You’ve probably heard the term “metaverse” thrown around before, but in case it’s lost on you, it refers to what is essentially a virtual world you can visit and live an entirely different life within — think of it as Facebook 3.0, but in 3D. While it may have a slightly dystopian ring to it, the metaverse has arrived and is open to all. This parallel online universe is gradually but steadily imitating aspects of the physical world in order to become a place where you can shop, play games, and socialize with friends.
Although it is not an entirely new concept (the original term comes from Neal Stephenson’s 1992 science fiction novel of the same name), the term has grown in popularity since Facebook changed its name to Meta in October 2021. (via The Washington Post). There is no denying that businesses have dabbled in a variety of realms in the metaverse, including real estate, which may not make much sense to the average person given that the metaverse is technically not real. Why would someone want to own metaverse digital property? The solution is complicated.
How much is it worth?
Real estate in the metaverse is in high demand. Although it exists as pixels on your screen, it represents virtual environments where you can socialize, play games, and do other things. Companies have been rushing to profit from the VR real estate boom since Facebook changed its name to Meta in late 2021. According to CNBC, sales of metaverse real estate increased nearly ninefold to $133 million in November 2021, and sales across the four largest metaverse platforms reached $501 million last year. Some of the plots are as expensive as buying a real house, with prices ranging up to millions of dollars for prime digital real estate.
A few factors influence how much a piece of the digital frontier is worth. According to Janine Yorio, CEO of Republic Realm, a metaverse real estate investment firm, location may not be a factor in rising land prices. Rather, attractions or special features such as a museum or coffee shop may determine the designated value.
However, this is debatable because it has been observed that users are interested in locating their plot in areas where they believe they will get the most value from it. According to Time, an anonymous buyer paid $450,000 for a piece of property next to (virtual) land belonging to rapper Snoop Dogg, believing that having a celebrity neighbor would increase the property value. Is it, however, worth the hype? “There are big risks, but potentially big rewards,” experts like Janine Yorio told CNBC.