Developers and speculators are treating parts of the internet’s metaverse as if it were dusty Manhattan in the 1800s. Investors are buying pricey parcels of virtual “land” with a dream that one day masses of people and businesses will want a piece of the action.
So far, metaverse action and interaction is light, but that’s not stopping the investment frenzy. In 2021, real estate transactions there topped $0.5 billion and are projected to double in 2022, according to metaverse analytics firm Metametric Solutions.
Why buy land in a virtual world?
The metaverse looks a lot like a video game. A person can control a 3D avatar, go to meetings, play games, and hang with friends. Now, they can buy land there too.
The Sandbox is one of the biggest metaverse real estate platforms. Atari purchased a large plot here, and someone famously shelled out $450,000 to be Snoop Dogg’s neighbor in Snoopverse, where the rapper plans to eventually host events.
“I think there are people who have lots of money and just like to goof around with it,” said Edward Castronova, a media professor at Indiana University Bloomington and author of “Life is a Game.”
Castronova is skeptical make-believe real estate is the next gold rush.
“Part of my cynicism is based on seeing these land rushes come again and again and again, and every time I just want to say, ‘It’s the content, stupid,’” Castronova said.
Right now, the metaverse is like Las Vegas before casinos: a barren wasteland. But early investors are hoping to cash in on players eventually coming to the table.
3 reasons investors are gambling
- To speculate. Investors are betting prices will go up so they can sell for a profit. In 2019, the average parcel in the popular platform Decentraland sold for $500. Today, that same parcel will sell for 29 times that.
- To develop. From hanging a billboard to curating an NFT gallery, development can theoretically generate income if people show up to the attraction.
- To rent. Blockchain investor Tokens.com plopped down $2.4 million for a 116-parcel estate in Decentraland’s fashion district. Now Sketchers is one of its tenants.
‘The real world sucks’
“If somebody figures out a way to take a virtual real estate idea and add to it some really compelling content that you can get, 30, 40, 50, 100 million players in, right? You’re gonna wish you’d invested in that one. I just haven’t seen it, that’s all,” Castronova said.
Still, the metaverse skeptic understands why more people are taking notice of this virtual world.
“One of the things that drives that interest is the fact that the real world sucks for so many people,” he said.
With property prices on planet Earth out of this world, some priced-out investors might be looking for otherworldly real estate right alongside the rich and famous.
SIMONE DEL ROSARIO: LOOKING FOR A PROPERTY WITH GREAT NEIGHBORS AND ENDLESS POTENTIAL?
DEVELOPERS AND SPECULATORS ARE TREATING PARTS OF THE INTERNET AS IF IT WERE MANHATTAN – IN THE 1800S! BUYING PRICEY PARCELS OF VIRTUAL “LAND” WITH A DREAM THAT ONE DAY MASSES OF PEOPLE AND BUSINESSES WILL WANT A PIECE OF THE ACTION.
SO FAR THE ACTION IS LIGHT IN THIS SO-CALLED “METAVERSE,” BUT THAT’S NOT STOPPING THE INVESTMENT FRENZY. IN 2021 REAL ESTATE TRANSACTIONS HERE TOPPED HALF A BILLION DOLLARS AND THAT’S PROJECTED TO DOUBLE THIS YEAR.
SO WHY WOULD ANYONE BUY LAND IN A VIRTUAL WORLD? LET’S TAKE A LOOK INSIDE.
THE METAVERSE LOOKS A LOT LIKE A VIDEO GAME. YOU CONTROL YOUR 3-D AVATAR, GO TO MEETINGS, PLAY GAMES, HANG WITH FRIENDS – AND NOW, YOU CAN BUY LAND THERE TOO.
HERE’S A MAP OF THE SANDBOX – ONE OF THE BIGGEST METAVERSE REAL ESTATE PLATFORMS. LOOKS LIKE ATARI PURCHASED THIS PLOT HERE. AND OVER HERE SOMEONE SHELLED OUT 450-THOUSAND DOLLARS TO BE SNOOP DOGG’S NEIGHBOR IN SNOOPVERSE – WHERE THE RAPPER PLANS TO EVENTUALLY HOST EVENTS.
EDWARD CASTRONOVA: I think there are people who have lots of money and just like to goof around with it.
SIMONE DEL ROSARIO: MEDIA STUDIES PROFESSOR EDWARD CASTRONOVA IS SKEPTICAL MAKE BELIEVE REAL ESTATE IS THE NEXT GOLD RUSH.
EDWARD CASTRONOVA: part of my cynicism is based on seeing these land rushes come again and again and again. And every time I just want to say ‘it’s the content stupid’
SIMONE DEL ROSARIO: RIGHT NOW THE METAVERSE IS LIKE LAS VEGAS BEFORE CASINOS. BUT IF THERE’S A COMPELLING REASON TO GET PLAYERS TO THE TABLE – MAYBE THERE’S A JACKPOT AFTER ALL.
Agent Avatar: this is a property with tons of promise lots of potential just came in but won’t stay on the market for too long and it’s a good neighborhood too.
SIMONE DEL ROSARIO: YES, THERE ARE METAVERSE REAL ESTATE AGENTS…AND GENERALLY – THERE ARE *THREE REASONS PEOPLE ARE GAMBLING IN THIS MARKET.
NUMBER 1. TO SPECULATE. BETTING PRICES WILL GO UP – SO YOU CAN SELL FOR A PROFIT. IN 2019 THE AVERAGE PARCEL IN THE POPULAR PLATFORM DECENTRALAND WENT FOR 500 DOLLARS. NOW – IT SELLS FOR 29 TIMES THAT.
NUMBER 2. DEVELOP IT. BUILD A CASINO, HANG BILLBOARDS, PROMOTE A POP CONCERT, CURATE AN NFT GALLERY. ALL OF THIS CAN THEORETICALLY GENERATE INCOME…IF PEOPLE SHOW UP.
AND NUMBER 3. RENT IT OUT. BLOCKCHAIN INVESTOR TOKENS DOT COM PLOPPED DOWN 2.4 MILLION FOR A 116-PARCEL ESTATE IN DECENTRALAND’S FASHION DISTRICT. AND NOW SKETCHERS IS ONE OF ITS TENANTS.
EDWARD CASTRONOVA: if somebody figures out a way to take a virtual real estate idea, and add to it some really compelling content that you can get 30, 40, 50, 100 million players in, right? You’re gonna wish you’d invested in that one. I just haven’t seen it. That’s all.
SIMONE DEL ROSARIO: BUT HE DOES SEE WHY MORE PEOPLE ARE STARTING TO TAKE NOTICE.
EDWARD CASTRONOVA: one of the things that drives that interest is the fact that the real world sucks. For so many people.
SIMONE DEL ROSARIO: AND WITH PROPERTY PRICES ON PLANET EARTH JUST OUT OF THIS WORLD, YOU MIGHT BE LOOKING FOR *OTHER-WORLDLY REAL ESTATE, RIGHT ALONGSIDE THE RICH AND FAMOUS.