Digital assets have taken over the web3 space like a storm. The Collins dictionary went so far as to bestow the title of ‘Word of the year’ on what is arguably the most popular digital asset class of all, ‘NFT’! Have you noticed the number of Twitter accounts with BAYC NFTs as their profile picture? Well, NFTs have had their time in the sun and will now have to share it with another digital asset, virtual real estate.
Real estate has been a very popular asset class since before we can care to remember. Its status as a finite resource coupled with innumerable use cases has been a cornerstone of its value appreciation over time. So why should real estate in the Metaverse be any different?
What Is Metaverse Real Estate?
We are not strangers to shared virtual spaces (remember PUBG and Zoom?). Metaverse platforms are just a step further ahead. They enable us to explore and interact within our digital spaces by giving them a sense of physical structure and geography.
There’s not much to the definition of real estate in the Metaverse. It’s exactly what the name suggests, digital parcels of land in the virtual world. And just like how you may build your dream house or office space on a piece of land that you own, you can program your virtual real estate in the Metaverse to host concerts, attend meetings, or even play games. The list is virtually endless.
The interest in digital real estate has spiked in tandem with the rising popularity of the Metaverse. It wasn’t long ago when Facebook turned heads by announcing its rebranding to Meta, signifying its commitment to building a digitally immersive world. In fact, the value of Metaverse real estate is expected to grow at a CAGR of 31% between now and 2028!
So How Does Real Estate in the Metaverse Accrue Value?
The pandemic accelerated and brought to the fore many technological innovations. With physical movement restricted all across the globe, we turned to various digital ways of connecting with one other. Just recall the number of times you yourself must’ve used the phrase ‘Am I audible?’
While things have improved and physical spaces have reopened to a large extent, the field of digital virtual spaces is only moving forward. This is driven by the use of digital spaces to create avenues not available in the traditional physical sense. And it’s these avenues that determine the value of digital spaces.
Digital spaces have always had value. However, with Web3 and Blockchain, it is now possible for individuals to uniquely own specific pieces of digital real estate and Metaverse land locations for private or shared use.
While one may argue that digital spaces can be virtually boundless, the Metaverse offers its own form of scarcity. After all, there’s only so much space on the walls of a digital building, or only so many buildings close to a digital amenity like a concert hall.
How to Choose the Most Suitable Real Estate for Yourself?
Large-scale proximity doesn’t matter in the Metaverse. There are no communtes (unless you want to marvel at a digitally built waterfall). Teleportation is the name of the game. Avatars may just walk out of a virtual concert together before teleporting off to wherever they need to go. This gives the immediate vicinity the most ‘foot traffic’, just as is in the real world. Imagine the traffic your virtual gaming parlour can get after a BTS concert!
Thus, what matters while thinking about value are the activities that inform the use of your digital asset and what lies in its local proximity. Look for places with growth potential. It might also be prudent to buy property near developed areas instead of directly in them. This will reduce your initial investment and provide better potential!
How Can You Buy Property in the Metaverse?
Purchasing real estate on the Metaverse isn’t that much different from buying an NFT. Your deed of ownership is a one-of-a-kind piece of code and verifies your rights to that property.
You’ll need a digital crypto wallet to build a virtual real estate portfolio. Once done, you can visit any of the Metaverse platforms out there such as Decenterland and Sandbox. Connect your wallet and voila, you’re ready to buy your first piece of digital real estate!
What Do You Do Once You’ve Bought Virtual Real Estate?
So you’ve spent some money and bought a nice piece of virtual real estate. What now? How to make this piece of land generate returns? Here are some trends that can help you generate revenue:
- Flipping Land: There’s not much to this. Buy some real estate and ride the wave. Unload it when you can profit from it.
- Development: Rather than allowing a plot of land to remain idle, many users are now constructing various virtual properties that they can use for their own purposes as well as generate some revenue. These include experiential avenues such as nightclubs, retail outlets, and digital casinos.
- Advertising: If you’ve timed and placed it right such that you get a lot of foot traffic, your property may be gold for advertisers.
- Events and Experiences: Well this is what the Metaverse was made for. To enhance our existing digital experiences and make new ones while we’re at it. The number of use cases is on the rise and demand for virtual reality is predicted to skyrocket soon.
Read About: How to Make Money in Metaverse
Conclusion: Is It a Good Bet?
There’s a reason all investment opportunities come with a disclaimer highlighting the risks and benefits. Web3 is the next generation of the internet and with it come exciting new opportunities in the form of crypto and digital assets. While scepticism surrounds virtual worlds, the promise of these innovations cannot be denied. It remains to be seen if we are in a virtual asset bubble or whether this is the future.