Real Estate in the Metaverse
The Web3 ecosystem is completely taken over by digital assets. “NFT” has achieved the title of “Word of the Year” awarded by Collins Dictionary. NFTs have become the most popular digital asset. You would have also noticed that Twitter accounts have BAYC (Bored Ape Yacht Club) NFTs as their profile pictures. Well, NFT’s crown of being the most popular digital asset is under threat by another asset, virtual real estate.
Real estate has been the most popular asset class in the traditional or physical world. The foundation of its value appreciation is due to its status as a finite resource as well as countless use cases. So can we expect the same from real estate in the Metaverse?
What is Metaverse Real Estate?
Shared virtual spaces have become common due to applications like Zoom and PUBG. You could say that Metaverse is an evolution of shared virtual spaces. They give a sense of geography and physical structure, enabling us to interact and explore within our virtual spaces.
You do not need to rack your brain to understand Metaverse Real Estate. It is just a digital piece of land, as the name suggests. You can program your virtual real estate in the metaverse to attend meetings, play games, and host events just like how you build an office or your house on a piece of land. The possibilities are virtually endless.
The rising popularity of the Metaverse has sparked interest in digital real estate. Facebook recently rebranded itself as “Meta”. Building a digitally immersive world is the objective of Meta. Between now and 2028, the value of Metaverse real estate is expected to grow at a CAGR of 31%.
How does real estate in the Metaverse gain value?
Many technological innovations were accelerated by the pandemic. We were desperate to find various digital ways to connect as our physical movements were restricted all over the world. How many times have we used the phrase “Am I audible?” or “Can you hear me?” during this time?
The field of digital virtual spaces is only moving upwards despite things improving and physical spaces reopening. This is due to the increasing use of digital spaces to create new avenues to counter the limitations of the physical world. The value of these virtual spaces is determined by these avenues.
Virtual spaces have always held value, but with blockchain and Web3 technology, individuals can now own Metaverse land locations and specific pieces of digital real estate for shared or private use.
The metaverse has its form of limitation or scarcity. One can argue that virtual and digital spaces can be virtually limitless, but there are only so many buildings close to virtual facilities like a library or concert hall. Also, there is limited space on the walls of a virtual building.
How to select the most suitable Metaverse real estate?
There is no commuting in the Metaverse unless you want to visit a digitally built phenomenon, so large-scale proximity is not an issue in the Metaverse. The most common way of going from one place to another is via teleportation in the Metaverse. Your avatars can walk out of an event together before teleporting to another event or virtual destination. As in the real world, this gives the most “foot traffic” to the immediate vicinity. For example, your small virtual comic store can gain enormous traffic after a major band’s concert.
The value of your digital asset depends on what lies in its proximity and the activities that use your digital asset. Invest in virtual locations that have growth potential. Instead of buying a digital property directly in developed areas, it would be wise to invest near the developed areas. This will provide better potential and also reduce your initial investment.
How to buy property in the Metaverse?
Purchasing Metaverse real estate is similar to buying an NFT. The deed of ownership is a one-of-a-kind piece of code. It also verifies your rights to the digital property.
You will require a crypto wallet to build a Metaverse real estate portfolio. You can visit any of the Metaverse platforms such as Sandbox and Decenterland once you own a digital crypto wallet. You are ready to buy your first piece of Metaverse real estate after you connect your crypto wallet.
How to generate returns once you have bought Metaverse Real Estate?
So now that you’ve spent some digital currencies and bought a splendid piece of digital real estate, what next? How do you generate returns from this virtual land? Trends in the list below can help you generate revenue:
- Development: Many users construct various digital properties that they can use to generate revenue rather than allowing a piece of virtual land to remain idle. These digital properties include retail shops, digital casinos, and nightclubs.
- Advertising: Your property can be highly attractive to advertisers if you have placed and timed your property to get a lot of foot traffic.
- Events: The Metaverse is made for events and experiences. Metaverse can create new experiences and also enhance our existing digital experiences. The demand for virtual reality is taking off, and there is a big rise in use cases.
- Flipping virtual land: As the name suggests, this is about selling your digital land at the right time to make a profit. You just buy a metaverse property, ride the wave, and then sell it when you can make a profit.
Is it a good bet?
All investment opportunities come with a disclaimer highlighting benefits and risks. New investment opportunities in the form of digital and crypto assets are being created on Web3. It is the next step in the evolution of the internet. The potential of these innovations cannot be denied, despite skepticism surrounding virtual ecosystems. It remains to be seen if this is the future or if we are in a Metaverse bubble.