As US real estate prices continue to skyrocket, investors are already staking out prime virtual land as well. They’re paying prime rates using real money as well.
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Virtual Land Prices Are Skyrocketing As Fast As Actual Land Prices
The COVID pandemic made many Americans rethink their desire to live in dense urban areas. This started a mad rush to secure their own land, pushing real estate prices to record higher.
However, another type of real estate is also getting more expensive. This is despite the fact that virtual land is real estate that isn’t real.
Instead, virtual land is an online property that users can purchase. They can use this virtual real estate to establish ownership of the metaverse, a social network of 3D virtual worlds.
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Facebook is one of the early adopters of the metaverse, creating a virtual world. The company foresees the metaverse as the next iteration of its social media platform.
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After Facebook announced its plans to move to the metaverse, investors began buying up prime virtual land almost immediately. In some cases, the prices for choice plots of virtual land soared by 500%.
Andrew Kiguel, CEO of Tokens.com, is leading his firm’s charge into investing in digital real estate and non-fungible tokens. “The metaverse is the next iteration of social media,” he said. “You can go to a carnival, you can go to a music concert, you can go to a museum.”
In the virtual world, users can simply log and interact with other users using their digital personas called avatars.
Similar to playing video games, users can use their avatars to visit worlds, attend virtual events, and purchase digital items. Facebook and other companies are now building immersive 3D worlds accessible through virtual reality goggles.
Monetizing Virtual Worlds
These virtual worlds carry potential revenues through corporate advertising and sponsorships for certain places and events. Companies can also generate income by selling unique virtual items such as clothes, accessories, or gadgets that avatars can use.
In addition, individuals and companies can buy property to set up their own places. The possibilities remain endless. In fact, crypto-asset manager Grayscale estimates that the virtual world can grow into a $1 trillion business soon.
In fact, tokens.com already paid $2.5 million to purchase a tract of land in Decentraland, a popular metaverse. Now that the secret is out, “prices have gone up 400% to 500% in the last few months,” Kiguel remarked.
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Another popular metaverse is the Sandbox. Here, Republic Realm, a virtual real estate firm, spent a whopping $4.3 million on virtual real estate.
CEO Janine Yorio said that they already resold the land. Yorio said that Republic sold 100 virtual private islands for $15,000 each. “Today, they’re selling for about $300,000 each, which is coincidentally the same as the average home price in America.”
Location, Location, Location
The rising prices of virtual assets such as land are likely the result of intensive speculation. Florida real estate broker Oren Alexander is seeing people buying it for what it can bring soon.
“The digital world, to some, is as important as the real world,” Miami-based real estate broker. It’s not about what you and I believe in, but it’s about what the future does,” he said.
Just like a real-world property, Kiguel says that the metaverse also values location. “There are areas when you first go into the metaverse where people congregate — those areas would certainly be a lot more valuable than the areas that don’t have any events going on,” he remarked.
As a result, major corporations and big spenders want to cash in on these choice locations. For example, artist Snoop Dogg is building a virtual mansion in Sandbox, and someone recently paid $450,000 to be his neighbor.
Purchasing virtual real estate is a simple process. A user can buy directly from the platform, or get help from a virtual developer. Since it’s computer code, Yorio says that users do anything they want with it: build, decorate, or renovate.
Still, Yorio cautions that making investments in virtual lands remains a risky proposition. ″[It’s] highly, highly risky. You should only invest capital that you’re prepared to lose. it’s highly speculative. It’s also blockchain-based. And as we all know, crypto is highly volatile. But it can also be massively rewarding,” she said.
Watch the Wall Street Journal video reporting that investors buy up metaverse real estate in virtual land boom:
What do you think about buying and selling virtual land? Do you think that the future of social media will go in that direction?
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