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Purchasing Virtual Real Estate – Is It The Next Big Thing?

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Is owning virtual land property investment? In a real world view, no, it is not property investment; however, you can use your property investment knowledge to get a healthy ROI and the point of entry more affordable than the real deal!

In this property investment blog, we provide some insight into virtual real estate investing. The following topics are covered:

  • What is virtual land?
  • Where can you buy it and what with?
  • Metaverse 101

Virtual land exists in virtual worlds, so first, let’s look at what it means to be in a virtual world.

Virtual World

Four Standford Uni students created a website to present their study on virtual worlds so we turn to their explanation of them.

A virtual world is a computer-simulated representation of a world with specific spatial and physical characteristics, and users of virtual worlds interact with each other via representations of themselves called “avatars.”

Second life and FarmVille are virtual worlds; however, they are all contained within one website. TheMetaversee is a much broader proposition to Second Life since it is decentralized and considered the next internet.

Metaverse 101

Second Life is considered a protometaverse as it has a lot of the same experiences albeit just within one website.

The Metaverse is an entirely different proposition to Second Life as virtual spaces are interoperable. You can move freely between metaverses like The Sandbox, Decentraland, Enjin and many more.

The top 7 metaverses are all build on the cryptocurrency Ethereum blockchain. What you may know about the current metaverses is they are mostly for gaming. For example, Axie Infinity game has over a million players daily and the highest revenue – second to Ethereum.

Metaverses may have their beginnings in gaming, but there is already much more on offer for non-gamers. Virtual worlds will mimic real-world experiences so people can do everything they do in the real world in these virtual spaces.

For example, you’ve been invited to a party in Decentraland. Getting ready for the party will require you to dress your avatar. The clothes, shoes and accessories are NFTs. You may need to drive a vehicle to the event – that will be an NFT. Once you’ve arrived, you’ll want something to drink and eat. These actions are NFTs in the Metaverse.

Now it’s time to move onto NFTs as you need to know how to buy virtual land.

NFTs Explained

From BusinessBlogs:

Non-fungible tokens are unique units of data that use cryptocurrency blockchain technology (mostly Eth) to register and authenticate digital content.

NFTs are everything from artwork, music, and wearables to land and virtualized real-world assets.

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NFTs Examples

Dressing your avatar is big business for real-world retailers, brands and celebrities. Did you know you can purchase everything from accessories to actual virtual clothes shoes? So who is creating these NFTs, and where are they available?

Business

NFTs and investing in the Metaverse is already big business. Depending on who you listen to, the Metaverse is likely to be a trillion-dollar business in the future. Emergen Research suggests it will reach 829 billion by 2028!

Creators of NFTs are real-world businesses including McDonald’s, Taco Bell – yes, virtual food who would have thought it viable, but if you’re going to mimic the life as you know it then you’ve got to eat! :). Fashion brands include Gucci, Prada, Louis Vuitton, Ralph Lauren.

The art world is also doing well with NFTs, with auction houses like Sotheby’s selling USD 65 million of NFTs in 2021. However, Christie’s have gone one better, selling over $100 million of NFTs during the same year.

Celebrities

Celebrities have pushed the popularity of NFTs of virtual everything from wearables to art images to land purchases. Rapper Snoop Dog has virtual land in The SandBox and artwork.

Paris Hilton is another earlier adopter and sold one NFT for USD 1.1 million. She has over 140 NFTs. Sports celebrities are also deep in the Metaverse, including Lionel Messi, Steph Curry, Lewis Hamilton and many more.

NFT Marketplaces

NFT marketplaces enable creators to use tools to create, mint and sell their virtual creations as tokenized digital assets.

Top NFT marketplaces include OpenSea, Axie Marketplace, and Rarible. On these platforms, you can create, mint and sell and buy and resell tokenized creations, including land.

Virtual Land

Where can you buy virtual land? Two of the most well-known metaverses where you can purchase land plots are The Sandbox and
Dentraland.

The Company You Keep

There are other metaverses where you can buy land, and you can find them by searching a marketplace like OpenSea. Property investors know their criteria for real-world real estate purchases but do the same criteria apply to the virtual world in the Metaverse?

Location, Location, Location

land in Decentraland

Decentraland – Youtube

A good location is always a top criterion, even in the Metaverse. Your land plot needs to be as close to premium plots owned by brands.

The Sandbox, land plots for sale vary in price depending on where they are located. Land next to Snoop Dog sells for USD $450,000. However, you can get a plot for as little as $14,000, albeit not near a celebrity or big brand. There are other big players with large land plots in The Sandbox, including:

  • The Walking Dead
  • PwC
  • Care Bears
  • Gucci
  • Atari
  • Samsung

Trading For Profit

There is a secondary market, and the big profits are made with traders buying and selling as the mood takes them.

Buy And Hold

Also with LAND (as it is known in The Sandbox), you can develop it. Create a game and let users visit your land and play it. Or though this is not happening yet, as there are a finite number of land plots, the time will come when The Sandbox is visited by millions of people every day, and landowners can rent their plot to a commercial ‘tenant’. The tenant may develop the land for their game that visitors will pay to play, or they may sell other NFTs on it.

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Develop and Sell NFTs

You, as the landowner, can develop your plot. Imagine putting a commercial building on it with many levels, and each level offers something that visitors want. Maybe you have a game on one level, an art gallery on another level or floor and a wearables store on another level. Each floor of your commercial building is displaying NFTs for sale!

A Work In Progress

The Metaverse may take a decade to reach the mainstream, which by then will be the new internet with billions of users. There is a chance it doesn’t reach its full potential – however, it’s small given the desire by businesses to develop it into the new internet.

Caveat emptor:

Proceed with caution with your investments and always seek professional advice from experts.

What’s Next?

Our next blog article on this topic will cover virtualized real estate vs virtual land. You may be like many investors keen to tokenize your property deed. Turning the deed of a real-world asset into a digital one is more than a trend to watch.

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