Metaverse is more than just a fashionable word, if fact there are a lot of businesses taking advantage, and real estate doesn’t leave behind, according to the Global Metaverse Real Estate Market 2022-2026 the metaverse real estate market is poised to grow by $5.37 bn during 2022-2026 decelerating at a CAGR of 61.74% during the forecast period.
The report offers an up-to-date analysis of the current global market scenario, the latest trends and drivers, and the overall market environment. The market is driven by the growing popularity of mixed reality and cryptocurrency, a rise in the number of big brands entering the market, and a growing number of land purchases on metaverse.
How does the real estate in the metaverse work?
Funny as it seems, Real states business in the metaverse is NFTs purchasable for crypto coins. Every virtual world has a finite amount of foot squares and you can buy it or sell it, according to a business insider article, “there no law on land or protection of forests and national parks applies to these plots, the owner of the land can do whatever he wants on this piece of land, from simply reselling it, speculating on its value, to building whatever comes to mind.”
Land in the metaverse is highly demanded in Virtual Real State Market, facilities and cities will be built in them where you can attend sporting and cultural events, or interact with the administration. The challenge is to find a standard for investments to be safe.
In 2021, sales in the virtual world reached 500 million dollars, as reported by CNBC with data from MetaMetrics Solution. On the other hand, a report by BrandEssence Market Research predicts that the metaverse real estate market will grow at an annual rate of 31% between 2022 and 2028. The activity is mainly concentrated on four platforms: Decentraland, Sandbox, Cryptovoxels, and Somnium Space.
Last year in the Sandbox, Republic Realm, a digital real estate investment fund, acquired 700 metaverse parcels for more than four million dollars. The same fund has paid almost one million Dollars for 259 lots to build a virtual shopping center in Decentraland. At the beginning of this platform, lots could be bought for about thirty dollars, now they are worth no less than 15,000 USD. These are small squares corresponding to precise coordinates within a digital map. And Roma has just been bought in its NFT version within the Ertha platform. The Eternal City cost $120,000, including all its monuments.
The fact is that, for now, there is not a single metaverse, but several. In addition to the platforms mentioned above, there are other immersive virtual worlds developed by Meta (formerly Facebook), but also by the video games Fortnite, Roblox or Minecraft, owned by Microsoft. The goal, or the dream, is that sooner or later all these meta-worlds come together, or that one of them becomes the definitive one.
But what is striking is that the sale of virtual real estate does not happen only for the interest of individuals. On the contrary, more and more companies are being created to face large real estate projects in the metaverse.
How much does it cost to invest in the metaverse?
In The Sandbox, for example, a plot of 96 x 96 meters was sold in December for 12,7 Million dollars; in Decentraland, the offer has been more limited in quantity and size, but with a higher price; there, a space of 16 x 16 meters was sold for almost 14,5 Million dollars.
The value of lots depends on the perceived importance of the platform they are on, and their location or relevance within the map: just like in the physical world, a plot in the center generally costs more than one on the outskirts. After acquiring a lot, you can build buildings or organize events to increase its value. And it is also possible to rent the plots or buy buildings already built.
“It’s like buying land in Manhattan 250 years ago when New York was being built,” Andrew Kiguel, CEO of Tokens.com, a cryptocurrency firm that in October 2021 spent more than one and a half million dollars to acquire half of Metaverse Group, a specialist in virtual real estate businesses.
Just as virtual land can be sold for millions of dollars and its value will depend on the scarcity and location of the land, one of the difficulties that Technavio exposes in its report is that the relationship between the price of virtual property and these factors “it is still in doubt, since the price of virtual land does not follow the price pattern of the physical world.”
In this sense, it ensures that the value of the real estate in the metaverse would depend on how buyers perceive its price, which generates fluctuations, in the same way, that occurs in the cryptocurrency market.
“Until now, the market has seen the participation of enterprise end users. However, a fluctuation in the price of metaverse land may restrict the investment scope of price-sensitive consumers, negatively impacting market growth over the forecast period.