Metaverse real estate sales top $500 million, projected to double in 2022

[Hydrogen]

Sales of real estate in the metaverse topped $500 million last year and could double this year, according to investors and analytics firms.

Real estate sales on the four major metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions. Sales in January topped $85 million, the metaverse data provider said. It projects that at this pace sales could reach nearly $1 billion in 2022.

The recent surge in sales was sparked by Facebook’s Oct. 28 announcement that it was rebranding as Meta to focus on the metaverse. Real estate sales surged nearly ninefold, to $133 million, in November, according to MetaMetric. Sales growth has faded since then, yet January’s sales total will still be more than 10 times the January 2021 levels.

A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31% a year from 2022 to 2028.

“There are big risks, but potentially big rewards,” said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.

‘Big Four’ dominate the space

Republic Realm paid a record $4.3 million for land in the largest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and a related market of boats and jet skis. Ninety of the islands sold on the first day for $15,000 each and some are now listed for resale for more than $100,000.

For investors, the big question is how to assign value and risk to an asset whose scarcity is artificial and whose future is a blank slate. Over a dozen platforms are now selling real estate in the metaverse, with new ones sprouting up almost weekly. So far, real estate sales have been concentrated on the “Big Four” — Sandbox, Decentraland, Cryptovoxels and Somnium. There are a total of 268,645 parcels on the four platforms, all of varying sizes.

Sandbox dominates the market, with 62% of the available land on the four platforms and three-quarters of all land sales in 2022, according to a report from Republic Realm. Sandbox’s 166,464 parcels each sold for the ether equivalent of $12,700 in December. The parcels are 96 meters by 96 meters (106 yards by 106 yards).

Decentraland has 90,600 parcels, which are 16 meters by 16 meters, and sold for the ether equivalent of $14,440 apiece.

Location may still matter

A rush of companies, major brands and investors are pouring into the new land craze, hoping to get in on the ground floor of the next digital Manhattan or Monaco. Yorio said land value in the metaverse will be determined by what owners do with a property — like designing a popular attraction, museum or feature —rather than location.

“You can teleport anywhere so location isn’t as important,” she said.

Yet other investors say that just like in the real world, location in the metaverse is everything when it comes to real estate. Prices for parcels near Snoop Dogg’s planned partnership and virtual world in Sandbox are fetching a premium, along with parcels near the Atari development.

Andrew Kiguel, CEO of Toronto-based Tokens.com, recently raised a $16 million fund to invest in metaverse real estate, almost all of which has been allocated to buying land and hiring staff. The company recently spent $2.4 million for land in Decentraland’s fashion district, where the company plans to host fashion events and retail shops.

Kiguel said he is about to announce deals with two North American apparel brands where he is renting space on his property to develop storefronts or experiences. Kiguel said the real opportunity in metaverse land is commercial — renting space and hosting events for companies looking to advertise to a younger digital audience. He said he’s been in talks with accounting firms, investment banks, podcasts and mutual funds to build a presence in the metaverse.

“We’re even talking to companies about putting up digital billboards in virtual conference rooms where people can meet,” he said.

Tokens.com purchased 12 waterfront properties in Somnium that it thinks will increase in value because of its scarcity and visual appeal, Kiguel said.

Still, others say metaverse land is just the latest iteration of the crypto ponzi scheme, luring unwitting investors into projects that may eventually prove worthless. While real land has natural scarcity — hence the old saying “They’re not making any more of it” — virtual land is easily created with code. There is no limit to the number of new metaverse platforms that can launch. Even the big existing platforms can create more land, as Sandbox did when it decided to increase its parcel sizes.

Many point out that previous versions of virtual land grabs, like in “Second Life,” fell far short of their promises.

“Metaverse land sales are generally a pyramid scheme and have been for more than 20 years,” said Edward Castronova, professor of media at Indiana University. “The Metaverse is El Dorado for internet startups. They chase it into the jungle and die.”

While older investors may scoff at metaverse land, Kiguel said, younger consumers and investors are instantly able to see the appeal.

“The problem a lot of people have is that there are generations that have a difficult time attributing value to things that are digital, that you can’t hold and that don’t have weight,” Kiguel said. “The younger generation has no issue with it. Like with NFTs, blockchain technology allows for something to be digital, irreplaceable and scarce. You can hold it, store it, display it and sell it.”

https://www.cnbc.com/2022/02/01/metaverse-real-estate-sales-top-500-million-metametric-solutions-says.html

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I'm glad they mention "Second Life" which put digital real estate which could be modified and customized on open markets more than a decade ago.

