is a Big Deal
With the metaverse, you get to enjoy real estate possibilities you could only dream of in the real world. For example, you could set up a mansion, an event centre, or a concert space in a couple of minutes. What's more, the value of your digital property exponentially rises as transactions are quick and straightforward in the metaverse.
Metaverse real estate investing calls to mind the game of Monopoly. The ideal is to acquire a reasonable share of the properties, and location is a significant determinant of which parcel of land to purchase. Areas with higher user traffic will witness an increase in value with time, and it will be better if your digital property is quite pricey. For instance, Snoop Dogg gained a neighbor in the Sandbox metaverse by buying the neighboring plot for $450,000, totaling 71,000 SAND. Over time, the traffic from Snoop Dogg's digital mansion will crank up the neighbor's digital property value.
Securing virtual real estate is just as competitive as domain name fever. But, much like the rush to secure unique internet domain names, virtual lands are limited in stock.
Buying virtual land offers numerous benefits. For example, landowners can lease out their land to other people to build shops, malls, or event centers while allowing creators to exhibit their collections. So when the land increases in value, it could develop other plots in various infrastructures. This is what Republic Realm intends to do when, on November 30th, 2021, it acquired the largest virtual property worth 4.28 million dollars for 792 parcels of land, or 2500 plots of land in Sandbox.
Already, there is high demand for the limited spaces in the metaverse, and a market boom is in the offing. Tokens.com's Andrew Kiguel agrees that the metaverse is a trillion-dollar industry. And this CEO isn't an outsider; this is an investment firm that recently acquired $2.8 million worth of virtual land in a fashion district. No doubt, the prospects are enormous, so how do you go about it?
How to Invest in Metaverse Real Estate
Investing in Metaverse real estate follows a similar process to buying cryptocurrency. But, first, organize your portfolio and invest based on your risk tolerance level.
Below are steps to invest in metaverse real estate.
- Create a digital wallet
Every metaverse platform has its unique currency. For example, Decentraland uses MANA while Sandbox makes use of SAND. As such, you'd have to create a digital wallet to make virtual purchases in the metaverse.
Every metaverse platform runs on a distinct economy. This means that the value of one metaverse platform isn't affected by the currency of others. So, for example, MANA can neither affect nor replace SAND and vice versa.
- Choose a Metaverse Platform
Choose a metaverse platform to invest in. Sandbox and Decentraland are the top choices. However, considering how popular virtual lands have become, more investors are acquiring as many lands as possible. Delaying your investment could leave you with a scrap dealer, away from locations with high traffic. But there are more metaverse platforms, so research the market before choosing a platform.
- Access Your Platform's Marketplace
Every property in the metaverse is an NFT (non-fungible token). So proceed to the platform's marketplace to purchase land. Compare prices and the location's potential. Also, how do you plan to manage the land: sell after it checks the desired value, rent out, or hold on as your legacy to your children?
- Link Your Wallet to the Marketplace
Connecting your wallet to your platform's marketplace is the next step for your order. Once linked, you get your purchase as an NFT. There's a possibility of incurring unreported transaction costs, so reserve extra coins to ensure a smooth transaction.
Where To Buy Land on the Metaverse
The current heavyweights in the virtual land market are Sandbox and Decentraland. Roblox is also a big name among marketers, but it doesn't sell real estate, unlike these two. Instead, brands sign up for free and create experiences on infinitely large parcels, and Roblox charges them only when they start earning. Others include Axie Infinity, Aavegotchi, and Bit Country.
Users, not the platforms, control both The Sandbox and Decentraland. This is because these metaverse platforms are tethered to the Ethereum blockchain, buy and sell with cryptocurrencies, trade digital properties in forks of NFTS and offer land at premium prices. The Sandbox and Decentraland sell land via marketplaces formatted as NFTs, purchased using their in-game currencies.
Land in Decentraland is divided into parcels identified by Cartesian coordinates like X and Y. These lands are permanently owned by community members, evidenced by the proof of ownership contract within each land NFTs. With its token MANA, you can purchase parcels at any location of your choice. But keep in mind that Decentraland currently has over 90,000 land units, each 33 feet long and 33 feet wide. Once you own a parcel of land, an estate, or a district, you can become a building, adding scenes or customized environments to your space.
The Sandbox comprises 166,463 parcels of land. With its token SAND, you can purchase parcels at any location of your choice. Game designers and users can build digital environments such as 3d dioramas games or crank up their real estate value by populating their space with asset tokens. Combined lands can be formed into regular estates or special estates like The Sandbox District. Holders can host events, symposiums, private parties, and concerts in these districts and estates. Here, you can access lands through a virtual map on Sandbox's website.
Bonus tip: you can acquire lands on the metaverse by setting up a partnership or licensing agreement with the platform. That way, you may purchase the land at a discount if you show the potential to help develop the platform.
Like any investment, metaverse real estate investing has its pros and cons, as well as risks and rewards. As exciting as its potential may seem, it is a risky investment mostly because its future is still largely uncertain. Also, the metaverse runs on a highly volatile cryptocurrency market, beset with harsh fluctuations. Finally, again, a total experience of the metaverse spaces will require pricey and highly advanced technologies, the absence of which could result in a loss of potential leads.
There are also concerns about high energy consumption, carbon emissions from VR use, and potential privacy and security issues. But these are common in emerging tech, and subsequent advances are calibrated to tackle these concerns. However, one thing is sure in all these: the metaverse real estate is here to stay.