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Real Estate in the Metaverse Is Booming. Is It Really Such a Crazy Idea?

Real Estate in the Metaverse Is Booming. Is It Really Such a Crazy Idea?
Written by publishing team

Theo Tzanidis, Senior Lecturer in Digital Marketing, and University of the West of Scotland.

The idea of ​​spending thousands or even millions of dollars to buy an imaginary “land” in a virtual world seems straightforward and absurd.

But in recent months, we’ve seen significant investments in a virtual land within the metaverse. PwC is among the latest to dive, buying properties in The Sandbox, a virtual gaming world, for an undisclosed amount.

If other reported sales were anything to do with it, that would be an impressive amount. One person recently bought a plot of land in the Snoopverse – the international rapper Snoop Dogg who develops it inside The Sandbox – for $450,000.

Meanwhile, the Metaverse Group, a real estate company focused on the metaverse economy, has reportedly bought a plot of land in Decentraland, another virtual platform, for US$2.43 million.

Let’s update on what “metaverse” is. You may have heard this term a lot when Facebook was renamed Meta in October 2021. Other companies, such as Nike and Microsoft, also announced that they would be launching into this space.

The metaverse describes a vision of a connected 3D virtual world, in which the real and digital worlds are combined using technologies such as virtual reality (VR) and augmented reality (AR). This immersive environment can be accessed through the likes of virtual reality headsets, augmented reality glasses, and smartphone apps.

Users will meet and communicate as a digital avatar, exploring new areas and creating content. The idea is that the metaverse will evolve into a collaborative virtual space where we can socialize, play, work and learn.

There are many metaverses already – for example in virtual gaming platforms such as The Sandbox and virtual worlds such as Decentraland. In the same way, a website is part of the broader 2D World Wide Web, individual metaverses will form a larger interconnected metaverse network.

Most importantly, as in the real world, it is increasingly possible to buy things in the metaverse – including real estate.

Virtual Earth as an NFT

Transactions in the virtual world are generally monetized using cryptocurrency. Unlike cryptocurrencies, non-fungible tokens (NFTs) are the primary way to monetize and exchange value within the metaverse.

NFT is a unique digital asset. Although NFTs are primarily elements of digital art (such as videos, photos, music, or 3D objects), they may constitute a variety of NFT assets – including virtual real estate. On platforms like OpenSea, where people go to buy and trade NFTs, there are now plots of land, or even virtual homes.

To make sure digital real estate has value, supply is limited — a concept in economics called “scarcity value.” For example, Decentraland consists of 90,000 blocks or “plots”, each about 50 feet by 50 feet.

We are already seeing examples where the value of virtual real estate is rising. In June 2021, it was reported that a digital real estate investment trust called Republic Realm spent the equivalent of more than $900,000 USD to purchase an NFT representing a plot of land in Decentraland. According to DappRadar, a website that tracks NFT sales data, it was the most expensive purchase of NFT land in Decentraland’s history.

But then, as we know, in November 2021, Metaverse Group purchased its plot of land in Decentraland for US$2.4 million. The size of this purchase was actually smaller than the previous one – 116 plots compared to 259 plots purchased by Republic Realm.

There are actually many metaverses. SFIO CRACHO / Shutterstock

It’s not just about seeing appreciation in Decentraland. In February 2021, Axie Infinity (another virtual game world) reportedly sold nine of their plots of land for the equivalent of US$1.5 million – a record, the company said – before selling one plot of land for US$2.3 million in November 2021.

While values ​​seem to be going up, it’s important to acknowledge that real estate investing in the metaverse remains highly speculative. Nobody can be sure if this boom is the next big thing or the next big bubble.

The future of real estate metaverse

Regardless of the financial incentives, you may be wondering what individuals and companies will actually do with their virtual land.

For example, the Metaverse Group was purchased in the Decentraland fashion district. According to the buyer, the space will be used to host digital fashion events and sell virtual clothing for avatars — another potential area of ​​growth in the metaverse.

While investors and businesses dominate this space right now, not all hesitant real estate will set you back millions. But what can owning a virtual land do for you? If you buy physical property in the real world, the result is tangible – a place to live, to be proud of, to welcome family and friends.

While the virtual property does not provide a physical shelter, there are some similarities. When shopping for virtual real estate, you can buy a plot of land to build on. Or you can choose an already built house that you like. You can make it your own using different (digital) objects. You can invite visitors and visit the virtual homes of others as well.

This view after a while. But if it sounds completely absurd, we must remember that once upon a time, people had doubts about the potential importance of the Internet, and hence social media. Technology experts expect the metaverse to mature into a fully functional economy in the coming years, providing a synchronous digital experience that is as intertwined in our lives as email and social networking are now.

This is a strange fantasy that has come true for someone who was a player in a previous life. A few years ago, a younger version of my conscience was telling me to stop wasting time playing video games; To go back to school and focus on my “real” life. I’ve always wanted to see games intertwine with real life, Real Player One style. I feel like this vision is getting closer and closer.Conversation

This article has been republished from The Conversation under a Creative Commons license. Read the original article.

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