Having endorsements from Snoop Dog and Atari is certainly a new thing. But I don't think its enough intrinsic value to support the massive surge of capital being invested atm. Definitely bearish on metaverse and it offering the second life experience. The expansion of virtual reality and greater exposure of the public to high speed broadband could be two aspects making digital real estate more accessible than it was. Significantly greater proportions of the public used dial up based internet around the time second life was gaining traction, which placed the experience outside the grasp of most.

I don't know how they plan to support their current market prices. Would most agree it appears to be unsustainable?

[stompix]

I'm starting to feel bad for the poeple that spend hundreds of thousands of dollars on a jpg of a rock when they could have spent millions on the jpg of a house.  . Oh silly me, forgot I'm still human and one with a lot of flaws, I'm not sorry at all!!!

“Metaverse land sales are generally a pyramid scheme and have been for more than 20 years,” said Edward Castronova, professor of media at Indiana University. “The Metaverse is El Dorado for internet startups. They chase it into the jungle and die.”

First time hearing about this guy, but I'm starting to like him. How many lunar plots have poeple bought? Stars? Pixels?
This is nothing else than Sims's furniture and clothes, wait till you have just like cryptos 100 metaverses each more special and more useless than the other.

[The Sceptical Chymist]

Interesting read.  While goofing around on Youtube a few weeks ago, I came across some videos pointing out how scammy Earth2 seems to be, since people are speculating on virtual land but there's no games to be played on said land--and thus all the parcels are basically worthless, since there's nothing anyone can really do with them.

I can see how there would be value in Facebook's metaverse, but this is just insane:

Decentraland has 90,600 parcels, which are 16 meters by 16 meters, and sold for the ether equivalent of $14,440 apiece.

That tells me that there are a lot of people with way too much crypto to play around with--or at the very least they're doing very stupid things with it.  Makes me wonder who exactly these people are who are buying up all of this virtual land.  It isn't exactly cheap.

Many point out that previous versions of virtual land grabs, like in “Second Life,” fell far short of their promises.

And like I mentioned with Earth2, there could be scammy elements to some of this virtual real estate.  Figures.  With every new crypto thing, the scammers rear their grotesque heads first, preying on the newbies in the space.  I don't think that'll ever end.

Would most agree it appears to be unsustainable?

I'd say these inflated prices are, though I don't think people are going to stop buying up space in FB's metaverse as long as it keeps appealing to gamers and whoever else.  Who knows, though?  I'd say it probably depends on what the economy does in the next few years.  If there's an economic downturn, I'm not sure how much money people are going to throw at virtual land.

[paxmao]

I'm starting to feel bad for the poeple that spend hundreds of thousands of dollars on a jpg of a rock when they could have spent millions on the jpg of a house.  . Oh silly me, forgot I'm still human and one with a lot of flaws, I'm not sorry at all!!!

“Metaverse land sales are generally a pyramid scheme and have been for more than 20 years,” said Edward Castronova, professor of media at Indiana University. “The Metaverse is El Dorado for internet startups. They chase it into the jungle and die.”

First time hearing about this guy, but I'm starting to like him. How many lunar plots have poeple bought? Stars? Pixels?
This is nothing else than Sims's furniture and clothes, wait till you have just like cryptos 100 metaverses each more special and more useless than the other.

year 2011 - I am starting to feel sorry for those people who exchanged their very real dollars for an imaginary currency that only exists in a database. They could have spend their dollars in buying a lollipop.

We do not what would be valued and what will grow in the future, so if someone is buying is because they may see some merit on the idea or see it as an useful asset to diversify. You may see it clearly, others have just another view.

There is no limit to the number of new metaverse platforms that can launch. Even the big existing platforms can create more land, as Sandbox did when it decided to increase its parcel sizes.

Does this sound like a familiar argument or not?

[hatshepsut93]

This is nothing else than Sims's furniture and clothes, wait till you have just like cryptos 100 metaverses each more special and more useless than the other.

At least Sim's items actually have a game where they exist, but "metaverse" is just a meaningless buzzword, there is no working product, it's just yet another promise of making something big from crypto bros who have such a great track record of delivering their promises /s

How I see it, there's a lot of shitcoin whales who can easily afford to trade their shitcoins that are currently worth millions for another shitcoins like NFT and metaverse land. Very few people are taking money from their bank accounts, send them to exchanges to buy ETH and then buy some tokens. So it's all imaginary wealth that comes from inflated marketcaps of shitcoins.

[stompix]

year 2011 - I am starting to feel sorry for those people who exchanged their very real dollars for an imaginary currency that only exists in a database. They could have spend their dollars in buying a lollipop.

