In the real world, buying land and properties is a reasonable proposition since their value appreciates over time. In the Digital world, digital real estate is also an investment.
Metaverses have all seen tremendous user interest, rising sale revenues from in-world assets, and land prices doubling from an average of $6,000 per parcel in mid-2021 to $20,000 per parcel by 2022.
Virtual land NFTs are one of the most appealing aspects of the blockchain-based metaverses, as they allow owners to build experiences, incentivizing creativity and imagination while incorporating decentralization.
Liveplex Api’s work to create value on any digital land and offers our customers greater inoperability and choice.
Virtual land also unlocks a monetization facet since these virtual parcels can be rented to third parties or serve as a rentable investment.
Startling amounts of money are being spent on virtual real estate inside metaverses. In June, a metaverse investment firm called Republic Realm spent $913,000 on a parcel in Decentraland. It was the largest deal of its kind at the time. About six months later, the same firm bought 792 plots in Sandbox, another metaverse, from video game company Atari for an eye-watering $4.23 million.
Investors in these digital lands look at their portfolios to cater to a demand and supply equilibrium.
The question to ask when evaluating your interest is – “Would people spend more and more of their time in metaverse in the future?”
You know the answer to that question.
The growth of blockchain ledgers and applications from platforms like Liveplex has helped birth new metaverses that make it easy for people to buy parts of them. The digital property deeds or non-fungible tokens (NFTs) that represent ownership are recorded on blockchains, allowing them to be sold again in the future.
Some investors are banking on it.
In November, Metaverse Group, a virtual real estate firm located in the real-life city of Toronto, splashed out $2.5 million on 116 blocks of virtual land in Decentraland's fashion district.
Andrew Kiguel, CEO of Tokens.com, which owns 50% of Metaverse Group, thinks he got a bargain. His reason is that if more people get excited about the metaverse, the value of parcels the Metaverse will rise because the metaverse will do what social media does: deliver advertising.
A new Citi report, Metaverse, and Money, notes that moving from the physical world to the virtual world isn’t drastically different, as while we can purchase a big mansion in the middle of nowhere, we often choose to live in an expensive small apartment, in the center of the city.
Sandbox is the largest virtual world in terms of transaction volumes, with 65,000 transactions in virtual land totaling $350 million in 2021, according to the Centre for Finance, Technology and Entrepreneurship (CFTE) metaverse report. Because of the choice to limit the number of lands and assets, prices are mainly determined by supply and demand in the secondary market and have grown considerably from an average of $100 per land in January 2021 to $15,000 in December 2021, with an apparent acceleration in Q4 2021 — when the Sandbox Alpha was released, according to the CFTE.
In March, HSBC set a stake in the metaverse by purchasing a plot of virtual land, becoming the first global financial services provider to enter the metaverse real estate game.
The scarcity of land in Decentraland, on top of which applications can be built using Liveplex API’s creates hubs that capture user attention, which drives revenue to corporations or content creators
Land in Decentraland is permanently owned by the community, giving them full control over their creations and landowners control what content is published to their portion of land, which can range from static 3D scenes to interactive systems such as games.
The land is a non-fungible, transferrable, scarce digital asset stored in an Ethereum smart contract. It can be acquired by spending an ERC20 token called MANA- which can also be used to make in-world purchases of digital goods and services.
In February, JPMorgan became the first bank to open a lounge in the metaverse.JP Morgan is also contemplating offering real estate mortgage loans to enable digital land buying and selling.
Wherever you choose to buy a plot of land, according to several experts, including Citi, what matters most is location. The most expensive plots tend to be at the center of the virtual town, and the ones owned by social influencers, celebrities, and brands also tend to command a premium over the rest.
Each Virtual world is also different and has its styles, cultures, and focus areas.
While the metaverse is quickly evolving, it is still in its nascent stages, and investing in digital real estate is still highly speculative.
You can either execute it via the primary market or the secondary market. Prices in the primary market tend to be relatively cheaper, but it is also challenging to complete the transaction, as these land parcels tend to be sold within a matter of seconds.
If you are purchasing virtual land from the secondary market, most transactions tend to occur on marketplaces such as OpenSea.
Owning land in the metaverse still turned out to be a better investment than holding ETH for a year, as data suggests that metaverse land performed 2.6 times better than ETH for the past year, despite the dip in land prices and growth in ETH prices seen over the last few months.
Industry data also suggests that metaverse-focused investments, digital real estate, will increasingly constitute a rising share of both individual and institutional portfolios
We are already seeing this play out with early metaverse investments by large companies and financial institutions. It is an exciting time for this aspect of the industry.
Metaverse mortgages are here to help fast-track secure transactions and eliminate barriers to entry for any business or any person looking to experience and explore the metaverse.
The market opportunity for bringing any number of metaverses to life may be worth more than $1 trillion in annual proceeds.
The metaverse to continue to boom in popularity this year due to major brands and big tech companies taking notice of the space’s potential and functionality.
The digital ‘land grab’ is here to stay.