Why You Should and Shouldn’t Buy Metaverse Real Estate

Have you been struggling to purchase your first physical piece of real estate? Here’s some bad news— you may not just have to worry about physical land any more. We may eventually have to worry about buying virtual real estate in the Metaverse, using non-fungible tokens real estate as the property’s title document.

At this time last year, most of us would have advised someone to kick sand if they said, “I’ll sell you a parcel of virtual land for 1 bitcoin.” Now, a year later, many crypto investors are discovering that we are the ones kicking actual sand in Decentraland, especially now that the Decentraland coin price prediction for 2022 is promising. 

The thought of profitably owning Metaverse real estate elicits a range of feelings in people: exhilaration, curiosity, and apprehension. While many investors are already suffering from a fear of missing out, others are fearful about investing in the wrong property due to a lack of experience. While investing in virtual real estate is a significant risk, selecting the perfect property may be made much simpler when purchasing with a Metaverse mining pool of investors. Platforms like Metaverse Capital Corp could come in handy in helping with these investments.

The Metaverse

You can now own digital swaths of land in the Metaverse if you have enough money and guts to invest. The Metaverse is without a doubt the most intriguing breakthrough for investors this year, providing great potential for those who enter at the proper time. Whatever type of real estate investor you are, there is a vast field of opportunity available to you, ranging from the virtual equivalent of short-term rentals to buy-and-hold property investing and even commercial leasing. 

For so many people, the virtual world has the potential to be an oyster. However, this does not mean that the Metaverse is risk-free or problem-free. Despite the many benefits of the Metaverse, you should be aware of certain concerns about virtual real estate before plunging in. In the midst of the virtual land grab, Grayscale Investments, a $53 billion digital asset manager, stated that the Metaverse had the capacity to generate $1 trillion in yearly income. 

Cathie Wood, CEO of Ark Invest, offered an even bolder prediction, predicting that the Metaverse might become a multi-trillion-dollar business. Over $100 million worth of Metaverse real estate has been sold in the previous week alone. The co-founder of a virtual real estate firm explains why the opportunity in digital properties has the potential to grow 200x in the next 16 months.

 According to DappRadar, over $100 million worth of Metaverse land was sold as non-fungible tokens real estate last week in Metaverse platforms such as the Sandbox, Decentraland, CryptoVoxels, and Somnium Space. Gord’s company, Metaverse Group, which sold a 50% share to Tokens.com for $1.7 million, purchased a plot of digital land in Decentraland for $2.43 million last week. 

In the same week, another parcel of virtual land was sold for $2.3 million on Axie Infinity, a play-to-earn platform. While many investors view the sudden boom in virtual real estate investing as speculative and unsustainable, Gord argues that the trend is still young enough that purchasing virtual land is nearly equivalent to purchasing pixels for a website in the early days of the internet which was not possible. 

“Instead of paying per eyeball for advertising space, if you could genuinely purchase ownership of that space and real estate on websites that would continue to be Facebook or truly dominating networks in the world,” Gord explained, “your ownership of the real estate in Facebook would be priceless.” Gord’s company oversees a portfolio of virtual real estate holdings dispersed between Decentraland and the Sandbox, with most digital properties now residing in Decentraland. 

Gord found Decentraland during the 2017 initial coin offering boom but passed on it due to the technology’s immaturity. Gord began purchasing MANA, Decentraland’s native token, in early 2020, after observing how the epidemic compelled individuals to spend the majority of their time online. 

According to CoinGecko prices, the cryptocurrency was selling for $4.2 on Friday afternoon in New York, up 34% in the last month and 4,493 percent in the last year. Gord is counting on Decentraland being the “world’s most valuable social network,” surpassing Facebook, and WhatsApp, since the Metaverse will have a purpose beyond communication.

“If we stage fashion displays, concerts, or conferences in the Metaverse, we may expect to draw tens of thousands of people in the short term,” Gord explained, “However, in the medium to long term, I believe it is quite feasible that tens of millions of individuals will join up for these experiences.” According to Gord, Decentraland’s platform has already grown more than 30 times in size, from 16,000 users at the start of the year to 384,000 at the end of November.

Is it an Illusion? Utterly

Despite the multimillion-dollar deals, some pessimistic crypto investors are skeptical that the current Metaverse land bubble will persist. 

“Is it a bubble? Absolutely. It is a bubble, It’s a bubble just like any housing bubble,” According to Jordan Fried, CEO of Immutable Holdings. In his interview with the Insider, Jordan Fried remarked that “There are not enough players of Decentraland or enough eyeballs in the game to warrant these kinds of prices today. It’s pure speculation, a frenzy, and a fear of missing out.”

Fried believes, however, the Metaverse trend is genuine and indicative of the potential that will arise as people increase their online time. So it should not appear strange that someone would pay $4,000 for a simulated Gucci bag in the Roblox game, even if it was not an NFT.

How Much Does Investing in Virtual Real Estate Cost?

The price you pay for virtual real estate is determined by the majority of the same elements that affect real land value: location, lot size, existing structures, and demand all play a significant impact on pricing. For instance, a parcel of land on Decentraland’s LAND #10889035741470030830827987437816582766476 sold for $452.98 on 12/25/2017 but was resold for $26,246.25 on 12/8/2021. 

This price is not a unique parcel either, but instead refers to standard lots. Last week, the Sandbox’s top-selling, LAND #48766, sold for $57,171.00, while Decentraland’s top seller, EST #1965, sold for $758,250.00. The figure below provides some basic statistics regarding the platforms that trade the most virtual real estate as of December 31, 2021.

The Metaverse: A Good Buy or Not?

As a real estate investor, venturing into the Metaverse is another tale. As you can see from the data above, there is a precedent for Metaverse real estate to appreciate significantly over time. Still, there is also an equal likelihood that any given Metaverse platform can become abandoned at any point at any time or not at all. In the Metaverse, real estate is a highly speculative investment. 

It would be best if you trust the platform would continue to exist far enough into the future for you to be able to cash out and profit from your investment. While this is feasible, the Metaverse notion remains so ill-defined that its members struggle to identify themselves uniformly. Some of these platforms will almost likely survive, but which will succeed and which will fail is anyone’s guess at the moment.

Taking a look at Decentraland’s roadmap, as one of the earliest, it shows a certainty that the project will continue to be a player for some time because of its vast buy-ins, but this also makes it a costly bet to take on large amounts there. On the other side, emerging platforms like Sandbox are pretty popular at the moment.

Still, it’s difficult to tell if they’ll remain popular or if this is more hype driving pricing than genuine long-term interest from users. Unlike real estate in the physical world, humans do not require virtual real estate to survive daily. They are not reliant on it to provide a roof over their heads, a place to cultivate food, or even a location for a company.

Conclusion

At present, the Metaverse appears to be the latest avenue for mega-millionaires. However, choosing the wrong project in the wrong location or universe might put a novice Metaverse investor up for failure, and because that space changes in the blink of an eye, staying current requires a great deal of effort. 

Nevertheless, conducting your due diligence and research may guide your Metaverse real estate portfolio and boost your chances of success. Most importantly, you can join a Metaverse mining pool to maximize your investment, transforming your virtual real estate into more of an investment and less of a gamble.

Featured Image: Megapixl