By now, the term Metaverse has probably reached your ears. You’re asking yourself if it’s even worth investing in a digital real estate property within the Metaverse. Is the hype real? If it is, how do you invest in the Metaverse?
In essence, a Metaverse is an online platform where virtual communities gather together to connect, socialize, network, offer services, showcase NFT collections, host events, and release products. Epic Games is one of the businesses today that owns digital lands in the Metaverse, including Microsoft and Apple.
As suggested by Jon Radoff, author of Building the Metaverse blog, the Metaverse is a sophisticated digital reality that consists of seven distinct layers:
- Infrastructure – Connectivity networks like 5G, Wi-Fi, cloud, and hi-tech materials like GPUs.
- Human interface – VR headsets, AR glasses, haptics, and other tech users will use to join the Metaverse.
- Decentralization – Blockchain, artificial intelligence, edge computing, and other tools of democratization.
- Spatial computing – 3D visualization and modeling frameworks.
- Creator economy – A variety of design tools, digital assets, and e-commerce establishments.
- Discovery – The content engine driving engagement, including ads, social media, ratings, reviews, etc.
- Experiences – VR equivalents of digital apps for gaming, events, work, shopping, etc.
The Metaverse is relatively new, continually evolving into something we’re in the process of understanding. Because of that, many wonder if it’s worth investing in virtual real estate within the Metaverse.
In this article, we’ll cover in-depth if investing in Metaverse real estate is worth it, what is it, how to invest within the Metaverse, and much more.
Is Metaverse a scam?
Before we even talk about Metaverse real estate, you might’ve had this question above your head and wondered if the Metaverse is legit.
We’ll answer that now for you:
The Metaverse is not a scam. It is an iteration of the internet established as a universe, immersive, and unified virtual world mediated by augmented and virtual reality headsets. The Metaverse connects between virtual, physical, and financial worlds.
The Metaverse is augmented reality-driven; each user controls a digital character or virtual avatar.
An example of this is that you can take a mixed reality meeting with an Oculus VR headset in your digital office, engage with a blockchain-based NFT game, manage your work, and even operate your crypto finances and portfolio in the comfort of the Metaverse.
What is Metaverse?
Thirty years before Facebook became Meta, in 1992, the science fiction novel, Snow Crash by Neal Stephenson, first introduced the concept of the Metaverse. More recently, the idea of virtual worlds and the Metaverse was further explored in the 2018 film Ready Player One, directed by Steven Spielberg.
In an interview with Altcoin Daily, Mark Cuban, the American billionaire entrepreneur, likens the Metaverse to the term ‘Cyberspace’ used in the 90s. Cuban says “we’re living in the Metaverse right now.”
Explaining this, he implies that everything we see and do are all part of the Metaverse. But what is it exactly?
Defined as a unified 3-dimensional virtual world, the Metaverse is where users gather through a digital avatar to perform sophisticated interactions that go beyond real-world applications. In the Metaverse, you can own digital real estate.
Generally based on connecting people worldwide through virtual and augmented realities, the Metaverse depends on blockchain technology to create this complex range of digital economies. Because of that, cryptocurrency will definitely play a big role in shaping the Metaverse, including NFTs and eCommerce.
The Metaverse banks on the idea that its unified digital world highlights a different and unique experience for its users. Rather than simply seeing and reading the internet, we’ll experience it in a new light, never before encountered.
Is it Worth Investing in Metaverse Real Estate?
Like any emerging technology, whether or not it’s worth investing in, the question you have to ask yourself is how much are you willing to risk. Your risk tolerance will dictate how much worth investing in Metaverse real estate may be for you.
Even if most of the data says ‘yes’ or ‘no’, you’ve got to trust your instincts and gut feeling. At the end of the day, the decision is up to you.
But in terms of emergent technologies, the Metaverse is definitely breaking the mold. With that said, the main benefit of investing in the Metaverse is that it gives you exposure to new tech like augmented reality, crypto, blockchain, and NFTs.
However, these new techs are subject to high volatility in the market, including the added risk of scams and fraudulent dealings. Because it’s new, people who are trying to game the system are prevalent in certain blockchain technologies.
On the other hand, significant returns can be generated for early investors and adopters, should the Metaverse materialize.
Why buy Real Estate in the Metaverse?
One of the ways you can invest in the Metaverse is by buying virtual properties and digital lands as real estate.
Some big names like Snoop Dog and international businesses including JP Morgan, HSBC, PwC, and Samsung have already bought virtual real estate. Their aim is to develop these lands for various purposes.
Early adopters have already got big ROIs, at least technically speaking. In 2021, the average price for the smallest plot of digital land on the Sandbox or Decentraland, two mega-metaverse platforms, was under $1000. Today, the price plays around £13,000.
