Already in January, metaverse real estate sales topped $85M.
Metaverse Real Estate Sales Now a “Reality”
Real estate sales in the metaverse topped $500M during 2021 according to MetaMetric Solutions. This metaverse data provider also indicated that real estate sales via the top four metaverse real estate platforms, Decentraland, Sandbox, Crytpvoxels and Somnium, reached $85M in January 2022 alone.
If the sales pace of $85M in January holds throughout this year, investors and analytics firms are projecting sales to double to close to $1B by the end of 2022.
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“Big Risks…and (Maybe) Big Rewards”
Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm, said, “There are big risks, but potentially big rewards…” by investing in the metaverse.
About a month or two ago, Republic Realm shelled out a record $4.3M for land to Sandbox, the largest metaverse real estate platform. The company is said to be developing 100 islands, called Fantasy Islands, with villas and a complementary market of boats and jet skis. 90 of the 100 islands sold on the first day they were offered for purchase on Sandbox, for $15,000 each. Some of these 90 quickly acquired islands are now up for resale for more than $100,000.
Four Metaverse Real Estate Platforms
Sandbox is clearly out ahead of the other three metaverse real estate platforms by “having” 62% of all available land on the four platforms and 75% of all land sales in 2022, according to Republic Realm. Each of Sandbox’s 166,464 land parcels (each parcel is 96 meters by 96 meters or 106 yards by 106 yards) sold for the ether equivalent of $12,700 in December 2021.
Decentraland currently has 90,600 parcels (each parcel is 16 meters by 16 meters.) Each of those parcels sold for the ether equivalent of $14,400.
Value Determination?
Some investors like Realm Republic’s Yorio believe that land value in the metaverse will be dependent upon how owners develop a property. Yorio said that since “…you can teleport anywhere so location isn’t as important…” developing features on metaverse land such as a popular attraction, entertainment venue or museum will determine value.
Other investors believe that location will be the name of the valuation game in the metaverse just as location is fundamental to land value in the real world. For example, prices of metaverse parcels near Snoop Dogg’s planned partnership in Sandbox or parcels near the Atari development are already commanding premium prices.
Andrew Kiguel, CEO of Toronto-based Token.com, has a different point of view, a commercial point of view, about metaverse parcel valuation. Kiguel put together an ether equivalent $16M fund for metaverse real estate investment to buy land and hire staff near Decentraland’s fashion district in order to host fashion events and rent out space to retail shops.
Kiguel has indicated he’s looking to commercialize his metaverse real estate by attracting companies (fashion, retail, accounting firms, investment banks, podcasts, mutual funds, etc.) who are interested in advertising to a younger digital audience. Kiguel said, “We’re even talking to companies about putting up digital billboards in virtual conference rooms where people can meet.”
Is Metaverse a Real Estate Valuable or an Iteration of Crypto Ponzi Scheme?
Unlike “real” land that has a natural scarcity, coders can simply create more virtual land and more metaverse platforms whenever they’d like.
As you no doubt noticed, Decentraland parcels (16 meters by 16 meters) are much smaller than Sandbox parcels (96 meters by 96 meters). “How did that happen?” you might ask. Sandbox merely decided to create more land by increasing its parcel sizes.
One critic of metaverse real estate is Edward Castronova, professor of media at Indiana University. Castronova said, “Metaverse land sales are generally a pyramid scheme and have been for more than 20 years.”
Metaverse Appeal Could Be an Age Thing
Token.com’s Kiguel said, “The problem a lot of people have is that there are generations that have a difficult time attributing value to things that are digital, that you can’t hold and that don’t have weight. The younger generation has no issue with it. Like with NFTs, blockchain technology allows for something to be digital, irreplaceable and scarce. You can hold it, store it, display it and sell it.”
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