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.
