The storm that the metaverse has been able to generate is profound. No other technology or service could impact an existing ecosystem as metaverse did to Web2. With Web3 taking and talking all the ranks, new products are lining up at the door of metaverse to offer immersive and unparallel services.
Think about virtual gaming, virtual working enviroment, virtual education, business, and real estate—the metaverse has it all. The essence of the metaverse is that it is not a monopoly but a decentralised ecosystem to be shared among and developed by all. Since the metaverse has an element for everything—there emerged a plethora of new themes like gaming metaverse, real estate, etc.
While other themes are looking to flourish, metaverse real estate market is booming. Projects such as Decentraland, Sandbox, Upland are thriving as real estate metaverse projects. The virtual land market in the four significant metaverses — Decentraland, Somnium Space, Cryptovoxels, and Sandbox — surpassed 440 million in 2021 and is expected to double in 2022.
So, what is driving people towards the virtual ownership of land? And how will it benefit landowners?
Ownership and Profitability
“Companies are spending millions on virtual real estate in the metaverse. When the Decentraland platform launched in 2017, its developers sold LAND for around $20 a piece,” commented Dev Sharma, CEO, Blockwiz, Web3 marketing Agency.
LAND is a 33×33 foot lot. Users spent over 161 million MANA during the first auction for 34,356 LAND packets, approximately $30 million. LAND is sold on the Decentraland and secondary marketplaces.
“It is an NFT, and such tokens have become increasingly popular in recent times for the amazing store of value they hold,” Mr. Sharma concluded.
Many NFTs, such as Bored Ape and Crypto Punk, have amassed millions of dollars as investments from the enthusiastic NFT community. The most expensive metaverse real estate NFT was sold by Sandbox metaverse. Sandbox sold a plot of land for €3.8 million in a single transaction in December 2021.
How Metaverse Real Estate Helps In Generating Revenues
While NFTs may seem the only source of revenue from the real estate metaverse, there is plenty more to offer when explored.
● Land Appreciation:
Like real estate investments, you can buy a piece of land that you think will appreciate in value in the future. Though it requires a lot of research around the ecosystem, location,
cost of purchase, platform, etc. You HODL the land for a period of time, and when the land’s value has appreciated sufficiently, you can sell it and make a hefty profit.
Just like in our real life, Metaverse is not any different. You own a land, plot or house and maybe lease it out to people in exchange for some amount of money. The business model remains the same. Shopping centers rent out stores to brands and make good money for it. You can also rent your virtual land to brands and companies and make a profit on your land.
Have you seen these banners on highways with branded advertising? Brands can be allowed to advertise on a virtual piece of land to promote their business to customers. JP Morgan and Goldman Sachs have also stepped into the metaverse space and are actively exploring profitability corners to advertise.
● Hosting Events:
Event hosting is a huge opportunity. You can host sporting events, music concerts, rock festivals, business conferences, etc. You may charge a fee for hosting these events in your virtual space. Imagine hosting a Drake or Adele concert on your property, enticing with a huge earning potential.
The Future of Real-Estate Metaverse
Although metaverse has a considerable fan base, it is essential to understand that Metaverse real estate is a very niche market. You need to realize that your market is small and may remain so. There’s nothing wrong with that, but your investment strategy should reflect it. There is a risk factor always associated with something this new and showcasing itself as a game-changing project.
However, you may choose a platform that can mint a land plot as NFT, which adds to the additional guarantee that the blockchain validates your ownership. Choosing the right platform to invest in and validating it with thorough research will surely save your investment. As reiterated, “It’s better to be cautious than not to invest at all.”