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The Metaverse Gold Rush: Who’s Buying Virtual Land And Why?

You can call the Metaverse a gimmick and a playground for Generation Z, but this new digital universe is attracting large sums of very real money. And it’s virtual land that everyone is buying. Here is why. 

The future of the internet and the Web 3.0. A new digital realm. A marketing stunt. The Metaverse has just emerged, but at the same time it stirs extreme emotions. Some say the hype around the Metaverse will quickly die down, while others believe it will evolve into a fully functioning economy and provide a digital experience that will be as integrated into our lives as email and social networks are today.

Although no one knows for sure whether this boom is “the next big thing” or “the next big bubble,” the gold rush of the 21st century has already begun.  People – and companies – are buying virtual land, exhibiting their art, attending concerts, getting married and even attending VR church. And, according to experts, the global market for goods and services in the metaverse will soon be worth $1 trillion.

In 2021, it was the race for virtual land that drove the volume of metaverse transactions. Virtual land sales reached a record high of $500 million, and were expected to reach over $1 billion in 2022. This year though, sales volumes and average prices for virtual land have dropped, but the buying frenzy could still return. Who is investing, where and in what type of real estate? Let us take a look.

Who are the main players? 

In 2021, the gold rush was orchestrated by several companies that let people buy, sell, and swap virtual properties in digital worlds such as Decentraland or The Sandbox. Their ambitions are similar to those of real developers: they build luxurious condos in prime locations and invest in shopping malls. 

In October 2021, for example, blockchain technology company paid $1.7 million for a 50% stake in Metaverse Group, a virtual real estate company, and began building a luxury tower with virtual Louis Vuitton, Gucci, and Burberry boutiques. A few months later, an anonymous NFT collector spent $450,000 to buy a virtual property near the virtual home of prominent rapper Snoop Dogg. 

The real estate boom sent prices soaring by as much as 500%. Now metaverse projects are experiencing a significant drop in value, and average prices for virtual plots have fallen by more than 80%. The average price of land sold across Decentraland peaked at $37,238 in February 2022, but by August the cost had fallen to an average of $5,163. Similarly, the average sale price in the Sandbox fell from about $35,500 in January to about $2,800 in August. Some have already proclaimed that “the real estate bubble of the metaverse just burst,” while others are still waiting for things to go back to their previous course.

Virtual pioneers of the Metaverse

In any case, there is already serious money involved. Despite the metaverse bubble bursting, a recent McKinsey report predicts that metaverse space could become a $5 trillion sector by 2030. And although the land people buy in Decentraland or Sandbox is virtual, the money they pay is real. All transactions in the Metaverse are in cryptocurrency, and art, music or places take the form of NFTs (non fungible tokens). They are blockchain-based digital representations of real objects and serve as proof of ownership. 

One of the platforms offering NFTs for almost any property you want is SuperWorld, co-founded by Hrish Lotlikar, a visionary and businessman who will be a guest speaker at the Masters&Robots conference in September. “Today, you can buy an NFT of almost any place you love, whether it’s Central Park or the pyramids in Egypt,” he says. SuperWorld offers 64.8 billion plots of land – and when you buy one, you also get a share of any business that takes place on that piece of land. 

That’s exactly why many companies are investing in the Metaverse: They believe it will be the No. 1 social network in the world, representing a cooler version of reality. “It’s where you go with friends, where you have experiences like conferences and concerts,” Michael Gord, co-founder of Metaverse Group, told the New York Times. He adds that the feeling of buying virtual land is similar to what the pioneers in the West Coast must have felt. “Imagine coming to New York when it was farmland, and you had the opportunity to buy a block in SoHo,” Gord explains. 

What will the future bring?

For now, real estate in the Metaverse is still a risky investment, but it will be interesting to see where it can take companies. 

The first possibility is that – just like in the real world – location will be everything. Luxury brands like Gucci will have digital storefronts on main streets, and people – or rather their avatars – will want to live in luxurious island villas with neighbors who are “from the same club.” They will buy trendy clothes in fashionable neighborhoods and make sure that every pair of branded sneakers in the real world has its NFT in the metaverse.

Conceivably, people will also go to virtual venues to see movies, concerts or shows; they will enjoy virtual theme parks and other attractions. So investing in land today means investing in future entertainment, hosting events and providing unique customer experiences. 

Currently, just over 25,000 individual cryptocurrency wallets are used to invest in Metaverse properties and other assets. In the future, they will be able to develop their properties: Build hotels, offices, casinos and stores. Of course, as groundbreaking as virtual property may be, it comes with risks. Billionaire investor and cryptocurrency enthusiast Mark Cuban thinks buying digital land is “the dumbest thing ever.” Others say it’s too early to tell. Many experts were also skeptical about the Internet – and at least now, buying virtual land is highly lucrative.

If you want to learn more about investing in virtual real estate and the future of metaverse, join us for Hrish Lotlikar’s talk during Masters&Robots Conference. Tickets are still available! You can buy them here