The metaverse can be defined as a blending of physical and virtual worlds, it is somewhat of a catch-all term for online virtual worlds. You can invest in anything from digital art to digital property. Metaverse supporters argue that such a future is inevitable and that humans will one day spend the majority of their daily hours in a world that is augmented in some way. If this is to be the case as many big tech giants are predicting, virtual real estate may be the future of real estate.
When we consider the way the world has become more digital as a result of the COVID-19 pandemic. From meeting with colleagues in VR Chat or or buying crypto currency and people spending millions on NFT’s, this leap occurring in real estate too should not come as much of a surprise, it’s become the norm to interact with others and the world around us through a screen.
For many people the idea of spending thousands of dollars on real estate will never make sense but for others with disposable income with housing prices in the real world continuing to spike, it is seen as an alternative for those who still want to own, but can’t afford real-life property. So why not get a head start on building that virtual house that you might someday pass down to your kids’ 3D avatars?
It’s becoming increasingly clear that commercial real estate in the metaverse is going to play a huge part in the global real estate industry in the years to come
According to MetaMetrics, sales across the four major metaverse platforms reached $501 million in 2021, with sales in January this year at $85 million. If the growth were to stay at this level, the market could reach almost $1billion come the end of the year.
Currently, there are over a dozen platforms selling real estate in the metaverse, but there is a Big Four that dominate the market, Sandbox, Decentraland, Cryptovoxels and Somnium. There are a total of 268,645 parcels across the four platforms, which all vary in size.
Recently, a single piece of digital real estate sold in Decentand for $2.5million. The value of the “property” was based on the fact that the plot of digital space is located in what is considered a prime real estate spot in Decentraland. The hope is that, just like in the real world, luxury brands will want to “lease space” within the digital location, or at the very least, advertise in it.
Now, should you invest in the metaverse?
It is worth considering that whilst the figures seem promising at this current point in time, it is largely based on hype as a lot of the talk about the metaverse in this moment is still theoretical.
However, many real-world brands and businesses are starting to invest. For example, Nike has already created sneakers for wearing in the metaverse, so big players can see the potential and major brands are putting out their own collections of NFT’s and partnering with tech companies to make their own digital avatars and digital worlds.Like any “real world “investment – there are risks. It is similar to choosing to invest in property in a completely emerging market. It may be an opportunity to get ahead of the curve, or it may completely fail. Which is why it is pivotal for you to do your own research and not take the hype as financial advice.