There are two reasons why you’d want to buy land in the Metaverse.
Home in the Metaverse
The first reason is you can use what you’ve bought for any projects you deem important. An example may involve building a house to live in or a digital retail location for your business.
To clarify, “living” in the Metaverse means having a space to call “home”. It is quite similar to having a personal web page to show your friends back in the infancy of the internet.
The difference? There’s a more complex, digitized interaction with people you form connections with.
These digital homes can pave the way for individuals to creatively express their ideas online or display their unique digital collectibles.
Of course, this reason is less risky because you’ll likely get what you want from your purchase of the real estate, but there’s another reason, which is more financially sound yet riskier.
Meta-investing
The second reason involves seeing your “homes” as financial investments in the long term. Of course, like any investment, nothing guarantees values to go up or even down.
In investing, nothing is guaranteed. Even nothing isn’t guaranteed.
This statement applies to the Metaverse. As Metaverse real estate is seeing a gold rush with average prices growing by a factor of 10 over the past year, many people are now buying virtual property because they believe that the value will increase in the future, should more people get involved with the Metaverse.
Like a traditional real estate model, even buying-to-let is an emerging option, creating a healthy rental market.
The Worth of Metaverse Real Estate
In December 2017, Decentraland held its first LAND auction at the Terraform event. A plot of land costs a meager $20 at the time. In 2021, those plots of land sold for an average of over $6,000. In early 2022, the prices surged up to roughly $15,000 per LAND token.
The digital real estate properties in the Metaverse have continued to increase, especially with heightened interest from investors and people joining in. An anonymous buyer reportedly bought a $450,000 land adjacent to Snoop Dogg’s in The Sandbox.
How to Buy Real Estate in the Metaverse
The good news is, that it’s simpler than buying a real house. It works similarly to buying an NFT. Buying land on the Metaverse usually involves cryptocurrencies. After purchase, a unique piece of code is given to you as your deed of ownership on the blockchain. It certifies your right of ownership over that plot of virtual land.
To have a portfolio for your Metaverse real estate, you first must have a digital crypto wallet to use. However, remember, that some platforms have certain cryptocurrencies they use for their transactions, so you have to check first before you sign up for a new wallet.
Afterward, simply go to the virtual metaverse platform and create an account.
Here’s a quick list of the top metaverse platforms currently performing:
- Decentraland
- Illuvium
- Sandbox
- Axie Infinity
- Cryptovoxels
- Bloktopia
- Metahero
- Star Atlas
- Roblox
- Somnium Space
Before you can choose a parcel of digital land and buy it, you have to link your digital wallet first to the platform. After that, like in the real world, you can buy Metaverse lands through property managers and brokers.
However, unlike in the real world, Metaverse brokers aren’t required licenses and operate under no regulations. So make sure you do business with reliable and trustworthy ones.
At this point, if you’re still unsure how to buy land on the Metaverse, we found a beginner’s guide for you below.
Where to Buy Digital Real Estate?
Dubbed as the “Big Four”, these major players command the Metaverse economy. These include Decentraland, Sandbox, Somnium Space, and Cryptovoxels. The platforms own over 250,000 parcels of land, which is among the highest priced on the market.
The Sandbox
You can actually start on The Sandbox, currently the dominating Metaverse real estate that owns roughly 62% of the entire market. LAND currently costs an average of $11,000 with premium lots selling between $20,000 to $30,000.
These virtual spaces can be used for a variety of purposes. These include commercial spaces, family homes, art galleries, and recreational hangout spots varying in sizes.
The past few years has led to The Sandbox forging strategic partnerships with gaming companies such as Atari, Square Enix and including brands like Shaun the Sheep and superstars like Snoop Dogg.
Because of this, it gave more marketing appeal as an investment platform and a creative space for artists.
Decentraland
The other Big Four metaverse platform you may want to consider looking into is Decentraland. Clustered into districts each having a unique type of content, Decentraland has users exploring these areas to view, interact, and share content.
For brands and creators, the districts offer them a more targeted and niche traffic, enabling them to bring their specific content to desired audiences.
Cryptovoxels
Another platform within the Big Four is Cryptovoxels, a Minecraft-inspired virtual world. If you play Minecraft, you’d love this game.
Using monochrome blocks, you can buy land and build on it. The platform comes with built-in tools for creating avatars, socializing, and editing.
Brands and creators can build galleries and stores to house, display and curate their collections, services, and products. Currently, in Cryptovoxels, a parcel of land sells at an average of $5,000 per lot, but it can go as high as $10,000 depending on the property’s size and location.
Somnium Space
Last but not least in the Big Four is Somnium Space, a virtual reality metaverse built by the players themselves. This 3D world gives users an immersive VR experience accessible on desktops and mobile devices.
