The metaverse became an overnight buzzword after Facebook, now Meta, unveiled plans to up its stakes in the virtual space in late 2021. But interest in this immersive 3D realm has been ongoing for some time now. And it’s given rise to several extraordinary concepts. Among them is virtual real estate.
But land and property in the metaverse are much more than a concept. They are very real, at least in the eyes of some investors who have already spent heavily to secure their own plots.
Just two decades back, buying and selling virtual land blocks may have seemed like something out of a sci-fi movie. But these are no ordinary times. With the advent of web 3.0, blockchain technologies, and groundbreaking advancements in AI and the like, our real world has begun to overlap with virtual environments in ways unimaginable.
One result of this epic merging of the real with the imaginary is virtual lands, homes, buildings, and other properties. And their prices are now surging, much like their physical alternatives.
So, from investors and real estate developers to celebrities and crypto-enthusiasts, many are flocking in to become a part of this new kind of property boom. Republic Realm, for instance, made headlines last year as it splurged an eye-watering $4.3 million on a virtual plot. Others, like the Metaverse Group, have also invested millions in similar assets.
Meanwhile, celebrities like Snoop Dogg are already building their virtual mansions. Then there are others who spend impressive amounts of crypto to reserve a plot next to them.
Virtual real estate: why the hype?
Metaverses are 3D virtual worlds that can provide highly immersive experiences to their users.
Now, the hype around them has many facets. But it’s mainly to do with the countless possibilities. Just think about it for a moment—in a virtual environment, you can take on a different physical form, jump off a cliff, and fly through the sky (or do more ordinary things like attending events, making friends, and shopping). You can lead a life that’s entirely different from your real self and take on risks you never thought possible.
Unlike the real world, the metaverse sees no boundaries. What you can achieve, do, or create is only limited by code. And this represents an environment with exciting prospects.
Clearly, the euphoria of what awaits behind a VR headset is a huge appeal for many people entering the metaverse. And one of the best ways to indefinitely become part of it is by buying virtual land.
But it’s not all about the excitement.
For some, their purchases are driven by real business motives.
For example, Republic Realm, the proud owner of the $4.3 million metaverse land, is a virtual real estate developer. It already owns around 2500 plots on different metaverses and has built the first metaverse shopping mall with retail tenants and leases.
Metaverse Group’s recent purchase was also led by business interests. Its $2.4million-worth virtual land is located in Decentraland’s fashion district. And the company is hoping to monetize this hyper-busy, upmarket plot by hosting fashion shows and selling clothes to avatars that frequent nearby shopping malls.
(And yes, virtual retail is already a thing. Some, like Balenciaga and Gucci, have already made their debut in the metaverse. Meanwhile, many other big brands are also exploring how they could sell their products in the virtual realm.)
There are many ways virtual property ownership could benefit investors in the years to come. As immersive interactions increase in this space, you can expect increased demand for entertainment hubs, conference venues, sports arenas, hotels, shopping malls, and the like.
The point is, the metaverse real estate hype is hardly a passing fad. Instead, it’s fueled by needs and wants, much similar to those that exist in our physical world.
So, should you invest in virtual real estate, too?
Virtual land on popular metaverses like Decentraland and Sandbox have become hot assets in the past year. The fear of losing out on a potentially lucrative opportunity (think of the Oklahoma land rush of 1893) is certainly enough to make anyone shed their cryptos on virtual property.
But right now, the demand for metaverse land is mostly driven by speculations. So, there’s a chance that current prices are substantially inflated. As a result, this type of virtual asset investment could be pretty risky.
This is not to say that they are without rewards. Some have already made significant gains with these digital assets.
But we all know that a higher yield comes with a higher risk. So, assessing your risk appetite is crucial.
It’s equally essential to spend adequate time to understand the inner workings of the metaverse, its trends, opportunities, and pitfalls.
Of course, real estate in the physical and virtual worlds share some fundamental driving factors like supply and demand-led pricing. But there are many differentiators that define how they each could become profitable assets.
For instance, buying metaverse land is pretty easy, but losing them is equally so—they’re sold as NFTs (just like, say, NFT art), and your ownership records are stored in a wallet. And a simple phishing attack on this data could wipe out your high-value digital assets within seconds.
″[It’s] highly, highly risky. You should only invest capital that you’re prepared to lose. It’s highly speculative. It’s also blockchain-based. And as we all know, crypto is highly volatile. But it can also be massively rewarding,” sums up Janine Yorio, CEO of Republic Realm, during an interview with CNBC.
No doubt, the metaverse holds exciting possibilities. Real-world brands are already investing heavily to become a part of a new kind of economy it’s poised to create. So, if executed prudently, virtual real estate investments might hold lucrative opportunities for savvy investors.
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