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Mark Twain once said, "Buy land; they aren't making them anymore." But if he were alive today, the famed American man of letters would have been forced to eat his own words. The emergence of the metaverse is opening up vast new spaces where land is being created virtually. For the less hip among us who might still not be in the know, the metaverse is a boundless digital world where our virtual versions can work, play, and socialize. The metaverse is powered by an amalgamation of emerging technologies, including blockchain, artificial intelligence, virtual reality, augmented reality, 3D modeling, 5G, brain-computer interfacing, and the internet of things.
What Can One Do in the Metaverse
People can attend concerts, visit art galleries, play games, and buy and sell stuff in this new space, including digital land. The real (or is it virtual?) estate business in the metaverse is already a multi-million dollar enterprise. In fact, in 2021 alone, the sale of virtual land surpassed half a billion dollars, and market observers expect the figure to double in 2022. Big-name celebrities like Snoop Dogg and Paris Hilton and giant corporations such as JP Morgan, PwC, Samsung, and HSBC have already carved out large portions of virtual land on different platforms. Some of the more popular metaverse platforms for real estate trading include Sandbox, Decentraland, Axie Infinity, Enjin, Earth 2, Superworld, Nifty Island, and CryptoVoxels. In these spaces, the real estate being bought is usually in the form of non-fungible tokens (NFTs), which are unique, non-interchangeable digital assets that represent real-life items. One way of wrapping your head around virtual real estate is to think of it as snagging a flashy social media handle or buying a domain name. Virtual property in the metaverse is what emails were in Web1, and social media profiles are in Web2. The only difference is that in the metaverse, we get to do away with the giant corporations that regulated and controlled our experience on the earlier iterations of the internet. To help give you a better understanding of the concept of virtual reality, we will look at a few of the core principles anchoring the digital real estate space and show you how similar it is to its real-life version.
Location, Location, Location
Harold Samuel, the founder of Land Securities, one of the UK's largest property companies, famously coined the phrase "location, location, location," to describe the three principles that matter most in a property. Years later, Samuel's dictum still holds in a completely different space. Location is key to a profitable virtual real estate venture. You cannot underestimate the importance of choosing the right location for your make-believe property in the metaverse. One click of a button can instantly transport you from one part of the metaverse to another. But the space still uses an asset-based valuation model that treats metaverse economics much like physical real estate. This model requires prospective property owners to research how much virtual plots sell on different marketplaces. It also requires them to understand what makes land valuable in every metaverse. For example, in Decentraland, properties close to casinos often come at a premium. In the Sandbox, buying land next to celebrities like Snoop Dogg will cost you an arm and a leg.
Buy and HODL
Much like the rest of the crypto space, the virtual real estate market is prone to a fair bit of volatility. But overall, the "industry" has witnessed impressive capital appreciation in recent times. For instance, after Facebook changed its name to Meta Platforms and signaled its intentions to dive head-first into virtual reality, the prices of virtual properties went up by almost 500%. Like in the real world, virtual real estate requires oodles of patience and time. Successful investors in the metaverse will need to be foresighted and look to make profits and build their assets in the long term. Metaverse real estate is all about capital appreciation. To invest in digital property means to invest in the long term, i.e., buy and HODL property for long-term rewards.
Crunch the Numbers; Don't Invest in a Whim
Now, this principle might sound a tad facetious, given that the idea of virtual real estate is about as whimsical as it gets. But remember that buying digital assets still costs actual money that will burn a substantial hole in your bank account or crypto wallet. Therefore, it is always advisable to let data, rather than emotion, guide you in your quest to become a digital landowner. Like its real-world counterpart, investing in metaverse real estate is all about strategy. You should have concrete business plans and set achievable goals as a potential buyer. You should also conduct in-depth analyses of virtual real estate markets before closing any deals. And never hesitate to walk away if the numbers don't add up. There is always another deal to be done, which will be right for you. Significant numbers to look out for include market value, capitalization rate, occupancy rate, and cash on cash return. All these numbers work in virtual real estate almost the same way they do in the real world. Speculation in the developing virtual world is still rife and overvalued. Therefore, it is pretty likely that you will pay over the odds for a property if you don't keep your emotions in check. Do not allow the fear of missing out to determine how you act in the metaverse.
Stay on a Steep Learning Curve; Educate Yourself
The metaverse is still a pretty new sector, and there is so much about it that regular folk doesn't know. It would help if you learned the basics about virtual real estate before starting. Know how to go about buying land on different platforms. Know how to create business plans. Learn to pick the strategy best suited for this new-fangled world. Know how to identify profitable digital properties and how to manage multiple assets. Self-education is the secret to succeeding in the metaverse. The more you know, the better placed you are to make intelligent decisions. The web is full of helpful resources to guide you in your virtual real estate journey, including blogs, podcasts, YouTube videos, social media accounts, and articles like this. And remember, it's not what you know; it's how you use the information.
Living Large or Small in the Metaverse
Metaverse real estate is the next big hit in the wildly popular NFT space. More corporate entities and individuals are getting into the game, outputting record sales and increasing NFT prices. Major players in the crypto space, such as Grayscale, estimate that the metaverse is a trillion-dollar opportunity. For those wishing to dabble in the sector, it is best to let these fundamental principles of virtual real estate guide you as you go about becoming the latest virtual property mogul in the metaverse.