The virtual space is divided into three sizes: small, medium, and extra-large. From roadside to waterfront properties, you can choose to build your own space. You can import objects like your digital avatar and monetize virtual assets.
Land parcels and digital assets in Somnium Space are tokenized, where ownership is recorded and authenticated on the Ethereum and Solana blockchain.
The parcels in Somnium Space sell for an average price of $11,500. You can still grab smaller parcels sold at around $2,000 to $4,000.
Factors to Consider When Buying
Like buying real-world properties, location plays an essential factor in determining the value of your virtual land in the Metaverse.
In The Sandbox and Decentraland, parcels are increasing in value as big brands like Samsung, Atari, Miller Lite and Adidas put their claims on these virtual worlds.
Early adopters who have bought lots adjacent to these big companies or within the vicinity have received massive income and ROIs.
Plan to invest in the Metaverse? Consider these:
- Make sure to look for areas that have development potential. Places, where people can eventually congregate, will become more valuable than those areas which have fewer people.
- Consider parcels near but not within developed districts as the more developed an area is, the more it will cost.
- When you score a relatively low-priced parcel, build on them and wait for the prices to drive up.
Essentially, the Metaverse plays like your traditional real estate model.
The Metaverse Real Estate Statistics
If you’re not convinced about investing in the Metaverse, it may prove useful to look at the numbers and make a data-driven decision. We have compiled the latest statistics about the industry. You may assess whether it is worthwhile to invest in digital real estate.
- According to Bloomberg, the Metaverse market was worth $478.7 billion in 2020 and it is still growing. The publication suspects that the market size of the Metaverse is growing rapidly due to the shift in the paradigm of rethinking 3D online worlds.
- A research study that put the market size value of the metaverse at $47.69 billion in 2020 forecasts the same market to have a revenue of $828.95 billion in 2028.
- Sandbox LAND grew by 15,000% in 2021. It also had the largest transaction volume in the same year with a total amount of $350 million for 65,000 transactions in virtual land.
- Another study shows that the global Metaverse market is set to register a revenue CAGR (compound annual growth rate) of nearly 50% by 2028.
- In 2021, metaverse real estate sales on the four major platforms reached $501 million and are expected to double to $1 billion this year.
- As Gartner predicts, by 2026, 25% of people will spend an hour per day in the metaverse.
- The average price of a parcel in major metaverse platforms has increased from $1,265 to $12,684.
- Metaverse real estate investments come from only about 25,000 individual crypto wallets.
What the Stats say
A majority of the statistics and data on the Metaverse seem to be on the positive side. They indicated massive gains for early adopters on the virtual platforms.
However, regardless of the data, you must consider that these virtual worlds are relatively new and not yet fully established. It may take some time for them to develop and see the fruits of labor, but now it’s a matter of speculation whether or not the Metaverse will be successful.
The numbers may tempt you, but you have to do more research if you really want to understand it deeper.
How to Invest in the Metaverse
As you may be an investor looking for the next “big thing”, it’s always interesting to witness an emerging industry backed institutionally. It may be difficult at first to grasp the concept of the Metaverse, but it’s worth noting that when the Internet first began, it, too, was met with skepticism.
Metaverse Tokens You Can Invest In
Other than real estate in the Metaverse, you can also invest in Metaverse tokens.
The Sandbox (SAND)
Ethereum-based blockchain, The SandBox is a virtual gaming world where players can create and monetize assets. It uses its own native token called SAND, which can be used to buy and sell NFTs within the game. You can trade SAND on several of the top crypto exchanges, including Binance.
Decentraland (MANA)
Decentraland is one of the first decentralized gaming metaverses. It is a 3D virtual world gaming platform where players can use the MANA token to buy in-game items, which are minted NFTs. These are unique valuable digital assets that can be resold or traded within the in-game economy.
Decentraland also offers land plots NFTs that users can pay large sums to buy. MANA supports these crypto exchanges: Coinbase, Gemini, eToro and more.
Axie Infinity (AXS)
During the pandemic, Axie Infinity truly took off with countries such as the Philippines benefitting greatly from this game. Instead of world-building, Axie Infinity plays like a Pokemon-inspired game. NFT beasts called Axies exist in the game to battle each other, and players raise them.
Axie Infinity uses the native token called AXS, or Axie Infinity Shards, which is tied to the broader NFT economy.
The Axie Infinity Coin is available on Coinbase, Gemini, and other crypto exchanges.
Metaverse Stocks You Can Invest In
Aside from buying real estate, one of the other ways to invest in the Metaverse is through stocks.
