In case you haven't heard, there's this not-so-little thing called the metaverse, and it's taking over the world — the virtual world, that is. Just as the real-life real estate market is hot across the United States, metaverse real estate is on fire.
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Before you decide to invest all your savings into a virtual property, here are a few things you need to know about buying real estate in the metaverse.
What is the metaverse?
In the broadest terms, the metaverse is simply any virtual or augmented reality world that humans can interact with, typically through digital avatars. There's not one singular metaverse, but an amalgamation of digital worlds across platforms — some of the most popular right now are Decentraland and The Sandbox. But technically, the metaverse can even include gaming worlds, like Roblox and Minecraft.
Essentially, the metaverse is the next version of the World Wide Web, but instead of web pages, we have 3D virtual worlds that we can tap into with VR headsets. In the metaverse, you're able to buy digital clothes for your avatar, attend virtual events with your friends, go on a simulated vacation, or even decorate your own computer-generated home.
What kind of real estate can you buy in the metaverse, and how do you buy metaverse real estate?
Much like the real world, there are all sorts of properties you can buy in the metaverse. Right now, you can buy empty plots of land in a virtual world with no real-world equivalent (think The Sims or Animal Crossing), which you could use to build your dream home, or you could even purchase a pre-existing home that's "turnkey" (aka ready for immediate use).
You can also buy virtual recreations of real-world destinations. On the metaverse platform SuperWorld, for instance, you can buy anything from the Taj Mahal to a stretch of the Sahara desert. "We also see a lot of purchases from people who have sentimental value attached to a certain location," SuperWorld co-founder and CEO Hrish Lotlikar tells Hunker. "For instance, I've heard from a number of our Super Citizens how they've purchased the virtual land where they were married, went to school, or experienced some other transformative event in their lives."
Purchasing methods vary per platform, but in general, they're almost all powered by cryptocurrencies like Bitcoin or Ethereum. The important thing to remember is that you're still spending your real money, not an in-game currency like you would use in a video game.
How might you use real estate in the metaverse?
On a private residential level, homeowners could theoretically build their dream homes in the metaverse to see how everything feels before building them in real life. Or if you're just into the idea of designing a dream home with no intention to physically build it, that's okay, too. Owning a metaverse home is not altogether that different from creating one in a video game — your friends (or rather, their virtual avatars) can gather at your virtual house for a party.
There's even a crossover between metaverse real estate and real-life real estate. "During the pandemic, a number of property tours moved online with 3D renderings of homes and offices," Kunal Lunawat, co-founder of real estate tech venture capital fund Agya Ventures, tells Hunker. "Allowing brokers to take prospective tenants on digital replica tours and engage with them in real-time as they 'walk around' would take this one step further."
On a commercial level, companies are using metaverse real estate as virtual billboards. "Real estate in the metaverse is valuable because it serves as storefronts for real-world projects and brands and/or beta tests the potential of new ideas of pretty much anything you can buy in real life, like residences, boats, cars, and planes," Erin Sykes, chief economist and real estate agent with brokerage Nest Seekers International, tells Hunker. But rather than having potential customers just looking at a billboard, they can "experience" the product virtually.
Again, it's not always about commercialization. "While some users are interested in creating future monetization opportunities on the land through digital commerce, e-commerce, analytics, and advertising, others acquire virtual land based on nostalgia or because of an emotional connection to a particular location in the real world," says Lotlikar.
Is investing in metaverse real estate a good idea?
Disclaimer: We aren't financial advisors! As with all investments, there's a level of risk. The biggest risk in metaverse real estate is that there's no guarantee these virtual worlds will remain popular. That said, major corporations are getting into the metaverse — Facebook, for instance, recently rebranded as "Meta" to capitalize on the developing industry.
Winston Nguyen, CEO of virtual reality publication VR Heaven, is skeptical that there is a long-term future in metaverse real estate. This is largely due to the fact that there will be a growing number of metaverse platforms and, in turn, there will be a growing amount of real estate to buy. Since the metaverse is virtual, "land" can be expanded almost infinitely.
"Right now, with all the metaverse hype, investors are seeing good ROI [return on investment], but in the long run, these assets will be completely devalued as they're driven by artificial scarcity and hype," Nguyen tells Hunker, referring to land bought on and using the metaverse. "There's not enough traffic to them that can justify the price, and I don't think there will ever be substantial traffic to these apps, because better ones already exist and better ones will continue to be made."
So, is investing in metaverse real estate a good idea? That's entirely up to you, but hopefully this information provides you with the tools to make an informed decision.