Updated: Sep 27, 2021
A little over a year ago I bought my first piece of virtual real estate in Cryptovoxels which is currently being used as an NFT Gallery. When I first bought the plot of land, my intention was to create a virtual music studio. After a few weeks of constantly changing my mind I had absolutely no idea what to do with the space. In the end, the adaptability of the metaverse kept me intrigued for the long-run.
Here's why I love virtual real estate:
Changing the design of your land is quick and easy
It’s accessible from anywhere in the world
The property you own can't be tampered with
The VR real estate market has been heating up a lot in 2021. Mike Novogratz (billionaire) recently funded a virtual real estate firm, Republic Realm, with a $10,000,000 investment. Republic Realm plans to develop their virtual land and rent out buildings to tenants in the form of virtual shops, galleries, etc.
Renting out space for advertising & e-commerce is an extremely underrated part of investing in virtual properties and shows the versatility of land ownership. A massive benefit of owning land in the Metaverse is that there are no annual costs or taxes like you would have for owning land or property in the physical world. There's a limited supply of land in each world, so as the platforms grow their land becomes scarce and more valuable.
Other common uses:
Private members-only areas
What are the most popular virtual worlds?
Floor price: ≈ $2,500
Avg price: 2.09 ETH
Avg price: 0.38 ETH
Floor price: ≈ 1.5 ETH
Note: I used floor prices for Decentraland & Somnium because their average prices do not represent the cost of a normal plot of land. For example, Decentraland's average sale price is 5.38 ETH however on the marketplace their cheapest land plots are for sale just above 1 ETH.
What do I need to get started buying virtual real estate?
*OpenSea is the largest & most popular NFT marketplace*
What should I look for when buying virtual real estate?
This is a subjective question since everybody has their own vision and goals for their land. Speaking from personal experience, I like scoping out the area first. Some people just scan Opensea trying to find a good deal but I prefer going into the actual worlds to get a feeling for the vibe each area gives off.
For example - I wanted my NFT gallery to have a unique view and be easily accessible so I searched Cryptovoxels for waterfront properties on the ground floor. To my luck I found a plot of land surrounded by other NFT shops & galleries, so my place fit right into the neighborhood.
Things to consider:
Choose a platform you frequently use - Virtual land can be expensive and leave you susceptible to making emotional decisions during market swings. If you regularly use the property you own, you will be less tempted to sell it during these times. This makes it much easier to hold onto the property until it's the right time for you to sell.
Choose the right platform for you - Depending on what technology you use or how crypto-savvy you are, some platforms may be easier to use than others. It's important to research the virtual world before buying property in it.
Example: One time I purchased land in The Sandbox and later found out my computer wasn't compatible with the game. I ended up selling the property for a loss because I didn't feel like waiting until downloads were available for iOS devices.
Location - Make sure your goals for the land align with the area around you.
Example: The BAYC community owns a large amount of land plots in a specific section of The Sandbox. If you are a BAYC member looking to interact with other apes, you would want to secure a spot in that area.
How can I invest in virtual land if I can't afford it?
A problem with a lot of these virtual worlds is that high land prices create high barriers to entry. One of the best ways to circumvent this issue is by purchasing these worlds’ native tokens.
Example: Decentraland has their native MANA token which can be used to pay for plots of land as well as in-world goods and services. When demand is high for land/goods/services in Decentraland, people buy MANA off the market at a higher rate - increasing its price. If you are bullish on Decentraland, accumulating MANA when it's cheap could be a good long-term strategy to gain exposure to the platform as well as build the funds to purchase in-world land. MANA tokens are currently $0.53 with an all-time high of $1.60 just two months ago.
A lesser-known way to invest in the metaverse is through the Metaverse Index token. Metaverse Index, ticker MVI, is basically an ETF for the metaverse. MVI tokens gives you exposure to a basket of different virtual world assets including MANA, SAND, ENJ, RARI, and many more. MVI is a much smaller crypto but I think it is important to include as an example to show some of the creative ways you can gain exposure to the market without having to buy actual property.