Real estate, one of the oldest businesses, is expanding into virtual and augmented reality fields. Investors are increasingly looking at exciting ways to utilize the technologies for personal benefits in light of virtual and augmented reality’s arrival.
In light of this, real estate in the metaverse is one of the forms of investment currently popular and ranks high in terms of activity and functionality.
Compared to other investment channels, such as cryptocurrencies, NFTs, and so on, the concept of investing in real estate through virtual reality is still in its infancy.
In 2017, Dencentraland, a pioneer in virtual real estate, began selling houses and plots in their 3D virtual world for as little as twenty dollars each; the topic was thrust into the spotlight and has remained there ever since.
How It All Started
When Second Life, a platform for 3D virtual worlds, first went public in 2003, this marked the beginning of the metaverse. But the virtual real estate market didn’t take off until late 2021 when Mark Zuckerberg placed a hyper public bet on the future of the next digital frontier by announcing that the social media platform formerly known as Facebook would now be called Meta. At that time, virtual real estate was still in its infancy.
Since then, the prices of land transactions in the metaverse have risen to seven figures. For example, a virtual estate in Decentraland was purchased for $2.4 million in November 2021, and another in Otherside was purchased for $1.65 million in May.
And at this point, are not only billboards and fast food restaurants for avatars being built on these plots of land, but also people’s homes. They do not provide any kind of protection or a place to sleep. Yet, they provide a space for our increasingly online selves to assemble and display their accomplishments.
Investing in Virtual Real Estate
The blockchain, a digitally distributed public record, manages payment transactions in the metaverse. This removes the requirement for a third party, such as a bank, to process the transactions. Despite the collapse of FTX and crypto winter forecasts, the market for real estate in the metaverse is anticipated to expand by $5.37 billion by 2026.
In the Sandbox, one of the most popular metaverse worlds and where Mr. Sierra made his $10,000 purchase, most of the recent virtual land rush has been caused by global corporations such as Adidas, Atari, and Warner Music Group. These companies have bought spaces to produce entertainment, sell goods, launch virtual headquarters, and host immersive gatherings for their employees and fans.
In the previous year, it was projected that the total worth of land in The Sandbox, sold via a nonfungible token known as an NFT, was $167 million. In addition, the price of a parcel of land acquired directly from the Sandbox is approximately $400, but on the bustling secondary market, the prices can be many times more.
The proximity of property near land owned by celebrities or major businesses also drives higher prices: One buyer paid $450,000 solely to become Snoop Dogg’s neighbor when the rapper Snoop Dogg purchased land in the Sandbox neighborhood and renamed it the “Snoopverse.”
Is it Worth a Try?
The procedures used to invest in real estate in the metaverse are identical to those used in the real world. However, when it comes to real estate brokers and agents, as well as almost anything else engaged in virtual reality, there is nothing that has the support of any organization on which an investor can rely for the capital necessary to support it.
Everything is in the people’s possession, proving they are the same person described on their virtual IDs. People must be aware of the best action to take if their money is stolen or they are subjected to various fraudulent activities.
Consequently, investing in anything connected to web 3.0 has just as much, if not more, risk than investing in cryptocurrencies, depending on the situation’s specifics.
For investing, citing growth numbers will lend little reliability to the situation. The figures can mislead you, as with the Bitcoin bubble and other cryptocurrencies that had significant growth in recent years; however, this is no longer the case.
This does not imply, however, that you should not consider purchasing property in the metaverse. Metaverse possesses the enormous untapped potential and has the potential to become a trustworthy investment choice in the future.
For now, you should put only some of your eggs in this investing basket and risk losing all the money you’ve worked so hard to obtain. Listen to what the investors say about allocating 5% of your investment portfolio to cryptocurrency.
Remember that the same criteria apply here, but with a much lower percentage figure.