Why Is Virtual Real Estate Hot In The Metaverse?
We are rapidly approaching the futuristic era of the Metaverse.
The Metaverse can be defined as an interconnected, permanent virtual reality where we live a digital life along with a physical life. Virtual real estate in the metaverse is the new hot topic these days.
Virtual real estate may not sound valuable, but when you know how many tech giants have invested in virtual real estate and the metaverse in general, you may start taking this more seriously. If not doing so already.
The Metaverse is the ‘digital twin’ of your physical world. In the Metaverse, you can invest and make money as in the real world. One of these investment opportunities is in real estate.
Virtual Real Estate In The Metaverse
(source: TIME Magazine)
The metaverse is a virtual world where people and establishments across the globe can interact with each other, and conduct business transactions similar to the real world but with digital platforms and digital assets.
The Metaverse is made up of real estate segments known as land parcels which act as plots of land in the virtual world. Individuals and corporates can buy these land parcels using cryptocurrency. This is basically what virtual real estate is.
For e.g., on Decentraland, a metaverse website, land can be bought using the cryptocurrency token ‘MANA’.
Over the last few months, investors have spent millions of dollars purchasing land in the Metaverse. There is no denying that technology has changed the way real estate operates. A whole new ecosystem has emerged – there are even mortgage providers and lenders who cater to customers purchasing virtual real estate.
The Metaverse adds a different perspective to the value of land with factors that are different from the real word. Land is valued in the real world based on factors namely size, location, and actual utility.
However, in the Metaverse the use of land is less significant as people will not actually live there.
The primary purpose of purchasing land in the Metaverse is to either develop it or rent it to someone else in order to earn what is called passive income. In the years ahead, passive income will extrapolate to active income.
In the Metaverse, unlike in the real world, anyone can invest. Anyone can buy land parcels as they are available at various prices, shapes, sizes etc.
Buyers around the world can activate a cryptocurrency wallet of their choice and start investing immediately. There are no barriers and limitations to buying micro lots- as they are accessible and affordable.
The Metaverse will inevitably expand.
It has gained momentum, and its growing popularity is a big plus. It may seem like a high-risk investment today, but it does not stop the early adopter from taking the leap of faith. Companies such Atari, Samsung, Adidas, and PwC have invested in digital real estate to prepare for the future.
As more land becomes available, there is strong pressure to rethink the actual activity of digital real estate. For example, trade fairs and exhibitions are held in the Metaverse with major venues, sponsorships, and booths driving monetization.
It will be an immersive experience with hands-on interaction that does not require travel or commuting. Similarly, social gatherings, weddings and collaborations can be transferred to the Metaverse using digital real estate.
Significant Land Purchase Trends In The Metaverse
The following are some of the top digital real estate trends for this year:
- Metaverse land sales are reported to reach a record $ 500 million in 2021. By 2022, sales could more than double to at least $ 1billion.
- Markets continue to be volatile and fluctuate in response to socio and economic factors.
- Events are a sure bet. Metaverse platforms have their own event calendars, and Meta’s (parent company of Facebook) Horizon Venues are now widely available. As a result, we will witness more real estate events in the near future.
- Brand categories can accentuate immersive experiences. Categories such as real-estate work well in the metaverse as they can bring alive an experience like no other. These experiences can trigger the sale of virtual experience.
Why Is Real Estate Hot In The Metaverse?
It is human tendency to be able to own something. Just like people want to own real estate in the real world they want to do it in the virtual world as it gives them a sense of ownership.
Many people believe that in the future humans will spend most of their time in a virtual world. When you are spending so much time you want your digital avatar to have a space to call home right?
The easiest explanation is FOMO or fear of missing out. Just because someone else is buying this new cool piece on land in a virtual space, others get influenced to buy the same as they fear they will miss out on a generational opportunity.
People think buying early and buying smart will give them an upper have over late comers or late adopters.
Owning real estate next to a well-known celebrity such as Snoop Dogg also influences people to buy virtual land. Here, location is key and if you nail the location you can earn much more rent on your land and also be able to resell it at a huge premium.
It is human tendency to have a sense of ownership. Just like people want to own real estate in the real world, they want to do so in the virtual world as it gives them a sense of ownership.
Futurists believe that in the future, humans will spend most of their time in a virtual world. When you are spending so much time in the Metaverse, you want your digital avatar to have a space to call home, right?
People think buying early is buying smart, and will give them a social advantage over late adopters.
Owning real estate next to a well-known celebrity such as Snoop Dogg also influences people to buy virtual land. Here, location is key, and if you nail the location, you can earn much more rent on your land and also be able to resell it at a premium.
How Can One Purchase Land In The Metaverse?
You need to identify where you want to buy the land – is it in Decentreland, Axie infinity or VulcanVerse or somewhere else?
Accordingly, you need the selected Metaverse’s token to be able to buy land. Suppose you want to buy land in Decentreland then you need to have MANA, the currency in Decentreland. You can buy these currencies off exchanges such as Binance or decentralized exchanges such as SushiSwap.
To store the currency you need a wallet- which can be a Metamask or a Binance wallet.
Using the currency that you now have, you can visit the website of the Metaverse and check for land sale dates for lower prices.
Land is allotted to you in the form of an NFT. The Metaverse also has a primary and secondary real estate market. You can further use websites such as opensea.io or nonfungible.com to buy land from the secondary market. These websites act as real estate agents. Prices here will be bit higher than the original land sales.
After you have bought a piece of land you can do anything you want with it – build a house, build a theme park, host other people, rent the land out, sell it for a profit etc.
While buying land, you need to check certain things such as footfall in nearby areas, location of the land, the terrain, accessibility etc.
Notable Vitual Real Estate Transactions
Republic Realm paid a record $4.3 million for properties in Sandbox, the largest Metaverse real estate platform. The company has developed 100 Fantasy islands, which have their own villas. 90 islands sold for $15,000 each on the first day, and some are currently resold for over $100,000.
Toronto-based Tokens.com CEO, Andrew Kiguel, has raised $16 million to invest in Metaverse real estate. Almost all of it was used to buy land. The company alsospent $2.4 million on land in Decentraland’s fashion district, a hotspot for fashion events and stores.
In December 2021, a fan of the musician Snoop Dogg paid $450,000 to purchase land in the Metaverse next to Dogg’s virtual property.
The Future Of Virtual Real Estate In The Metaverse
At first glance, the concept of owning virtual land may seem unbelievable. But even though it now appears overwhelming and unbelievable, it’s important to remember that many people used to question the potential importance of the Internet and then social media. According to experts, in the next few years Metaverse will evolve into a fully functional economy, providing a synchronised digital experience that is as integrated into everyday life as today’s email and social media. Many futurists are betting on this new immersive world.