NVIDIA (NASDAQ: NVDA)
NVIDIA is another proponent that you can invest stocks in. It has developed its own platform for the Metaverse, named “Omniverse”.
NVIDIA is cultivating this platform to be the Metaverse except it’s for developers, providing enterprise tools and solutions for companies and creators wanting to work within the Metaverse.
Most notably, people know NVIDIA to be a chip-making company, creating GPUs for gaming, crypto mining and data centers. With the development of the Metaverse, NVIDIA seems to continue to expand its investments to various segments of the industry.
Metaverse ETFs
A safe approach to ensuring a secure and diversified portfolio is getting exposed to an entire industry. Buying a basket of several various companies through an exchange-traded fund (ETF) may be useful.
However, there aren’t many Metaverse ETFs yet. However, we have an option, namely, the Roundhill Ball Metaverse ETF (NYSE: METV). The ETF was launched in June 2021.
Currently, the fund has an expense ratio of 0.59%. Its major holdings include Meta (NASDAQ: FB), NVIDIA (NASDAQ: NVDA), Roblox (NYSE: RBLX), and Unity Software (NYSE: U).
Meta Platforms (NASDAQ: FB)
Formerly known as Facebook, many attribute Meta as the main driver behind the creation and development of the Metaverse as we know it today. By putting his company in a major rebranding, CEO Mark Zuckerberg plans to integrate Facebook, Instagram, and Whatsapp into the Metaverse.
In the past, Meta has acquired companies such as the VR headset maker Oculus. It is expected they will play an integral role in Meta’s role in the Metaverse, making Meta one of the most popular metaverse stocks out there.
Is the Metaverse Real Estate a Good Investment?
At the time of writing, the Metaverse real estate economy just popped.
fricking metaverse housing bubble just popped who would’ve thought https://t.co/4OZKoi5fH4
— lil t the based god (@fauxzus) August 7, 2022
More specifically, Ethereum-based blockchain Metaverse projects, including the Sandbox and Decentraland, have witnessed significant declines in their valuations and other key metrics, as data from WeMeta shows.
For instance, the average price of virtual lands sold in Decentraland peaked at $37,238 in February 2022. But as of August 1 came, their costs had dropped to an average of $5,163. Similarly, the Sandbox’s average sale price dropped from circa $35,500 in January to around $2,800 in August.
85% decline
Overall, across the six major Ethereum metaverse projects, the average price per parcel of virtual lands declined from roughly $17,000 in January to around $2,500 in August or a 85% decline.
As mentioned above, this emergent technology is still in its early stages and should be considered highly volatile. Now, this bubble burst can be interpreted in two ways: either as an opportunity or a warning.
It is an opportunity because as prices go down, the more you can invest in the future for when the prices go up. Meanwhile, it may be a warning that the Metaverse isn’t a worthwhile investment.
Again, it depends on your risk tolerance and perspective on the matter. But while the bubble burst, it may be an opportune time to invest while the prices are low.
Risks in Metaverse Real Estate Investments
For now, what’s certain is that investing in Metaverse real estate properties is highly speculative in nature. It is an understatement to say that the risks are big. Even if you do earn, it’s highly possible that those earnings can disappear overnight.
Considering the size and scope of the industry, the risks are really large and consequential, one that can set you back your entire life!
In the internet or the virtual world for that matter, you can lose all your hard-earned money in a blink of an eye.
However, it doesn’t mean that the earning potential is impossible. It’s just a gamble at this point. But with the shift to digitalization, you will see some people and companies benefitting from this venture.
Research Always
As always, before you make any investment decision, you have to learn and research as much as you can about the Metaverse. Even though it may be a virtual world comprised of games, finances themselves may not be a game for everyone.
You need to understand the risks and challenges involved and gauge them against the potential rewards.
Only after you’ve made in-depth research through all the pros and cons should your decision be made.
The Future of Metaverse Real Estate
No one knows about the future; we can only anticipate and even speculate. What’s certain is that the future of digital real estate in the Metaverse will entirely depend on the interest level of people in it.
Even though influential and big corporations like Meta, Microsoft, Apple, and NVIDIA are betting on this technology, it’s not an assurance that it will hit. Again, it’s a gamble. If it is the “next generation” of the internet, then it will show over time.
But as of now, the reception is mixed, with people arguing for and against the Metaverse. Even in the heyday of the internet, there were skeptics, like what we have now. But like the mass adoption of the internet, only time will tell.
Whether you are a big business or an individual and personal brand and influencer, the Metaverse is clearly breaking the mold and seeking to innovate in ways we can’t imagine before.
So there must be something valuable in this as more and more people look into it. It is definitely exciting!
With more immersive and ground-breaking technologies underway, the future of the Metaverse and its real estate opportunities is sure to be bright and healthy.
