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On first hearing about virtual real estate, many people wonder why anyone would create it or how it would even work. Such reactions are understandable – after all, what would be the point in owning virtual property? Isn’t the physical property we have in the real world enough? Well, you might be surprised to learn that virtual land has already become a popular purchase for those wanting to get involved in the technologies of the future, particularly those with an interest in the metaverse for business. In this week’s Mazer blog, we delve into the world of metaverse real estate to help you learn more about this unusual new phenomenon.
New Virtual Worlds in Metaverse
As covered in previous Mazer blog posts, there are already many virtual worlds out there, moving us ever closer to a complete metaverse for business and everyday life, where we can live between the real world and this new virtual universe. Decentraland is one of the most well-established of these virtual worlds, but a dozen major metaverse real estate companies are currently active and offering virtual reality solutions for business. When Facebook changed its name to Meta last year, the metaverse became a more mainstream idea, and interest in virtual land began to grow. In turn, sales across the major metaverse platforms exploded to over $500 million in 2021 and had already surpassed $80 million by the end of January 2022.
In previous Mazer articles, we have covered NFTs (The Metaverse And NFTs: What Are They And How Do They Work) and blockchain (The Role Of Blockchain In The Metaverse), and it is these two technologies that allow people to own unique digital assets such as property, thus facilitating the trade of virtual land. In Decentraland, instead of using dollars or pounds, users purchase items with MANA, the cryptocurrency of that particular world. Like with real-world currencies, its value goes up and down, with the current price of 1 MANA being around 0.71 dollars. So, even though users buy land with MANA, the currency also has a real-world value. With metaverse solutions for business becoming more and more popular, some companies have forked out truly staggering amounts for metaverse property. At the end of 2021, for example, Metaverse Group, a real estate company with their eyes on the metaverse economy, bought a piece of virtual real estate for a massive $2.4 million, or 618,000 MANA. It was a sizeable investment, taking up 6,090 square feet of virtual space.
Metaverse Group aren’t the only company with such ambitions. Republic Realm also bought a substantial piece of virtual land in Decentraland, this time 16 virtual acres for just under $1 million. They used this space to build a virtual shopping center based on the design of the Harajuku district of Shibuya, Tokyo. And, if this wasn’t enough, after recently changing their name to Everyrealm, they made an even bigger purchase – $4.3 million for an enormous section of land in Sandbox, another popular metaverse platform. With sums like this being thrown around, as well as the entry of a number of high-profile businesses, such as HSBC, adidas, and PricewaterhouseCoopers, already snatching up digital land, it’s no surprise that some analysts have predicted the metaverse market to grow by as much as $5.37 billion between 2021 and 2026.
Metaverse Virtual Real Estate A Growing Industry
With this growth, more and more metaverse businesses are establishing themselves. That’s why we can now see companies like TerraZero Technologies giving out mortgages for digital property. They lent one of the first mortgages of the metaverse early in 2022, and it’s likely that many more will follow as word gets around. In fact, there are already companies fully built around metaverse real estate. Metaverse Group have even situated their headquarters in the metaverse, in a region of Decentraland known as Crypto Valley. There are property brokers who specifically work with buying and selling virtual land; there are those who buy virtual real estate just to improve it and sell it on; and there are those buying virtual plots for advertising purposes. If you know your stuff, you could even act as a virtual landlord, or as a developer who helps companies to build their metaverse spaces. There are also companies like XR Wizards which help businesses to develop their own unique part of the metaverse. Through their Mazer platform, they can create bespoke metaverse environments (Mazer spaces) for any company, taking the stress out of entering into this new and exciting but somewhat unfamiliar world.
Big celebrity names are also getting in on the act, with Kanye West, Snoop Dogg, and Paris Hilton all getting involved in virtual real estate. With such well-known customers, it won’t be long before members of the public are buying up plots for themselves, hoping to get something close to one of these celebrities. In the real world, skyrocketing house prices have made it almost impossible for young people to buy property where they grew up, let alone next to world-famous celebrities. In the metaverse, the cheapest parcels of land are around $11,000 on Sandbox and Decentraland, and even cheaper on less well-known platforms, making it easier for more modest buyers to invest. However, with limited real estate available – Sandbox has 166,464 individual plots or LANDS, as they are known on the platform – demand could outstrip supply very quickly, pushing prices higher and higher.
