In our previous blog, we covered the basics of the metaverse and real estate and briefly touched on the potential benefits of investing in virtual land. If you’re the type of person who is grounded in reality or a real estate agent who is steeped in traditional means of conducting business, the idea of buying and owning virtual real estate may sound silly and a bit complicated.
However, with a little research and due diligence, we’ll explain the relationship between NFTs, metaverse platforms, and the process of buying real estate in the metaverse. Let’s get started!
NFTs and Metaverse Real Estate
The first thing you need to know is that metaverse real estate or virtual land is sold in the form of nonfungible tokens (NFTs). Therefore, it’s essential to have a solid understanding of what NFTs are and how they fit into the metaverse.
NFTs are a secure type of digital asset based on the same blockchain technology used by cryptocurrency. Instead of fiat currency, an NFT can represent a piece of art, a song or digital real estate. An NFT gives the owner a kind of digital deed or proof of ownership that can be bought or sold in the metaverse.
As they are NFTs, the ownership over the land and the digital assets in it can be easily proven. All transactions involving metaverse land are equally public record.
Buying Virtual Real Estate
If you’ve already purchased NFTs, congratulations, you’re ahead of the game! You have our permission to stop reading this article now as you are superior to the rest of us mere mortals since the process for buying virtual real estate is basically the same.
However, if you are among the rest of the population who need a little help, then here are the steps you need to take to buy land in the metaverse:
Step 1: Create a Digital Cryptocurrency Wallet
While apps such as Venmo and PayPal are digital wallets that allow you to purchase cryptocurrency, they have limitations to what you can do with your crypto. You’re better off choosing an app or exchange such as Binance.Us, Gemini, CoinBase, or Robinhood, just to name a few, that offer more features and flexibility.
Step 2: Select a Metaverse Platform
Whatever digital cryptocurrency wallet you choose will also need to connect to the platform through which you’re looking to make a purchase, and have the proper type of funding or crypto used within that platform.
Third-party platforms such as OpenSea allow you to explore virtual worlds and NFTs by category. It’s a great resource for those who are new to the metaverse and aren’t quite sure where to start.
Step 3: Bid on or Buy the Land
In the real world, the closing process might be the most arduous part of purchasing a property. That’s not the case with digital real estate – at least for now. Once you’ve found a parcel you’re interested in purchasing, all you have to do is click on it and purchase.
As long as your wallet is funded, parcel is selected, and the price is decided upon, you’re ready to purchase. The transaction is recorded on your wallet and generates an NFT title to the property which is exclusive to you.
A word of advice, whenever purchasing an NFT on a third-party platform, make sure to check for the blue checkmark denoting it’s a “verified collection” or a “verified sale.”
Best Places to Buy Land in the Metaverse
Most platforms will have a limited amount of parcels available. This helps boost digital scarcity and fuel a healthy virtual economy. But there are many other options available, each offering territories suitable for all types of activities, like advertising, business, services and events.
Top metaverses include:
Decentraland
Land in this metaverse has ranked at the top of most expensive sales, with plots going for millions. A lot of the allure of Decentraland is related to the platform’s high profile partnerships with brands as well as its celebrity and influencer tenants.
The Sandbox
Lots on the Sandbox are marked as LAND and they can be found through the Sandbox’s own platform or be purchased second-hand on some third-party NFT exchanges, such as OpenSea and Rarible. Bear in mind these have traditionally been more expensive than LAND in official sales.
CryptoVoxels
This is a digital world that ranks amongst the smallest, originally consisting of just 3,026 parcels. Those can be bought through primary sales or via OpenSea, in exchange for both USD and ETH. Unlike other metaverses, CryptoVoxels has kept expanding and currently features 7351 parcels. The lowest price for a plot of land is currently around 1.899 ETH (approximately $5,335 USD).
Somnium Space
This metaverse first came into the scene in 2018 and has a heavy focus on virtual reality offerings and it’s known for its games and NFT art. As of the beginning of 2022, there were 5,000 unevenly divided land parcels in the platform. However, more land is expected to be released in the future. The currency of Somnium Space is $CUBE and plots of land can easily be found on OpenSea.
How Much Does Land Cost in the Metaverse?
Now that we’ve discussed the mechanics of how to buy land in the metaverse, it’s time to talk about the other aspect that tends to blow people’s minds when reading headlines about the metaverse: cost and sale prices.
You can buy cryptocurrency for fractions of a cent, so the fact that people are paying thousands or even millions for digital real estate, is extremely difficult for some people to wrap their heads around.
Data from Nonfungible.com shows that among the current top 10 most expensive NFTs, the virtual land in Decentraland and The Sandbox rank in the top ten with over $66 million and $31 million respectively. Conversely, the smallest chunks of land are going for 3.7 ether and 3.46 ETH, respectively, which translates to roughly $11,717 and $10,957, according to a Fortune report, which cited data from Meta Metric Solutions.
Right now, you’re probably asking yourself, what determines the price and value of virtual real estate? The answer is the same as traditional real estate: location, location, location.
The most expensive plots tend to be at the center of the virtual town, and the ones owned by social influencers, celebrities, and brands also tend to command a premium over the rest. Much like in the real world, distance/proximity plays a crucial role in determining the value of a plot of land in the virtual world. After all, people prefer to be close to the center of all the action.
Real estate, whether in the real world or the metaverse, is an investment. And most know that investments are inherent with risks. In our next blog, we’ll play devil’s advocate and examine some of the risks and problems investing in digital real estate may pose.