The newest trend in real estate hotspots isn’t a beautiful tropical island or a major industrial city. It is in the cutting-edge virtual world known as the metaverse. Would you believe that major investment firms around the world are spending millions of dollars to own digital land?
According to real estate experts, buying land in the metaverse is similar to purchasing land in Chicago in the 1800s.
Technically, the metaverse is nothing but a derivative of cryptocurrencies. It is highly speculative and volatile. But the attraction towards this investment lies in those very facts.
For example, if you bought crypto a decade ago, you would be a very rich individual right now. A crypto exchange can help you monitor cryptocurrency prices and volatility. Cryptocurrency value isn’t controlled by a central authority, thus giving investors an alternative to fiat currencies.
The volatility of cryptocurrency markets is the very reason behind the potential for outsized returns. Business owners and investors are trying to replicate that phenomenon with the metaverse.
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How Do You Profit From It?
Your activities in the metaverse aren’t very different from those in the real world. You can attend virtual concerts, play esports, and shop at your favorite mall. The only difference is that it is all simulated.
There are buildings you can walk into, and there are shops you can visit to buy different goods and services. The land that these establishments are located on is for sale.
The notion driving a real estate boom in this virtual world is that you can make money in the future. Once you own the land, you can lease it out when the demand rises. However, digital real estate is still considered a risky investment.
What Led to Its Rising Demand?
The metaverse in its current form comprises several digital worlds. Users can interact with these spaces using digital avatars. The spaces here are still evolving. Most of what is located in the space looks cartoonish or is a replica of a popular real-world location.
The metaverse’s land is very similar to a monopoly board. There are parcels of land on it. Your objective is to buy as many parcels as possible. When platforms list parcels of land for sale, they specify how many parcels are available.
This will not go up in the future. It is the scarcity or the limited nature of parcels of land in the metaverse that drives its value.
Consider the case of Republic Realm, a metaverse real estate developer. The company reportedly paid upwards of $4 million in cryptocurrencies to own land in the metaverse.
The Importance of Location
The location of a parcel of land in the digital world is as important as it is in the real world. Location will be the most significant driving factor of value. Locations in the metaverse that have a large number of visitors will be of higher value.
Once you own land in a popular area, you can build anything you want there. Amusement parks, museums, concert halls, anything that you think will attract footfall. Investors are relying on the fact that more users will join these virtual worlds in the future.
And as more users get on board, companies and individual investors will start building virtual establishments like fancy homes and hi-tech retail outlets. These development projects will result in an appreciation of the land’s value.
How Are the Properties Built?
Companies or individuals that want to build properties hire an architect who designs the structure. Once designed, it is handed over to a game developer and a 3D modeler who build the actual structure.
Investors should be aware of zoning rules, though. Just like the real world, you are restricted to building only certain kinds of structures in certain areas. But the exciting part is that the structures do not need to abide by the laws of physics.
For example, there is a virtual mall where stores are leased out to fashion brands. These fashion brands make virtual clothing for avatars. Alongside, there is a villa community with 100 luxury villas. These villas are being bought by metaverse users.
The Risks in Metaverse Real Estate
As mentioned earlier, investing in metaverse real estate is risky and speculative. A particular virtual world could lose its popularity if it starts receiving fewer visitors.
The price of land in such locations would nosedive. Since it is a crypto derivative, if the value of the crypto itself falls, so will the price of the land. It can be offset by separating your holdings into different worlds.
This new real estate phenomenon is an exciting opportunity – especially for entrepreneurs looking to break into new markets with futuristic business ideas