How to Invest in Virtual Real Estate in 2023
09 February
Sara Wahba
Real estate
Are you looking to diversify your investment portfolio and join the growing virtual real estate investing trend? So, how to invest in virtual real estate?
With the rise of the Metaverse and the increasing integration of our lives with the digital world, virtual real estate sales have skyrocketed, reaching over $500 million in 2021, according to MetaMetrics Solutions.
Although still small compared to the physical real estate market, with a total estimated value of the US housing market at over $43 trillion and nearly $270 billion in new home sales in June 2022, virtual real estate presents a unique opportunity for investors.
In this post, Metastack will dive into "How to Invest in Virtual Real Estate" and explore the rewards and risks of this exciting new market.
Facts About Virtual Real Estate
Investing in Virtual Real Estate has seen a significant rise in recent years. The sales on major metaverse platforms reaching $501 million in 2021, according to MetaMetric Solutions.
The trend continued in January 2022, when sales on these platforms exceeded $85 million. The projections indicate they could reach $1 billion in 2022.
A notable example was the metaverse real estate developer Republic Realm's $4.3 million purchase of land in the virtual world Sandbox in November 2021.
Another instance of high investment in virtual real estate was seen in 2021 when an investor purchased a virtual plot next to rapper Snoop Dogg's digital mansion in Sandbox for $450,000.
The increasing focus on the Metaverse, as seen in Facebook's announcement to change its name to Meta in October 2021, has caused virtual real estate sales to spike.
However, virtual real estate sales on major platforms reached less than $1 million in the first week of August 2022 after reaching a peak of $60 million per week in mid-November 2021, according to WeMeta.
How to Invest in Virtual Real Estate?
Investing in Virtual Real Estate is a simple process once you have determined to take the plunge. The following few lines will explain how to invest in virtual real estate:
- Buying and selling virtual real estate is relatively straightforward Research different metaverse platforms and select the areas of your interest.
- Utilize websites such as NonFungible.com or WeMeta to gather sales history and other relevant data.
- Set up a digital wallet that holds your assets, such as an NFT or cryptocurrency.
- Ensure that the wallet is compatible with the metaverse platform of your choice.
- Have a sufficient amount of cryptocurrency to complete the purchase.
- Be aware that some platforms may require a specific coin, like MANA, for purchases on Decentraland.
- Complete the investment and receive an NFT symbolizing your virtual real estate property upon successful completion of the sale.
The Boom and Bust in Virtual Real Estate
Investing in Virtual Real Estate is still in its infancy but has seen significant growth in its early stages. In late 2021, Facebook rebranding as Meta, emphasizing its focus on the Metaverse, added credibility to the concept and ignited a surge in virtual real estate investments. The all-time high of several cryptocurrencies also boosted the growth.
However, since then, virtual real estate sales have decreased significantly. According to WeMeta, sales on major platforms failed to reach the $1 million mark in the first week of August 2022, compared to its peak of $60 million per week in mid-November 2021.
Additionally, the average selling prices of virtual real estate have also declined. For instance, the weekly average sale price for virtual land on Decentraland reached a high of $37,239 in early November 2021 but decreased to around $10,600 in August 2022. Similarly, The Sandbox's weekly average sale price reached its peak of more than $35,000 in January 2022 but dropped to $3,990 in early August.
Is Virtual Real Estate Profitable?
The profitability of investing in Virtual Real Estate is still being determined. Currently, investing in virtual land is a highly speculative and risky investment. The potential for profits depends on other investors' perceptions of the Metaverse and owning virtual real estate.
Unfortunately, many investors who made purchases after the excitement surrounding Facebook's rebranding as Meta have since seen a significant price decline, with some dropping over 80 percent.
While virtual real estate could be a viable investment option in the future, as the Metaverse continues to grow and individuals spend more time and money in virtual worlds, it is still too soon to determine.
On the other hand, investing in companies that sell products in the Metaverse or have a portion of their profits tied to metaverse activity may offer more lucrative opportunities. Finding a way to invest in metaverse activity may be a more profitable option than directly investing in Virtual Real Estate.
Pros and Cons of Investing in Virtual Real Estate
| Pros | Cons |
| 1. Early Stages of Metaverse Offer Growth Potential. 2. Room for growth in the early stages of the Metaverse's development. 3. A new method of participating in the virtual economy. 4. Potential for profitable rental opportunities if the Metaverse continues to develop. 5. Investing in the early stages of the Metaverse's development offers a chance for growth. 6. By participating in the virtual economy in this new way, individuals can take advantage of a unique opportunity. 7. As the Metaverse continues to evolve, there may be opportunities for profitable rental income, providing further potential for growth. | 1. Risks Associated with Cryptocurrency Investment. 2. Fortunes are currently linked to the volatility of cryptocurrency prices. 3. High level of speculation and risk involved. 4. Investment may experience a boom and bust cycle. 5. The success of cryptocurrency investments is closely tied to the fluctuations in cryptocurrency prices. 6. It is important to note that cryptocurrency investment carries a high level of speculation and risk. 7. The investment in cryptocurrencies may follow a boom and bust cycle, with significant fluctuations in value. |
How to Invest in Virtual Real Estate: Conclusion
In conclusion, investing in Virtual Real Estate in the Metaverse presents an emerging market with potential investment opportunities. However, like any investment, it is crucial to approach it carefully and conduct extensive research. The value of the virtual real estate is determined by supply and demand, making it susceptible to fluctuations in the market. Therefore, it is imperative to consider the associated risks and carefully evaluate the virtual landscape before making any investment decisions.
Keep following Metastack to get more information about investing in virtual real estate on Metaverse.
