Significant investments in virtual land within the metaverse are booming, with Bloomberg Intelligence estimating the global metaverse revenue opportunity to approach $800 billion by 2024.
Virtual worlds, such as Decentraland and The Sandbox, are enabling users and partners to build, trade and monetise in-game assets.
These immersive online platforms combine multiple elements of technology, including virtual reality, augmented reality and video where users “live” within a digital universe, converging the physical and digital realms in what is set to be the next evolution of the internet and social networks.
Professional services giant PwC is among the latest to dive in, having purchased real estate in The Sandbox for an undisclosed amount. Similarly, Tokens.com’s metaverse group bought a plot of land on virtual platform Decentraland in November for $2.43 million.
“The world of crypto is no longer a digital alternative to fiat currency, it is becoming its own universe – a multi-trillion-dollar industry,” said Simon Reid, chief operating officer and co-founder, crypto ratings authority Evai.io, in an interview with Arabian Business.
“Virtual real estate works in very much the same way as physical real estate – the only difference being, it exists in a new form of digital world, powered by crypto: the metaverse. There are many metaverses already in existence and many more being developed as we speak. They are essentially digital open-worlds with their own economies – and they are growing rapidly. Full cities populated by avatars – people from all over the world, running businesses, playing games and buying and selling property,” he added.
The biggest metaverse projects to date, Decentraland and The Sandbox, have seen phenomenal growth over the last year.
The Sandbox token (SAND) value has surged from $0.030 in January 2021 to over $4.63 in January 2022, an increase of 15,333 percent reflecting increasing demand.
Developments in Decentraland are also rapidly taking place, with the nation of Barbados preparing to establish a virtual embassy in the metaverse, connecting international diplomacy and digital real estate. This further increased the value of MANA – the platform’s native cryptocurrency – with a 6 percent weekly increase in price and an annual surge of 3,812.4 percent.
UAE-based cryptocurrency exchange BitOasis recently launched 12 new tokens on its exchange platform, including Decentraland’s MANA, signifying positive advancements from within the region as well.
Metaverse real estate and real-world real estate operate on many of the same economic principles, in which Reid explained: “First mover advantage and location will be key in the metaverse era. The same market dynamics of the traditional property market will apply to the metaverse and purchasing of virtual real estate. Buyers who purchase land in the early days will be getting value for money and a greater share, those coming later will be purchasing at a premium as demand grows and supply reduces, prices will inevitably rise.”
“Like any investment opportunity, you purchase an asset with the belief that the price will appreciate over time. Whether it is luxury watches or physical real estate, the investment is placed to secure your future, and virtual real estate is no different,” he added.
To many, the metaverse is filled with ample opportunities – a vast virtual land in which real estate knows no boundaries and transactions can be executed almost instantly and transparently, with the virtual equivalent of short-term rentals to buy-and-hold property investment and even commercial leasing being available to all.
Explaining how users can invest in virtual real estate, Reid said: “You can purchase properties and/or parcels of land, depending on your investment threshold. If you own properties, you can rent them out in certain metaverses and if you own land, you can build on the land to help develop the metaverse and generate income through virtual enterprise. If you pick the right plot in the right metaverse, you can see your profits skyrocket.”
With that, the movement is picking up pace exponentially, with global giants staking claims in the metaverse – Adidas recently bought their first parcel of land, naming it adiVerse, while Samsung have also just opened a virtual store in Decentraland.
Doubt still looms over the legitimacy of investing in the metaverse and whether it is simply a passing trend, but Reid says it’s here to stay.
“It is not a passing trend at all. You’re talking about places where, regardless of geographical locations or social boundaries, users can enter the Metaverse to take advantage of a world of previously unimaginable possibilities,” he said.
Looking at the endless possibilities that the metaverse will offer, he added: “There will be university degrees that will be taught by real-world lecturers, teaching classes of avatars from all over the world, with degrees stored on the blockchain. Nike have just acquired cutting-edge virtual sneaker company RTFKT; Dolce and Gabbana recently released an NFT clothing collection. Brands know this is the future. It’s evolution. And as for the benefits to users, why wouldn’t you have various interests in the digital world where the room for profit margin far exceeds traditional forms of investment, as well as being a hedge against the inflation we are about to see.”
However, when looking to invest in virtual real estate, Reid warned that purchases “should be viewed through the lens of entertainment first and investment as a secondary bonus” as the market matures and mass adoption accelerates.
“Virtual investments should be approached with the same mindset as those in the physical world. Buyers should not invest more than they can afford to lose or leave themselves at risk if the hot property they purchase in the metaverse doesn’t immediately skyrocket in price,” he added.
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