How to Invest in Virtual Real Estate (Metaverse Real Estate Guide)

What, exactly, is the metaverse?

The Internet is gearing to move to the next phase of things, simulating the real world into a cyberspace of digitally owned property, also known as the metaverse. A metaverse is a digital platform on the Internet where people communicate and interact as cartoon avatars in a 3D-rendered community.

Investors are taking the plunge into metaverse real estate. Firms are investing millions of dollars into virtual real estate with the optimism of doubling or tripling their investments in the near future.

Source: statista.com

On October 28, 2021, Facebook announced its rebranding to Meta, ushering in the future of the Internet with the Metaverse. Metaverse platforms at the time were only small communities of investors and players. However, people’s curiosity about it grew since Facebook’s rebrand. Digital real estate investment firm Republic Realm released a comprehensive report on the metaverse land sales activity in 2021. The report shows that by November 2021, real estate sales across the biggest metaverse platforms totaled $187 million, more than twice the total sales in November 2020.

Game tokens also witnessed a price hike as virtual land sales increased. In January 2021, a plot of land sold at an average of $100. By December 2021, individual plots sell for an average of $15,000.

As the metaverse garners more attention, the value of virtual lands and gaming tokens will only increase. The Sandbox currency SAND witnessed a 748% increase in trade value in November 2021, and from $0.99, 1 SAND is now worth $8.40.

Metaverse investors believe in the potential of real estate and development in the virtual world. The Sandbox, the biggest metaverse platform to date, closed 65,000 transactions or a total of $350 million in the year 2021 alone. Meanwhile, the second-largest platform Decentraland reached 21,000 transactions or $110 million.

The Sandbox is a crowd favorite, gaining greater interest in comparison to other metaverse platforms. Despite having launched only by the end of November 2020, it already sold $78.5 million. The Sandbox land sale contributed to over 89% of that month’s sales alone. In 2021, The Sandbox land sales accounted for over 70% of monthly sales.

The metaverse real estate sales in 2021 exceeded $500 million, and by January 2022 alone, metaverse real estate sales closed for $85 million. Current trends dictate that sales could double in 2022.

The metaverse is highly attractive because it operates in an economy independent of external authorities like governments and banks. The users are in command of how much a digital property shall cost. You don’t need to make grand purchases to be a part of the metaverse. You can also use it as a social space for you and your friends across the globe to reconnect, show off your avatar’s unique wearables, and meet (albeit through your colorful, animated avatars).

Several metaverse platforms are operating, but each has only limited pieces of “land.” Users who believe that cryptocurrency and digital property are the Internet’s next big thing after social media rush to purchase digital land in Sandbox or Decentraland. Decentraland itself only has 90,000 unique parcels of land.


Getting in the Groove of Virtual Real Estate: 


Why Investing in Virtual Real Estate is a Big Deal

Metaverses beat the real world with the possibilities you can unfurl with your piece of “land”. In a matter of minutes, you can set up a shopping mall, a mansion, or a skyscraper. Because transactions are quick and easy in the metaverse, the value of a digital property increases exponentially.

Investing in virtual real estate is similar to playing a game of Monopoly. Ideally, you would want to acquire as much property as possible. Location plays a big role in selecting which parcel of land to purchase. Pricier they may be, areas with greater user traffic will have greater value over time. 

In fact, Snoop Dogg gained a neighbor over at the Sandbox metaverse, who bought the neighboring plot of land for the price of $450,000. In Sandbox currency, that is equivalent to 71,000 SAND. As Snoop Dogg’s digital mansion attracts people every day, the neighbor also benefits from the traffic their “land” receives, in turn cranking up the value of his digital property.

The race to virtual real estate investments is strikingly similar to the domain name frenzy. Just like how people rushed to secure unique domain names on the Internet, virtual land is a limited commodity. There can only be so many virtual landowners across existing metaverse platforms.

Buying a parcel of virtual land opens a door of opportunities for you, and the rest of the metaverse population. As a landowner, you can choose to lend out the experience of working on the land with other people in the digital world. Malls, shops, and event centers allow creators to showcase their content collection.

In November 2021, Republic Realm took over virtual real estate headlines as it made the biggest virtual property purchase to date: 4.3 million dollars for a parcel of land in the Sandbox. Republic Realm owns around 2,500 plots of land across metaverses. Just like traditional real estate, the company sometimes waits for some of the lands’ value to increase, while it develops other plots into various interactive infrastructures.

