Real Estate In The Metaverse - A Guide To Virtual Lands

Forget New York, Paris, London or Monte Carlo. Although no doubt glitzy and glamorous, the hottest real estate isn’t to be found in the real world anymore. The metaverse is now the go-to place for plush properties, from private islands to celebrity mansions. And the fact that it’s all entirely virtual hasn’t done much to scare off potential investors.

Of course, the idea of virtual lands isn't entirely new. Many of us might remember playing The Sims and Second Life, or maybe even Facebook’s FarmVille, but the rise of metaverse has seen digital lands taking on a completely different (and very lucrative) meaning. Brands like Nike or Gucci are snapping up real estate in virtual worlds and opening retail stores for meta customers, while others hold on to virtual plots of land as the next technological goldmine. And in truth, real estate prices in some of the most popular metaverses have surged by as much as 400% to 500% in the last few months, reflecting just how frenzied the race for virtual land has become.

Investors are now paying millions for a piece of the metaverse dream, perhaps hoping to prove that it is more than just La La Land talk. With that in mind, we’ve decided to put together this guide with everything you need to know right now about the world of real estate in the metaverse.

GOING DOWN METAVERSE AVENUE

Welcome To ‘Unreal-land’

Entering a metaverse like Sandbox or Roblox and taking a stroll through its most popular districts, you’d be forgiven to think you were going down the Champs-Élysées for a shopping spree rather than visiting a virtual world such is the amount of big name stores on display. One thing is for certain: you won’t have any trouble finding the who’s who of fashion, art or tech in the metaverse. Think Gucci, Balenciaga, Ralph Lauren, Nike, Samsung or Sotheby’s, major brands are quickly setting up shop in virtual words - and for good reason.

By some estimates, the metaverse is a trillion-dollar opportunity, all of which is very much up for grabs as users and corporations make a sprint for a piece of the pie before it’s too late. And just like in real-life, metalands aren’t short on all sorts of entertainment, from music festivals and educational activities to the temptations of Las Vegas-like city districts and more sinful offerings of the pornoverse (disclaimer: SFW link) side of the metaverse.

And as the virtual worlds keep expanding and attracting greater audiences (Roblox alone claims to have 47 million daily active users), one central element has come into focus: the virtual real estate that underpins it all.

LONDON, NEW YORK... OR DECENTRALAND?

Why is metaverse real estate selling for millions

Virtual worlds share attributes that are very much similar to how real estate brokerage works in real-life, from location value and size of the lot to the economics of scarcity, visitor traffic and overall utility. Thinking of a metaverse like any real-world metropolis, properties closer to areas of high visitor traffic are more likely to get bigger valuations and slapped with eye-watering price tags than, say, a virtual house in the meta suburbs. The same reasoning goes for choosing a place to open a virtual store or set up a virtual billboard, for example.

Some might think of the idea of investing real money in nonexistent land as being somewhat delusional or simply ludicrous (metaverse real estate has been frequently dubbed surreal or unreal estate after all), but metaverse is as hot as ever. Plots and properties have sold for as much $4.3 million and the current investor feeling has been best described by one executive as “like buying on Fifth Avenue back in the 1800s”.

So, how has the metaverse become a goldmine? For brands, particularly fashion houses, the allure is clear; besides skipping over production costs, purchasing virtual land and opening metaverse retail stores eliminates the need for inventory and staff while making products easily accessible to consumers, 24/7. Italian fashion powerhouse Gucci has proven that the metaverse secret sauce has something to it after welcoming over 19 million visitors to its online experience ‘Gucci Garden’, hosted on Roblox last year and where fashionistas could ‘try on’ and purchase limited-edition digital apparel.

Much of the upside can be traced back to the NFT boom that has upended much of the economic markets in 2021, spewing out multi-million dollar digital paintings, memes, GIFs, digital apparel and, of course, virtual real estate.

Sellers looking to boost their chances will traditionally look to dedicated NFT marketplaces like OpenSea or Rarible, but many see metaverse infrastructures as a better platform.

Decentraland is currently gearing up to host its first Fashion Week and virtual property like towers, tents and runways is being built in preparation for the glitzy event. This follows on the back of successful music events hosted in the metaverse, most notably Ariana Grande’s and Travis Scott’s Fortnite concerts, to name a few.

Moving away from fashion and entertainment, metaverse lands have also become a big bet for other types of corporations looking to establish digital headquarters, open virtual offices and explore innovative deal-making opportunities. Recently, PwC, one of the world’s big four consultancy firms, announced that it had too started scooping up virtual estate, in line with a broadening metaverse corporate investment appetite set off by Facebook’s Meta rebranding-move last year.

“Since the Meta announcement, the value of virtual parcels shot through the roof. The price on average for virtual lands in The Sandbox, one of the essential metaverse players, surged almost 500% from the end of October. In November, virtual lands on The Sandbox were traded for $14,800 on average, a significant growth from October’s $2,500 average,” noted analyst firm DappRadar in its 2021 annual crypto industry report.

VIRTUAL LAND, REAL BUCKS

How to make money with metaverse real estate

Money makes the metaverse go round. And there’s big money being made in virtual real estate, with plots of land in some metaverses appreciating in value by as much as 500%, as mentioned earlier. For some digital assets have become an investment like stocks or bonds, for others a way of having another stream of passive income. Either by buying, renting or simply managing metaverse real estate, here are some of the biggest trends we’ve seen so far:

Real estate flipping: Purchasing plots of virtual land or digital properties and re-selling them for a higher price, pocketing the difference.

