Why should you invest in Real Estate in the Metaverse. Just like “real” real estate, virtual real estate is an investment. Metaverses have all seen tremendous interest from users, rising sale revenues from in-world assets, and land prices doubling from an average of $6,000 per parcel in mid-2021 to $12,000 per parcel by year-end, according to a Republic Realm report. And as DappRadar explained, virtual land NFTs are one of the most enticing aspects of the blockchain-based metaverse, as they allow owners to build experiences, incentivizing creativity and imagination while embracing decentralization. They also unlock a monetization aspect since these virtual parcels can be rented to third parties or simply serve as a rentable investment.
Andrew Steinwold, managing partner and founder of NFT-focused investment firm Sfermion, sees an additional purpose and likens virtual real estate to social media.
“You can view the piece of virtual land you own as your “social media profile” similar to your Facebook or Instagram profile. On those social media platforms you can really only post pictures and written content about yourself while on virtual world platforms your optionality is unlimited,” he said.
“You can create a gallery to show off your NFTs, you can create your own house just for creative purposes, you can create an e-commerce store and actually sell NFTs. If you know how to code you can actually create a mini-game on your piece of land, you can even create a source of passive income through setting up a billboard on your land or renting the land out to other users,” Steinwold continued.
Where Is the Best Place to Buy Land?
A new Citi report, Metaverse and Money, notes that moving from the physical world to the virtual world isn’t significantly different, as while we can purchase a big mansion in the middle of nowhere, we often choose to live in an expensive small apartment, in the center of the city.
“This is because the network effect is meaningful, as the apartment says something about us and the community around it. In the virtual world, platforms such as The Sandbox also have multiple pieces of real estate. However, owing to the network effects, we tend to perceive certain plots as more valuable than others, especially if they are in the vicinity of celebrities or in closer proximity to the center of the town,” the report notes. “Some people prefer to buy virtual land in megacities, although there are several other plots of land available in The Sandbox at cheaper rates. These decisions are driven by some of the same factors we take into consideration while purchasing land in the physical world.”
The Sandbox is a virtual world where players can build, own, and monetize their gaming experiences using SAND, the main utility token of the platform. Its metaverse is based on a map of 166,464 LANDS — blockchain-backed virtual tokens — which are physical spaces in the Metaverse owned by players to create and monetize Games. LANDS are used to publish your game and can be rented to game creators, according to its whitepaper. It also has a market value of $3.9 billion, according to the Motley Fool.
It is the largest virtual world in terms of transaction volumes, with 65,000 transactions in virtual land totaling $350 million in 2021, according to the Centre for Finance, Technology and Entrepreneurship (CFTE) in its metaverse report. Because of the choice to limit the number of lands and assets, prices are mainly determined by supply and demand in the secondary market and have grown considerably from an average of $100 per land in January 2021 to $15,000 in December 2021, with a clear acceleration in Q4 2021 — when the Sandbox Alpha was released, according to the CFTE.
In March, HSBC set a stake in the metaverse through the purchase of a plot of virtual land, becoming the first global financial services provider to enter The Sandbox, as GOBankingRates previously reported.
Decentraland is a virtual reality platform powered by the Ethereum blockchain and users can create, experience, and monetize content and applications, according to its whitepaper. The scarcity of land, on top of which applications can be built, creates hubs that capture user attention, which drives revenue to content creators. It has a market cap of $4.8 billion, according to the Motley Fool.
Land in Decentraland is permanently owned by the community, giving them full control over their creations and landowners control what content is published to their portion of land, which can range from static 3D scenes to interactive systems such as games. Land is a non-fungible, transferrable, scarce digital asset stored in an Ethereum smart contract. It can be acquired by spending an ERC20 token called MANA- which can also be used to make in-world purchases of digital goods and services.
In February, JPMorgan became the first bank to open a lounge in Decentraland, as GOBankingRates previously reported.
According to the Axie Infinity whitepaper, “Lunacia, the Axie homeland, is divided into tokenized plots of land which act as homes and bases of operation for their Axies. Plots can be upgraded over time using a variety of resources and crafting ingredients that can be found when playing the game.”
Lunacia consists of 90,601 plots of land, which are represented as NFTs and can be freely traded by players, according to the developer whitepaper. The Genesis property in question is particularly valuable because of its scarcity: there are only 220 Genesis plots within the game’s 90,601 plots.