Virtual real estate is set to boom, with the high demand among users for the very limited spaces up on the market. Tokens.com CEO Andrew Kiguel even claims that the metaverse is a trillion-dollar opportunity. That’s coming from an investment firm that just purchased virtual land at 2.8 million dollars in a rising fashion district. Indeed, the metaverse is a space that can host just about anything the users aspire to do: hangouts, shopping, museum walkthroughs, concerts, and more.


How to Invest in Virtual Real Estate

Investing in virtual real estate follows almost the same procedure as buying cryptocurrency. Get your investment portfolio ready and decide how much you are willing to risk for the sake of owning virtual land.

  • Set up a digital wallet.

Every metaverse platform operates on its unique currency. Decentraland, for example, makes use of MANA, while Sandbox uses SAND. You will need to set up a digital wallet to make virtual purchases in the metaverse.

Because every metaverse runs on its economy, the value of its respective currency is not affected by other metaverses. That being said, MANA and SAND cannot be used interchangeably between metaverses.

  • Decide which metaverse platform you want to become part of.

Decide which metaverse platform you wish to invest in. The popular choices are Decentraland and Sandbox. However, given their popularity among metaverse enthusiasts, virtual lands are quickly getting snatched by other investors. If you wait to get into the metaverse, you might be left with scrap deals, away from where most users gather. There are more metaverses out on the Internet, so do your research before taking the plunge.

  • Access the NFT Marketplace.

Every property in the metaverse is a non-fungible token or NFT. To purchase virtual land, head on to the platform’s marketplace. Compare and contrast prices and the desirability of the location. Also, consider your plans in managing the land: will you be selling it after it reaches a certain value? Will you rent it out to well-known brands? Do you plan to hold on to it for your children to inherit?

  • Link your wallet to the platform’s marketplace.

Whether you want to purchase virtual land in Decentraland, Sandbox, or any other metaverse platform’s market, you must link your wallet to continue with your order. Once connected, you will receive your purchase as an NFT. Set aside extra coins in your wallet for unreported transaction fees to ensure a smooth and hassle-free transaction.


Is Virtual Real Estate Overheating?

Since 2020, virtual real estate investors have only been increasing, and prices are steadily on the rise. With the decentralized economy of metaverses, there is little that the metaverse platform developers can do about price inflation. 

The metaverse may be stable, but it is far from reaching a status of completion. Investors must be wise with their decisions after purchasing parcels of land. There are still ways to go until everyone in the metaverse gets to fully experience and immerse themselves in the digital world. More metaverse platforms are also emerging, with better opportunities and accommodations. Users can take all the time they need to make up their minds about virtual real estate investment.


Investing in Virtual Real Estate: Good choice, or bad?

Virtual real estate comes with a lot of promising features. First off, you can earn impressive revenue by leasing out your virtual property to brands or firms that need a working space within the metaverse. You can also sell your “land” for a price that only you can dictate. Virtual real estate, in essence, brings closer different sectors of the working industry, with an efficiency unlike the real world full of traffic jams, months of construction, etc.

As exciting as it is to bring reality into a digital world and simulate real-world experiences through pixels, virtual real estate, or the metaverse in general, it is a risky investment. The metaverse is a highly speculative platform, with no one knowing what is exactly going to happen in the next few months or so. The metaverse runs on cryptocurrency, which is a very volatile market. The harsh fluctuations are enough to drive unprepared investors to bankruptcy.

Virtual real estate can also charge higher fees to interested buyers. As special technology may be required to get the in-depth experience of a walkthrough, potential leads can significantly decrease. Not to mention, misleading depictions of the interior of an apartment or studio can greatly affect the satisfaction of buyers.


The Pros of the Metaverse

  • A more engaging way to connect and communicate: 

Unlike conventional chat and video calls, the metaverse allows you to interact with friends, family, and acquaintances from all over the world. Through avatars, you and your peers can occupy the same space in a 3D-rendered virtual environment.

The pandemic pushed the world into staying indoors. As social beings, humans will always crave interaction. Through the metaverse, people can continue engaging in new and exciting experiences without leaving home. Meeting new people is also more sophisticated and opens work opportunities.