Real estate brokering: With so much real estate business to be made, the need for virtual real estate companies has only become greater. Users can earn generous commissions by connecting buyers with sellers, or simply giving out advice as a real estate broker.

Renting: Much like in real-life, people are buying plots of land, building houses and other types of infrastructures, and renting them out. Becoming a virtual landlord is an emerging trend that is slowly catching on in virtual worlds.

Advertising: The hottest properties or plots or land are becoming highly sought-after for advertising purposes, especially if they are of high visibility to other users (generally located in high traffic areas).

Real estate management: Another great way of monetizing expertise in virtual worlds is to manage other user’s properties, including overseeing how virtual venues like concert halls and pieces of land are being best used.

Real estate designing: Conceptualizing and bringing to live plots of land and metaverse buildings can be a very lucrative business. Whether it’s a private property, a shopping mall or a stadium, the need for specialized 3D designers will soon become one of the most in-demand jobs in virtual worlds.

Hosting experiences: Some metaverses like Sandbox allow users to develop and host experiences like mini-games, educational activities, museums, galleries, etc. These can easily be developed using the platform's own software (known as Game Maker) and added to the metaverse by the creator.

LOCATION, LOCATION, LOCATION...

Where to buy land in the metaverse - and how does it all work, anyways?

Not all of us can afford to live in the big city - and many of those who do, the rent or mortgage crunch has been a real awakening (thanks, Covid-19 pandemic).

But the metaverse changes the narrative. In the metaverse you’ll be able to snap up a piece of metaverse real estate for a few hundreds dollars (depending on the platform), from simple plots of land to virtual private islands, and perhaps you’ll even be lucky enough to end up with a real-life celebrity as your meta neighbor. Again, location is key, among other factors at play.

But before jumping into the world of metaverse properties, you might want to cover some basics like comparing metaverses, land prices and cashing out potential. If you’d like first to have a quick introduction to the concept of metaverses in general, we’ve put together a short and sweet guide to ease you in.

Just like in the real world, digital real estate comes in lots or parcels within a platform. Typically, there’s a limit to the number of parcels available and each is traded as an NFT (non-fungible token). Decentraland for example, is divided into 90,601 individual plots of virtual land of equal size, while the Sandbox is made up of 166464 plots, which the platform calls LANDS.

OpenSea is a great starting point for those interested in buying virtual land as it shows the current ranking of virtual worlds and their NFTs based on a number of metrics. Currently, the hottest virtual real estate can be found at:

Sandbox Land

Axie Infinity Land

Decentraland

Roblox

Upland

Somnium Space Parcels

Cryptovoxels

As no doubt you’ll notice, land in some of these metaverses has gotten really expensive, no doubt thanks to high profile tenants like American rapper Snoop Dogg or socialite Paris Hilton, and partnerships with major brands including Adidas and Nike. The asking price for the cheapest plots of metaverse land in the Sandbox and Decentraland are currently around $11,000, making it an investment worth thinking over at least twice for the average person.

But say you’re still interested in getting the keys to your virtual house, what else should you know? In most (if not all) metaverses, all purchases are made using a native digital currency so you’d better be familiar with it. Decentraland uses its own cryptocurrency called MANA while Sandbox relies on $SAND, but generally you’ll be able to use Ether (ETH) to complete transactions in metaverses like Axie Infinity.

If you want to have a go at buying virtual land, there are a few steps that are mostly standard across metaverses:

  • Set up a wallet: Create an account in your platform of choice and then open a digital wallet that will be connected to your account and where all your cryptocurrency will be safely kept. There are many wallet services available, but most metaverses will have a partnership with Metamask or Trustwallet.

  • Buy cryptocurrency: As mentioned before, you will need enough of your metaverse’s in-platform currency in order to complete transactions. You can easily buy currencies like $SAND and $ETH on exchanges like Binance, Coinbase or KuCoin.

  • Select a real estate plot or property: After browsing through the land available, you will be able to check important details like price and details of the current owner. A metaverse like Decentraland will have a very intuitive marketplace and you’ll be able to explore it like a map, zooming in on districts and understanding which plots have the most potential.

  • Confirm your purchase: Once your real real estate transaction is complete, you should be able to confirm it in your wallet. As simple as that.

And if you’re happy with your brand new real virtual land, you might feel inclined to throw in a virtual jet or a digital yacht into the mix (yes, you can buy that too).

COMING TO A METAVERSE NEAR YOU

So far, the virtual real estate market has followed a favorable trend, best described by the ultimate #cryptobro maxim - the only way is up. Big companies are joining in, Paris Hilton is throwing metaverse mansion parties and investors are blowing millions on virtual land.

Just another strange internet fantasy for some, landscape of the future for others, the concept of virtual lands and metaverse real estate is far from being something we can all agree on.

But as more real-life areas like shopping, entertainment and even official administration services move to virtual worlds, it’s not far-fetched to think that people might want to own not only their avatars but also properties where they can meet other friend, family and people, open businesses, host events or use it as an investment tool.

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