When poeple bought bitcoin in 2011 it could be used to buy something that is was not imaginary, with this, what can you actually do with it?
If you go by this rhetoric then bitconnect was a hit, and forget Godolphin stable, you have crypto kitties, worth more than 100 Ascot winners.
Did poeple get rich already from their moon plots? So, how much land did you buy on Omicron Persei 8?

We do not what would be valued and what will grow in the future, so if someone is buying is because they may see some merit on the idea or see it as an useful asset to diversify. You may see it clearly, others have just another view.

But I have to admit you hit the nail with the $ value, which shows what people really care about nowadays, forget everything else, just make your pockets as big as you can, pure capitalism I would say. 

[davis196]

I'm wondering about the scarcity of this "digital real estate" type of shit.
Is it possible for everyone to create a bunch of "digital real estate" and sell it(or just keep it)?
Does the "real estate" have to be on the metaverse,in order to be considered as "real" digital real estate?
Any digital real estate outside of the metaverse would be a totally fake real estate,I guess.
If that's the case,can someone just create his own metaverse,in which he sells his own real "digital real estate"?
After all,this "real estate" is going to be on a metaverse,which makes it totally real.
What if 1 million different metaverses are created and each one has 1 billion pieces of digital real estate?
Wouldn't all the digital real estate become worthless?

[avikz]

It sounds like a non-sense to me! 500 million is a huge amount which could have been used for real real-estate which could have generated a passive source of income for the owner. I don't know what the digital real-estate will do for the owners. This entire metaverse is an imaginary world which is running purely on hype. Once the hype is gone, this imaginary world will collapse along with billions of dollars that are invested into this non sense.

Same will happen for NFT. An absolute NFT winter is just around the corner. So if you want to invest your money, buy something real.

[el kaka22]

Second Life was basically the ancestor of all these metaverse things. The difference is that instead of having a game money, we are talking about a token that is mostly decentralized, or at least it is a token that you could turn into cash very easily instead of selling game money. This is why I believe that metaverse is not a unique or new thing, it will get a bit less popular overtime but it will not be over because people love to spend time in these places.

It will not be like ready player one, it will be like second life (maybe a bit more popular of course) and it will have its own economy. Look at eve online for example, thats a good part of the resembles in mateverse world as well but in space instead of lands (which I am sure we will see owning planets soon in metaverse).

[timerland]

The difference between metaverse real estate and real life real estate is that one has utility and the other one is completely for sure.

E.g. there are plenty of real estate projects where the only thing you can do with it is attach your own picture onto that plot of land.

There is really infinite amounts of real estate across multiple chains - you don't necessarily need to buy one particular one to build a business.

[mk4]

The Metaverse thingy projects are the most overvalued crap in the cryptocurrency markets that it ain't even funny.

Just some data:

• Decentraland (MANA) has a FDV marketcap of $5.9 billion
• Activision has a marketcap of $61.49 billion

The former has a crappy product and barely has any adoption at all, while the latter is a gaming giant with millions and millions of players worldwide and has a wide variety of AAA games. But yet, Decentraland is ONLY 10x cheaper.

[CaVO32]

The Metaverse thingy projects are the most overvalued crap in the cryptocurrency markets that it ain't even funny.

Just some data:

• Decentraland (MANA) has a FDV marketcap of $5.9 billion
• Activision has a marketcap of $61.49 billion

The former has a crappy product and barely has any adoption at all, while the latter is a gaming giant with millions and millions of players worldwide and has a wide variety of AAA games. But yet, Decentraland is ONLY 10x cheaper.

I would go for Activision if they will be exploring the metaverse industry. At least, I know they have solid foundation and millions of players already as you said. As Microsoft is buying Activision Blizzard, they are eyeing this metaverse concept as stated in the below article -

https://www.windowscentral.com/microsoft-ceo-discusses-metaverse-activision-blizzard-and-how-company-will-create-next-internet

I am also not confident with this MANA project. Though they have good liquidity right now. But can they really survive and and continue to keep their users when there is already better product available in the market?

[Mometaskers]

I've heard about Second Life before and that's what I'm expecting Metaverse to turn out but maybe with wider adoption and more interactive with VR. I still think it's overvalued and even if it breaks even it'll take a long time to actually see any profit from selling the virtual real estate staked.

The difference between metaverse real estate and real life real estate is that one has utility and the other one is completely for sure.

And virtual real estate can be practically infinite unlike rl real estate. Even when people start spending most of their days in the Metaverse to escape their life like in Ready Player One, they'd still need a roof over their head until it becomes possible for them to move to San Junipero LOL.