  • A fresh environment to start your day at work:

Workspaces and offices all around the globe found themselves seeking refuge in cyberspace when the pandemic shut the world down. Working professionals all over the world had to adjust to remote work setups. While some handled it better, certain lines of work can benefit from the metaverse.

Through immersive virtual environments, employees can simulate the experience of a professional office setup. You can manage your way around the desks of your colleagues, chat by the coffee station, and more at the metaverse.

  • Upgrade branding and social media presence:

Content creators help brands stay relevant with their witty and relatable skits. However, social media platforms lack real-time engagement. The metaverse provides the best solution for delayed responses and inaccurate data analysis. 

In the metaverse, content creators can produce and release their content in 3D-rendered pop-up shops. Their followers get to experience browsing through their work, much like shopping in the real world. Popular brands can rent a vacant space in a virtual mall and put their collection up for sale—a unique shopping experience compared to the usual browsing of the brands’ shop category on their website. People can browse, purchase, and show off their newly-bought merchandise in the metaverse. Aside from the virtual shopping experience, users also add to their inventory of NFTs.

Artists can also hold concerts and fan meetings in the metaverse. Unlike in the real world, where show organization and production take a long time of deliberation and budget allocation, virtual concerts in the metaverse are more than likely instantaneous. Ariana Grande and Justin Bieber already held virtual concerts.

  • A more fun and engaging way for students to attend class:

Distant learning setups are here to stay, but that does not mean students and schools are stuck with virtual meetings and offline self-study periods. The metaverse presents suitable solutions to help make online learning more fun and productive. Students can experience walking to class and facing the blackboard in the metaverse. 

The 3D environment of the metaverse can simulate the same setting and evoke the same feelings of the students going to school in real life. Studying and participating in class is also more interactive, as you “meet up” with your classmates daily.

  • Initiating and nurturing a virtual economy:

With metaverse platforms, people can further explore digitally-owned assets and self-contained economies. The high level of interaction and user experience in the metaverse presents a healthy environment for the virtual economy to flourish. Blockchain technology and the cryptocurrency market will strengthen through regular activity in the metaverse.


The Cons of the Metaverse

  • Advanced technology is required:

Advanced technologies capable of rendering virtual reality (VR) and augmented reality (AR) are needed to get the most out of the metaverse. Facebook’s Oculus and Microsoft’s Hololens are some of the VR technology out in the market today. While the technology is available for purchase, these items are outrageously priced. 

Fast and reliable Internet connection, multiple graphics cards, and other equipment are also necessary to get the full, immersive experience of the metaverse. Unfortunately, not everyone has the budget nor access to these.

  • High energy consumption:

The technologies required to keep the metaverse up and running consume large amounts of energy. A study reports that a high-end gamer with the necessary equipment for a quality VR experience contributes to over 2,000 pounds of carbon emissions annually. As the metaverse requires multiple hardware and technology, energy consumption per item differs but adds to the total amount of electricity consumed.

  • Blurring lines between reality and virtual reality:

Video game addiction is a persistent health problem in today’s society. The metaverse can be a lot like video games, where the blurred lines between the real world and simulated virtual environments can spell trouble for users, especially the younger demographic. As it is the metaverse’s purpose to simulate the experiences of the real world, people can have a hard time differentiating what’s real from what’s virtually simulated.

  • Privacy and security risks:

The metaverse relies on artificial intelligence (AI) to comprehend the sequence of events and actions taken by users and translate it into an “experience.” Dare we say, user experience makes the metaverse go round. Data collection is necessary for running the metaverse. However, privacy risks are prevalent, especially in the use of AI. Deep fakes and other fraudulent activities can bring harm to users. Metaverse platform developers have yet to speak up about data privacy and online security for their clients.


Conclusion

The metaverse is an exciting concept with impressive solutions to the shortcomings of today’s Internet. 3D-rendered environments allow for people to connect and indulge in an immersive experience without leaving the comfort of their homes. Aside from socialization, the metaverse also opens up opportunities to generate profit through virtual means. 

Nonetheless, the metaverse is still in development. There is still so much to know about the feasibility of the metaverse despite the hype and the rush of virtual real estate investors. The technology necessary to experience the metaverse is far from accessible to all users, and the developers of the metaverse platforms have yet to release a more concrete action to preserve the privacy and security of their users.

Whether you are hopeful or indifferent towards the future of the metaverse, it is currently here to stay and take over a significant space on the Internet. 

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