This article goes out to everyone who loved putting their Sims in the pool and deleting the ladder! That’s right folks, we’re talking about investing in online real estate, a trend that some forecast might become the next big thing in the metaverse.
Facebook’s recent name change wasn’t just for giggles: the company intends to invest billions of dollars on technical innovation in the metaverse. But while their commitment to funding innovation in that space is unprecedented, the idea of buying land that exists online-only is actually around a decade old. In 2008, the Great Recession led to a veritable real estate boom in popular massively multiplayer online role-playing games (MMORPGs) SecondLife and Runescape.
Both of these role-playing video games focus on players developing and customizing their virtual avatars, all while interacting with thousands of other players in a persistent world environment that continues to change and evolve — even when you’ve logged off. Coinmarket noted that in Second Life in 2009, “the user-to-user transactions in the game had topped out to $567 million. It represented 25% of the virtual goods market in the US, and the economy was large enough for the world to have its own GDP.”
But, I can hear you saying, I don’t care about metaverse real estate way back in the Jurassic era! How do I get in on this hot real estate today, and what can I do with it once it’s mine, all mine?! Well, here’s the skinny. If you know you want to buy a property within a specific metaverse, you have the benefit of being able to check out what amenities are nearby and scope out the location in detail. If you’re not so sure, you can use a third-party platform, like OpenSea or NonFungible.com, to see what’s out there. This option allows you to compare the prices of different parcels of land across metaverses.
- Compare land parcels for sale or for rent in Decentraland, Sandbox, Somnium, Cryptovoxels, and Upland.
- The actual how-to-buy process is simple. Let’s use Decentraland as an example: it’s as easy as taking a little trip to the Marketplace and heading over to “parcels and estates.” Once you click “view all,” you’ll be able to see if you’re located near any famous landmarks or desirable areas.
- Repeat after me: location, location, location. Digital land could accrue value, just like in the real world. Theoretically, if big-name luxury stores were to open locations on Fashion Street in Decentraland, real estate there would rise substantially in value.
- Capitalize on your investment by leasing your land out or selling ads on your property. Creating an art gallery or throwing exclusive, ticketed parties (à la Snoop Dog) is also a way to earn coin.
Decentraland and Sandbox are arguably the most popular choices, as both have created scarcity to try to ensure that land value holds up over time. Each piece of land on Decentraland is equivalent to a 16x16 meter plot IRL (to give you a sense of scale for when it comes to decorating) and is represented as an NFT. The number of pieces of land available on Decentraland is capped at 90,000.
The Metaverse Group, a leading virtual real estate company focused on the metaverse economy, recently announced that a 116 parcel estate in the heart of the Decentraland Fashion Street District was sold to Tokens.com, its subsidiary, for the equivalent of $2.5 million dollars. For those of you who are wondering what kind of square footage that amount of coin buys you in Decentraland these days: the property is approximately 6,090 square feet. (We bet some of those bathrooms are actually half-baths). The master plan with the new property? To facilitate fashion shows and build out relationships with the high fashion brands who are ready to level-up their e-commerce ventures.
Who knows, maybe members of Gen Z will own portions of digital properties before they own real estate IRL. Maybe we’ll use our digital real estate as collateral for loans, borrowing against our online real estate assets in order to purchase homes. As long as an unseen third party can’t pick any of us, put us in the pool, and take away the ladder, it’s all good.
For more NFT education from cocoNFT, click here.
