Should we invest in real estate in the metaverse?

Today, driven by the maturity of technology, the metaverse is structured. A virtual, immersive and 3D world where we can travel, interact, consume, invest.

The Metaverse, for whom, for what?

Many are interested in this new playground: from celebrities – Paris Hilton, Booba, Gimms – to technology investors, including Mark Zuckerberg, who has renamed his company Meta. Also brands: Ubisoft, Warner Music, Adidas, Gucci, Carrefour, Axa… No less than 170 brands are present on The Sandbox platform, attracted by the possibility of innovative marketing operations, new potential income or more. at the heart of a new trend.

So what about the virtual real estate market? Certain universes such as The Sandbox, Decentraland, Somnium Space, Worldwide Webb and Cryptovoxels lend themselves more specifically to real estate investing. Whether selling or renting land, buildings, shops, shopping centers or art galleries, the possibilities are identical to the real world. We can imagine the interest in an investment where we can buy, build, rent, resell our virtual property.

In the golden triangle of some metaverses, prices are already in the millions. First record at The Sandbox, where Republic Realm, an American real estate company, acquired land in December 2021 for a sum of 4.3 million US dollars (3.8 million euros). The properties surrounding Snoop Doog’s “Mansion” have been valued at US$458,000 (€404,000). Another speculative maneuver, the virtual New York Stock Exchange sold $23,000 (22,500 euros) to an investor attracted by a potential capital gain.

How to Invest in the Metaverse?

The digital economy is fundamentally based on three technologies:

  • Cryptocurrencies, digital currencies that allow the purchase of goods or services. Their encryption ensures the security of the transaction and their operation, especially based on blockchain, guarantees independence from financial institutions.
  • Blockchain, an independent, transparent and secure information storage, transmission and sharing technology.
  • NFTs (non-fungible token), non-fungible tokens ie. unique and non-fungible digital assets, such as a work of art, whose market value fluctuates.

Once the portfolio (“wallet”) of cryptocurrencies has been assembled thanks to specialized platforms, it is possible to buy land or virtual plots via the NFT system. These “certified” digital lands, because they are registered in the blockchain in the form of unique cryptographic tokens, provide an inalienable right of ownership.

Is it profitable to invest in virtual real estate?

As in the real world, the value of land is linked to its location and rarity. Currently, the supply of plots in the Decentraland and The Sandbox metaverses is limited, 90,000 for Decentraland, around 160,000 for The Sandbox. Depending on their success, their numbers may increase. Logically, the higher the demand, the higher the prices. The closer the plots are to attractions, big brands or celebrities, the more expensive they are, thus opening the way for speculation.

Another criterion to take into account: the attraction of the metaverse itself. Depending on the coast of it, the value of the property can increase or devalue. Today, it is almost impossible to predict the future of this new technology, which is still largely in the experimental stage. The sustainability of the metaverse will depend on the quality of the experiences that will be offered by the brands, their ability to create and retain users and the revenue they will generate.

Metaverse, eldorado or mirage?

If real estate investing in the metaverse seems attractive, like any virtual space, it raises a lot of uncertainty. The development in the price of a virtual property offers no guarantee and can quickly lose all its value. Faced with the current rise in prices, some investors warn of the risk of losses that could result from a speculative bubble like the one in the 2000s.

So in the meantime, investing in “real” stones remains one of the safest and most profitable investments!

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