Definition | Virtual Real Estate – Metaverse Real Estate

Who would have thought that some would spend millions of dollars on land that only exists in virtual worlds? However, this reality does exist in metaverses such as Decentraland or The Sandbox.

Virtual real estate refers to the buying, selling or operating of land in a virtual world. It is a market in its own right. Overall, more than $500 million was spent on real estate purchases during the year 2021 and in April 2022, Insights estimated $1 billion in such spending over the year.

How to explain such enthusiasm? The fact that many companies believe that they must gain a foothold as soon as possible in a market perceived as gigantic in the long term. The announcement of mark zuckerberg in October 2021 like what Facebook – rebranded as Meta by the way – was going to develop its own Metaverse clearly accelerated the movement. The already existing metaversess such as Decentraland, The Sandbox benefited greatly from such an announcement. Several giants in their field have bought huge lots in such worlds: Atari, Carrefour, Adidas, Snoop Dog… Thus, in December 2021, Adidas paid the equivalent of 1.7 million euros to acquire 144 plots in The Sandbox. At the end of November, Republic Realm (New York), had disbursed 4.3 million dollars for the purchase of 792 plots there again, on The Sandbox. It was then the largest purchase of virtual real estate ever made.

Decentraland’s Fashion Street appeal

On November 23, 2021, the Canadian company Tokens.com — a site for crypto-currency investors — had already dropped $2.4 million to acquire a 565 m area2 on Decentraland. Tokens.com has acquired this land in the Fashion Street district and intends to make this space available to the virtual stores of luxury groups.

Andrew Kiguel, CEO of Tokens.com claims to have acted knowingly: he was an investment banker in the real estate sector for 20 years. Now, he believes that virtual goods have a potential analogous to those in the real world. According to him, Fashion Street will become the equivalent of the Ve New York Ave. In fact, the objective of such an operation is to give major fashion brands the opportunity to present their products on the Fashion Street. ” If I hadn’t done some research and figured out that these are high value properties it would sound crazyexplains Kiguel. These are places for advertising and events where people go to gather “.

A few weeks earlier, Decentraland’s Metavers Music Festival drew 50,000 attendees. Andrew Kiguel says he appreciates blockchain technology related to virtual real estate: “ I can see ownership history, what it cost and how a property passed from one person to another “.

How to choose a virtual good to acquire

If theuniverse cryptocurrencies sometimes experience spectacular ups and downs, that of virtual real estate is relatively more predictable: prices are generally on the rise, existing properties tend to increase in value over the long term, investors are increasingly more numerous. Virtual real estate happens to work similarly to real-world real estate, often deemed a reliable investment. Moreover, what makes the value of a virtual good is similar to that of a good of the real universe: its rarity, its location and of course also its immobility.

Investing in virtual real estate requires the same attention as in the real world. Anyone wishing to acquire an apartment or a building must be well informed about the product in question, even if it means requiring the services of a specialized broker. It is important to take into account the immediate environment of the coveted land:

  • is it a high traffic area?
  • what are the development opportunities in the area?
  • what is the price of nearby lots?

The profitability will also depend on the exploitation that will be carried out of the virtual place in question – for example entertainment capable of attracting many Internet users. It will also depend on the adoption of the metaverse chosen over the months and years. If you have acquired land in Decentraland, The Sandbox or Somnium Space and, over time, this particular metaverse was no longer popular, the property acquired would see it devalue.

Obviously, the advantage compared to the real world is that it is easy and ultra fast to buy land and you will never have to pay property taxes, condominium fees, etc.

In practice

How do you buy such a good? They are sold in the form of NFTs which, remember, are certificates of numerical properties tamper-proof. It is therefore necessary in the first place to hold a wallet (portfolio) of cryptocurrencies such as MetaMask or Trust Wallet.

Thereafter, it is necessary to identify the land available on a map detailing the occupied plots and those which are for sale. Thus, on The Sandbox marketplace, free plots appear in green. We can click on one of them and it redirects us to OpenSea where we can buy it using the corresponding cryptocurrency. On Decentraland, the currency is Mana, on The Sandbox, it’s Sand, etc. Once on OpenSea, you can offer a lower price than the one asked, free for the owner to accept or reject the offer.

Once you have acquired a given plot, it turns red on the map of The Sandbox to indicate that it is no longer available for purchase.

How to exploit your virtual real estate?

Once you have acquired land, what can you do with it?

  • Rent your space to companies

The plot that we have purchased can be used as a coworking space that can be rented to companies for business meetings. It must be understood that, sooner or later, all the plots of a metaverse such as The Sandbox will have been acquired and therefore, those who want to take advantage of them will have no choice but to rent them.

  • Create an exhibition gallery

At a time when NFTs have the wind at the back, it is possible to create a virtual art gallery and rent spaces to artists wishing to exhibit their works.

  • Create a place of entertainment

One could similarly create a concert hall, a store, a place of play, type casino, etc. So, in February 2022, the Manchester City team entered into a partnership with Sony to manage a football stadium in a metaverse. For his part, rapper Snoop Dog is developing “Snoopverse” on The Sandbox and this space will be oriented towards gaming and entertainment. The creation of such attractions is particularly favored on Decentraland or The Sandbox insofar as we have there environments managed by their users: these platforms provide the tools to build and decorate the places and to create games or entertainment.

  • Advertise or sell clothes

Within a metaverse, users are represented by avatars and therefore, some may be tempted to shine by the clothes or accessories they wear. They will therefore be tempted to visit shops presenting such NFTs or even be attracted by certain advertisements. Already, some users have started buying clothes for their avatars. If the plot purchased is close to a place with high traffic, you can offer to rent your walls for display advertising.

  • Organize events

One way to make your investment profitable can be to organize events requiring you to buy an entry ticket: concert, conference, match… You can also organize competitions or giveaway (free distribution of tokens).

  • Sell ​​video game accessories

If, within your plot, you have created a game, you could sell NFTs of elements of this game. For example, vials ofenergygifts of magic, etc.

Some will have a more down-to-earth objective: to achieve long-term capital gains. And so, they will buy plots on metaverses in the hope of seeing their value explode and that they will then be able to resell their property with a remarkable profit. It is also possible to staker (immobilize) its tokens Sand, Mana or whatever, hoping they will go up in value.

You will also be interested


[EN VIDÉO] NFT: what is it exactly?
NFTs have revolutionized the art market, because they make it possible to authenticate a unique work.

Interested in what you just read?

.

Leave a Reply

Your email address will not be published.