Anyone looking to buy a new home or property saw prices soar over the past year. But, it’s not just brick-and-mortar spaces that are costing more. Virtual land and real estate in the metaverse are more popular than ever and selling for millions of dollars.
“There’s a huge boom happening,” says Joaquim Miro, senior vice president of global growth at GDA Group, which has a metaverse division. “We’ve seen the metaverse space increase more than 10 times in the last year.”
Everyone from major fashion brands and retailers to celebrity mega fans to individual investors and companies is showing interest in virtual real estate. That’s why metaverse real estate is selling for millions.
What's in this Article?
The metaverse is “a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you,” according to Meta, the company formerly known as Facebook.
Essentially, it’s a virtual platform where people can play games, shop, connect with friends, and network. Investors are hoping to get a jumpstart on the heightened interest in the metaverse by purchasing virtual land on these platforms.
Buying land in the metaverse resembles any other real estate deal—the land just exists in 3D cities, according to The Wall Street Journal. Once you own land in the metaverse, you can develop it, lease it out, and earn money from it.
Metaverse real estate transactions are made using cryptocurrency. Purchases are secured with non-fungible tokens (NFTs) and tracked by blockchain technology.
Virtual land can be purchased from several different platforms, each with a designated number of parcels for sale. The four main platforms to buy virtual land in the metaverse to date are:
- The Sandbox
- Somnium Space
The metaverse is uncharted territory as far as investing* goes. But both businesses and individuals are hoping to stake a claim in the metaverse, where experts predict more people will be hanging out in the future.
Many investors are hoping to generate income from the virtual land by building something on the plot and renting it out to other businesses, he explains. Others are buying land and sitting on it for now.
Interest is growing in the metaverse as technology advances. Miro says there’s more interconnectivity between the spaces and it’s more accessible for users to navigate using a computer or headset.
“That brings a lot of traffic and hype, and new opportunities for marketing,” he adds. “That’s why we’re seeing such a huge spike in prices.”
The increased interest in NFTs is also driving investments in metaverse real estate, Zanardo says.
“Virtual real estate is an NFT land token,” he explains. “But, there’s a use case with it where you can actually build these virtual experiences and incorporate games that can generate yield for the user and incentivize more users to come in. That helps businesses.”
Metaverse real estate deals can range from tens of thousands of dollars to millions, depending on the platform and when you make the deal. Prices fluctuate, though they could well keep increasing.
Market research firm BrandEssence projects that the metaverse real estate market will grow at a compound annual rate of 31% a year through 2028.
In early March 2022, the metaverse average sale price was about $7,700, across Decentraland, The Sandbox, Somnium Space, and Cryptovoxels.
To build a large house or building in the metaverse, Zanardo says you need to purchase multiple adjacent lots, which increases the cost.
“If one parcel is starting at $11,000, you can imagine if you buy 300 of them altogether, you’re now into the millions just based on that minimum price value,” he says.
Why is metaverse real estate selling for millions?
Some experts have compared snapping up metaverse real estate to buying land in New York City 250 years ago. It’s all about getting in the game early, as interest in virtual land is booming.
Though the return on investments is speculative, it’s driving up the prices, Zanardo says. That’s why metaverse real estate is selling for millions.
“We saw Bitcoin, five, six years ago, go from this unknown technology where people didn’t really think it had a real use case to now it’s one of the most sought-after assets in the world,” he says.
For those who missed out on getting into Bitcoin early on, metaverse real estate offers a second chance to dive into a new type of investment.
“A lot of people are really speculating that they want to get in now to make sure that they don’t miss an opportunity like that again,” Zanardo says.
For businesses, buying and developing virtual land — and then leasing it out — offers exciting marketing potential. A number of large brands and companies, including Samsung and Adidas, are committing to the metaverse, signaling that they believe in the technology and where it’s headed, he adds.
“The value of the land has gone up,” Zanardo says. “They’re now attracting large corporations who see this as a long-term investment where they can use it for marketing, experiences, and advertisement.”
The 3 biggest metaverse real estate purchases yet
Companies, including PwC, Adidas, Miller Lite and others, have made virtual land purchases recently — but the details of many of these deals haven’t been made public.
But a look at other big-ticket transactions shows just how much people and corporations are willing to pay to get in on the metaverse action.
Here’s a look at three of the largest known metaverse real estate transactions to date:
1. Republic Realm
Republic Realm, a metaverse real estate developer, purchased land from Atari SA in The Sandbox for $4.3 million in November 2021. The deal was the largest metaverse real estate sale that had been publicized at the time, according to The Wall Street Journal.
The company owns about 2,500 virtual land plots in 19 worlds. In some cases, it has held the property, waiting for it to grow in value. Other times, it has developed, designed, and built virtual homes or retailers.
A subsidy of crypto investor Tokens.com, Metaverse Group, purchased a 116-acre parcel in Decentraland for $2.4 million in cryptocurrency in November. The land is located in the platform’s Fashion Street shopping district.
Tokens.com plans to use the space to host digital fashion shows and create shopping experiences. The company will also partner with existing fashion brands to connect with new audiences and expand shopping on the platforms.
In December, someone paid $450,000 to be rapper Snoop Dogg’s neighbor in the metaverse.
Snoop Dogg sold the parcel in Snoopverse, the metaverse he built in The Sandbox platform. The rapper plans to host events in space and even built a replica of his home in the virtual world.
These days, investing in real estate doesn’t necessarily mean purchasing a physical space that you can touch and feel. There are many opportunities to buy a plot of land in a virtual world—and, the market keeps growing.
Metaverse real estate is selling for millions. You can hold onto the land to sell down the road, or develop it to create an immersive gaming experience to sell to someone else. You can even set up shop in a virtual shopping district or next door to your favorite celebrity.
But the metaverse is still a very new entity, and how well investments there will perform remain to be seen.
Buying a house in the real world, on the other hand, is still considered fundamental to financial stability and wealth-building.
*The information in this article does not constitute financial planning advice. Please consult a financial planner regarding your specific situation.