What Is Metaverse Real Estate And Why Virtual Land Is The Future? Here Is A Comprehensive Overview Of Metaverse Real Estate
The metaverse has opened up new market opportunities for virtual real estate, therefore agents and brokers must understand what this means for the sector and how it operates.
The Internet and computers were created to simplify life, but they have now taken on a life of their own. Virtual worlds were previously confined to science fiction books, but in the last ten years or so, technical improvements have made this concept a viable alternative for both corporations and cryptocurrency investors.
The phrase “metaverse” is becoming one of the most common among game creators, businesses, and investors. Since Facebook’s name was changed to Meta, Meta has gained public and private recognition
Metaverse, a virtual reality platform, offers everything real in a virtual form, including real estate. People not only believe in metaverse real estate, but they are also buying it in droves. The value of metaverse real estate is predicted to rise by 31.2% CAGR between 2022 and 2028 as its acclaim grows
If you wish to enter the metaverse real estate market, you must be prepared. Get our expert guide to metaverse real estate investing techniques by clicking here.
Here’s a primer on metaverse real estate.
WHAT IS METAVERSE REAL ESTATE?
The metaverse’s real estate is a virtual property in which land plots are for sale. And it isn’t as new as you may assume. People have been focusing on it and creating entire worlds for a very long time
“Metaverse real estate is a kind of virtual world real estate. Investors own virtual land pieces on which people can sell NFTs, interact, and play games.”
Real estate in the metaverse, like NFTs, is purchased with bitcoin. After the transaction is completed, you will receive a one-of-a-kind piece of blockchain code that will serve as a deed of possession
A metaverse platform is supposed to operate as a bridge between the digital and physical worlds. For instance, Sandbox is a metaverse platform that appears as a game and a virtual environment.
Unlike traditional video games, where users merely go through the levels until they complete the game, Sandbox allows users to claim control of the planet itself. Land plots are bought, sold, and traded.
Metaverse real estate comprises programmable virtual reality locations where users can attend meetings, sell NFTs, socialize, attend virtual concerts, and engage in a variety of other virtual activities. The metaverse has grown in popularity in recent years, as seen by Facebook’s recent name change to META.
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HOW DOES METAVERSE REAL ESTATE WORK?
Users can connect via a 3D avatar in the metaverse, which is thought to be a blend of the internet and spatial computing. These avatars can also be used to engage with digital persons and 3D virtual items in a manner comparable to real-world interactions.
The metaverse’s goal is to give users a completely immersive experience. Remember that every area of the metaverse is divided into sections, or parcels, of virtual land. You can create these virtual real estate tracts for a specific purpose.
In reality, both businesses and individuals can use the land they invest in to construct something that will attract metaverse users.
For example, An online landowner might construct an art gallery or a workplace. Any existing building on the lot can include elements that make it “liveable.” These features might range from an entertainment system to collaboration tools.
Cryptocurrencies can be used to pay for virtual property purchases in the metaverse. This land will then exist as an NFT, which is a form of asset available on the blockchain that cannot be swapped for another item.
When it comes to NFTs, each one is regarded as a distinct crypto asset with a certain level of intrinsic worth. The NFT holder can keep the NFT or sell it to an interested buyer at a predetermined price.
Virtual land parcels are similar in that a metaverse user can purchase one on a marketplace, keep it in their wallet, and then sell or develop it.
Due to the novelty of metaverse real estate, there is still some risk involved in purchasing virtual land, but since digital art will always be regarded as art, it is quite likely that virtual land will be able to maintain its worth as well.
WHAT IS THE WORTH OF METAVERSE REAL ESTATE?
There are several factors at play when it comes to virtual property in the metaverse maintaining its value. When you purchase virtual land, you are simply purchasing a particular number of pixels that comprise the virtual space.
Purchasing a greater block of virtual land will always cost more than purchasing a smaller parcel. The entire size of your virtual land piece will decide its value.
The value of a parcel of land might also depend on its location and how close it is to any landmarks. If virtual land is located near more well-known firms or celebrities, it will almost surely sell for a higher price than the present market value
The prospective use cases for virtual real estate can also affect its value. If a plot of land is adjacent to a VR street, it might be more expensive as a result of additional display ad chances.
Platform adoption rates are the final aspect that can influence the value of metaverse real estate. The land inside a platform’s metaverse will be increasingly profitable as more users use it.
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WHAT IS THE VALUATION OF METAVERSE REAL ESTATE?
The value of virtual real estate fluctuates based on demand, but it has been on an increasing trend so far. A plot of land cost only $20 when Decentraland, one of the “big four” metaverse real estate owners, staged its maiden auction in 2017.
Starting in 2022, their price increased to around $15,000 from $6,000 in 2021. A parcel in the metaverse is 106 yards by 106 yards in size and is defined as the number of pixels in the plot.
The potential cost of a metaverse property looks to be uncapped given the platform’s growing popularity. One of the most significant deals, for example, was the $450,000 purchase of a property close to Snoop Dogg’s parcel in the Sandbox.
SHOULD YOU INVEST IN METAVERSE REAL ESTATE?
There are two main reasons why you may wish to own real estate in the metaverse, much like in the real world. The first is most likely the safest; you want to use it for something, like constructing a home to live in or a place to conduct business.
In the metaverse, “living” refers to having a location to call home where you can display your belongings and perhaps even invite people over to hang out. It is the same as having a personal website in the early internet days before everyone switched to social networking.
People will utilize their metaverse “homes” in the future to display their online personas or to house their digital collectable collections. This is perhaps the less dangerous justification for wanting to possess metaverse property because it’s likely that you’ll obtain what you’re looking for from your investment.
The second justification is to use it as an investment, but this is where things could get a little dicey because there is no assurance that its value will increase, just like with any investment.
However, we appear to be in the midst of a gold rush in terms of metaverse real estate, with average values growing by a factor of ten in the last year.
Many people are buying virtual land now because they believe it will become much more valuable as more people get interested. Some are even buying to rent, anticipating a flourishing rental market.
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IS METAVERSE REAL ESTATE A SAFE PLACE TO INVEST?
This is probably the most crucial point, especially if you’re thinking about putting down a sizable quantity of money! Buying virtual land, like buying NFTs and cryptocurrencies, is a high-risk venture.
The market is mostly unregulated, so if something goes wrong—for example, if a seller turns out to be a con artist and vanishes with your money—you can find yourself on your own because there are few established channels for pursuing restitution.
You need to be certain that you can store them safely and won’t lose your password before engaging in any transactions involving cryptocurrencies and NFTs.
Overall, because everything is secured on blockchains using smart contracts and carefully encrypted, the risk of someone stealing your virtual real estate or failing to pay rent is now negligible (as long as you remember your password).
There are concerns, however, that future technology (such as quantum computing) may render today’s cryptographic security mechanisms outdated.
This may not be an issue right now, but it is something to consider if you are thinking of making substantial long-term investments.
Finally, there is the question of scarcity to consider. Real-world land has steadily increased in value since it is a limited resource with an increasing population of individuals interested in possessing it.
In the virtual world, there is essentially no limit to the volume of area. If all of the virtual plots of land on a platform have been sold but there is still demand from buyers, the developer can construct as many additional plots as they require.
The massive platforms now have geographical borders, resulting in “artificial scarcity,” but this is not assured in the future!
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