Why Buy Virtual Real Estate?
The land bought by Metaverse Group exists in a district of Decentraland called Fashion Street – so it will be used to hold fashion events and to sell virtual clothing for users’ avatars. Buying virtual land in such sought-after locations is just like buying property in central London or New York – it’s somewhere which is more likely to attract customers, and therefore somewhere which holds more value. It’s likely that the price of virtual land will go up and down like its real-life counterpart based on the part of the metaverse it exists within, so it will be important for early investors to choose their little part of the metaverse wisely. So, what you do with your virtual land might also depend on where it is. Some might buy land deliberately out of the way and make their own peaceful virtual space to exist in, while companies aiming to attract business from younger generations, in particular those who have grown up with virtual reality technologies, will want to build and advertise in the busiest and most visible metaverse spaces.
As well as businesses looking to build their brand recognition, developers looking to free their imaginations from the limitations of the physical world may also want to look into virtual property. In the metaverse, the possibilities are endless. For example, you could construct something inspired by buildings from the wildest sci-fi movies, like Star Trek or Dune, or even create something entirely original that no one has even seen or experienced before. It’s all perfectly possible in the metaverse, where the laws of physics will be whatever the designer wants them to be. And with Unreal Engine providing the high-quality visuals that people need to construct realistic and engaging virtual environments, these experiences are bound to get more like the real world in the future. Just check out the trailer for The Cornerstone to get an idea of the level of detail and realism that’s already at our fingertips in virtual reality. In this photorealistic virtual reality world, land is currently being auctioned off using NFTs, and some land is being offered to creators with the most inventive ideas. Once your have your land, you can build on it using the three materials available on the island – Base Stone, Organic Soil, and Active Mineral – and building credits. What you build is entirely your choice. You can even decide who else can access or build on your land. And after you’ve built on and improved your piece of land, you can resell it, hopefully for a profit.
Ultimately though, the biggest reason for many to buy virtual real estate right now is as an investment. Some plots have appreciated in value by as much as 500%, making investment a no-brainer for businesses who have the money to do so. But is this just a bubble that’s eventually going to burst, leaving a lot of people out of pocket? Financial expert David Rasencraft seems to think so, suggesting that it could be as bad as the financial crash of 2008. Like with any investment, putting your money into the metaverse is a risk. How are investors to know which of the many virtual worlds will be successful? What insurance will users have that they won’t lose their money if the technology crashes or something else comes along to replace it? In the real world, even if an area depreciates in value, you still have the physical building or at the very least the land. In the metaverse, your investments could be wiped out from one day to the next. And what about the fact that new items can be created almost ad infinitum? If new virtual worlds keep being created and more and more virtual land sold, will it all be devalued to the point that it’s not worth anything?
Metaverse real estate has the potential to be an amazing investment, but nobody knows exactly how lucrative it’s going to be. The metaverse is still such a new concept that no one really knows where it’s going to end up, so do you take a punt now and invest in something which could potentially backfire later? It depends how brave you’re feeling. If you take a no risk, no reward attitude, you’ll certainly want to look into it as the amounts of money which have already been made are enormous. If, on the other hand, you’re a more cautious person, it might be worth waiting to see how things develop before deciding where to put your money. But don’t wait too long as you could miss out on the opportunity of a lifetime.
Read also: What Is A Metaverse Avatar
What is metaverse real estate?
Metaverse real estate refers to virtual land ownership within virtual worlds like Decentraland. People are interested in it as it offers unique digital assets facilitated by technologies like NFTs and blockchain.
Why are businesses investing in metaverse real estate?
Businesses like Metaverse Group and Everyrealm, along with companies like HSBC, adidas, and PricewaterhouseCoopers, invest in metaverse real estate to build brand recognition and establish a presence in the growing metaverse market.
What factors make virtual real estate in the metaverse an appealing investment?
Virtual real estate in the metaverse offers various opportunities, including investment, brand building, and creative expression. The ability to own unique digital assets, potential appreciation in value, and the flexibility to design and sell virtual properties make it an appealing but speculative investment.