Despite warnings to potential investors from pro-metaverse cheerleaders, real estate in virtual worlds is pulling in big dollars.
Land Rush Happening in the Metaverse
Forget New York and Beverly Hills or even Aspen or Lake Tahoe. Plots of online land in the metaverse are going for big bucks.
Ever since Facebook announced it was going all-in on virtual reality and changing its corporate name to Meta Platforms, prices have skyrocketed +500% in just months.
Andrew Kiguel, CEO of Toronto-based Tokens.com, an investment vehicle for metaverse real estate and non-fungible token-related digital assets, recently plunked down nearly $2.5M on a plot of land in Decentraland, one of two hot metaverse real estate worlds.
The other hot metaverse world is Sandbox. There, Janine Yorio’s virtual real estate development company named Republic Realm recently popped for $4.3M, a record, on a parcel of virtual land. Yorio told CNBC that last year her company sold 100 virtual private islands for $15,000 each. This year, those same private islands are selling for some $3M each.
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Location, Location, Location
Just as in the tangible world, real estate worth in the digital world is all about location, location, location.
Kiguel said, “There are areas when you first go into the metaverse where people (people such as Snoop Dogg where someone recently paid $450,000 to be his neighbor) congregate – those areas would certainly be a lot more valuable than the areas that don’t have any events (concerts, museums or carnivals where people such as the avatar for Justin Bieber or Ariana Grande is performing) going on…Areas where people congregate are far more valuable for advertisers and retailers to find ways to get in there to access that demographic.”
To Invest or Not To Invest
According to Miami-based real estate broker Oren Alexander,” The digital world, to some, is as important as the real world. It’s not about what you and I believe in, but it’s about what the future does.”
In Sandbox or Decentraland, people interact on their computers via avatars, just as in eXp Realty or a video game. (Of course, Facebook/Meta and other companies envision people accessing the metaverse via virtual reality goggles like Meta’s Oculus.) There, people buy and sell their virtual land with cryptocurrency via their avatars. Avatars build on their plot of land, make it interactive and then decorate/change/renovate it.
Kiguel thinks “The metaverse is the next iteration of social media.” Grayscale, a crypto asset manager, estimates the metaverse growing into a $1T business in the near future.
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All this said, Yorio told CNBC, “(It’s) highly, highly risky. You should only invest capital that you’re prepared to lose…It’s also blockchain-based. And as we all know, crypto is highly volatile. But it can massively rewarding.”
Mark Stapp, professor and director for real estate theory and practice at Arizona State University, agreed. Stapp said, “I would not put money into this that I didn’t care about losing. I certainly wouldn’t. If it continues the way it’s going, it is most likely going to be a bubble. You’re buying something that isn’t tied to reality.”
Thanks to CNBC.