Mon. Nov 28th, 2022

Investors and analytics firms predict that sales of metaverse real estate, which topped $500 million last year, will more than double this year.

According to MetaMetric Solutions, real estate sales on the four major metaverse platforms reached $501 million in 2021. The metaverse data provider reported a sales total of $85 million in January. At this rate, the company expects sales to reach almost $1 billion in 2022.

Metaverse real estate sales top $500 million

On October 28, Facebook announced that it was rebranding as Meta to focus on the metaverse, which sparked a spike in sales. According to MetaMetric, real estate sales in November increased by nearly ninefold, to $133 million. Since then, sales growth has slowed, but January’s sales total will still be more than 10 times that of January 2021.

Metaverse real estate is expected to grow at a compound annual rate of 31% between 2022 and 2028 according to BrandEssence Market Research.

As Republic Realm CEO Janine Yorio put it, “There are big risks, but potentially big rewards,” she said.

Dominant players are the “Big Four.”

Sandbox, the largest metaverse real estate platform, saw Republic Realm pay a record $4.3 million for land. In the future, the company plans to build 100 islands, each with a private villa and a market for boats and jet skis. All ninety-nine islands went for $15,000 each on the first day, and some are now on the market for more than $100,000 each.

Topping $500 million in 2021 in Metaverse property sales

Investing in an asset with a fictitious scarcity and an uncertain future poses unique challenges for investors. Real estate can be purchased on a dozen platforms, with new ones springing up nearly every week. The “Big Four” — Sandbox, Decentraland, Cryptovoxels, and Somnium — have dominated real estate sales thus far. At a total of 268,645 parcels, they range in size from small to large on the four platforms.

According to a Republic Realm report, sandbox will account for 62% of all available land on the four platforms and 74% of all land sales by 2022. In December, each of Sandbox’s 166,464 parcels sold for $12,700 in ether. There are 96 metres by 96 metres of land available (106 yards by 106 yards).

One Decentraland parcel measures 16 metres by 16 metres and costs the ether equivalent to $14,440.90.90.90 each.

It’s possible that location still has an impact.

Companies, major brands, and investors are rushing to get in on the new land craze, hoping to get a piece of the next digital Manhattan or Monaco before it’s too late. According to Yorio, land value in the metaverse is not based on its location, but rather on what the owner does with it.

It’s less important where you are now that you can teleport anywhere.

Other investors, on the other hand, believe that location is everything when it comes to real estate in the metaverse. Parcels near Snoop Dogg’s planned virtual world in Sandbox and Atari’s development are attracting a premium price. CEO Andrew Kiguel recently raised a $16 million fund to invest in metaverse real estate, with nearly all of that money going toward purchasing land and hiring staff. Kiguel is based in Toronto. It recently spent $2.4 million on land in Decentraland’s fashion district where it plans to host fashion events and open retail shops for consumers to purchase designer apparel and accessories.

‘I’m about to announce deals with two North American apparel brands to rent space on my property to develop storefronts or experiences,’ Kiguel said. Metaverse land offers real commercial potential, according to Kiguel. Companies looking to advertise to a younger digital audience can rent space and host events there. He said he’s been in talks with accounting firms, investment banks, podcasts, and mutual funds to build a presence in the metaverse.

In virtual conference rooms, “we’re even talking with companies about putting up digital billboards,” he said.

In Somnium, Kiguel said, has purchased 12 waterfront properties that it believes will appreciate in value because of their rarity and visual appeal.

Even so, there are those who believe metaverse land is nothing more than the latest incarnation of the crypto Ponzi scheme. In contrast to real land, which has a built-in scarcity, virtual land can be easily created with code. A new metaverse platform can launch as many times as it wants. Even the largest platforms can expand their parcel sizes, as Sandbox did when it did so.

According to many, previous virtual land grabs, such as “Second Life,” have fallen far short of what they were expected to accomplish.

According to Indiana University professor of media Edward Castronova, “metaverse land sales are generally a pyramid scheme and have been for more than 20 years.” El Dorado for internet start-ups is the Metaverse.” They die in the jungle while trying to catch it,” he says.

Kiguel said that while older investors may dismiss metaverse land, younger consumers and investors are able to see the appeal.

According to Kiguel, “the problem a lot of people have is that there are generations that have a difficult time attributing value to things that are digital, that you can not hold and that do not have weight. This is not a problem for the younger generation. It is possible to create digital, irreplaceable, and scarce objects using blockchain technology. It’s something you can hold, store, display, and even resell.”

By Adam

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