Since 2021, we have been witnessing a spectacular rise in real estate prices in metaverses. Virtual plots of land are regarded as profitable investments by an increasing number of investors.
Virtual land is also gaining popularity among brands who want to enhance their visibility in virtual worlds. PwC, Adidas, Samsung or even Sotheby’s Auction House have already started investing in metaverses. Digital marketing experts agree that the future of marketing will play out in metaverses rather than on social networks. Consequently, more and more brands will want to open their virtual sales points in metaverses.
Investing in virtual real estate is not a new activity. Video game players have been buying and selling land in virtual spaces for a long time.
But why is there such enthusiasm for real estate in metaverses?
Non-fungible tokens (NFTs) have enabled real estate to take off in metaverses by providing a guarantee of ownership on the blockchain.
The real estate market within metaverses also experienced a significant upswing following the announcement in October 2021 by Meta, formerly Facebook, of the creation of a metaverse along with an investment plan worth several tens of millions of dollars.
How do you buy a plot of land and how much does it cost?
Land and buildings in metaverses are NFTs, i.e. title deeds registered on the blockchain.
You therefore need a wallet and cryptocurrency to be able to purchase them.
The properties for sale are available on metaverse marketplaces such as Tiliaverse and on NFT sales platforms like OpenSea (often used to resell virtual property).
You can purchase a basic virtual property for around 200 dollars in the Tilia.Earth Metaverse. Prices for the best-placed properties can reach thousands of dollars.
In 2021, sales generated almost 2.5 million dollars on Decentraland or Axie Infinity. The record to date remains the purchase by Republic Realm, an American real estate company, of a plot of land known as “The Sandbox” for 4.3 million euros in December 2021.
What is the advantage of investing in a plot of land in a metaverse?
A commercial and rental investment
Firstly, just like a real estate investment in real life, a virtual plot of land may qualify as building land. If so, it would then be suitable for developing a commercial activity such as a shop, an art gallery, an attraction etc., thereby generating revenue.
What is more, it is possible to rent out land. Although it is still difficult to evaluate prices on the rental market, a rise in demand is to be expected for commercial spaces in metaverses, as well as for virtual private residences. In the same way, billboards can be installed and leased to advertisers.
When it comes to return on investment, there is not much data available on the subject, but certain indicators suggest that very satisfactory returns are to be expected.
According to a report by Bloomberg Intelligence, a concert in the metaverse can generate up to ten times more turnover than a similar event in a real concert hall. This was the case for a concert given by Travis Scott on Fortnite, which achieved turnover of 20 million dollars.
Similarly, thanks to its presence in the metaverse, Adidas was able to sell NFTs worth 23.5 million dollars.
A speculative investment
Last of all, some investors buy a property deed in a metaverse for speculation purposes. They are counting on the development potential of metaverses and hoping that prices will soar...
It is true that experts on the subject anticipate extraordinary growth in the metaverse industry. Estimations for 2024 range from 800 billion dollars, according to Bloomberg Intelligence, to 8,000 billion dollars, according to the American bank Morgan Stanley.
Conclusion: diversify your investments
Investing in real estate in the metaverse can allow you to make a substantial profit and generate an impressive return on your investment. It is also a good way to diversify your investments between cryptocurrency and non-fungible properties.
Just like when managing a portfolio of cryptocurrency, investment in the world of metaverses requires good knowledge and careful anticipation of risks.
It is also sensible to diversify your investments across different plots of land in several metaverses. This is the strategy adopted by the investor Republic Realm, which owns land in 23 metaverses.
Given the surge in the prices of virtual plots of land since the end of 2021, it is high time to take an interest in real estate in metaverses, whilst taking the time to analyze the situation carefully and to evaluate the risks.