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Last year, if you were asked what Gucci, The Walking Dead, Atari and Snoop Dogg had in common, you might’ve stood scratching your head indefinitely. By the end of 2021, their commonality was ownership of digital real estate in the metaverse and brand strategies so comprehensive that they are leaving less-progressive brands behind in their dust. The aforementioned have each established themselves with no less than 75 parcels of land in the metaverse platform known as The Sandbox. This equates to hundreds of acres in our physical world today.
Notables from a wide variety of industries are recognizing the real estate value appreciation aspect of the metaverse and its fully immersive experiences that offer customers a new dimension of enjoying their favorite brands. It’s not just entertainers and TV productions that are flocking to the scene; hospitality firms such as Hong Kong-based Regal Hotel Group recently announced their intentions to build a digital green city named Meta Green in collaboration with Hong Kong University and focus on the development of an eco-friendly sustainable society.
The rise of digital real estate
The urgency of acquiring these digital assets is nothing short of a code-red stampede. In January of this year, The Sandbox released 156 more parcels of land that sold out in two seconds. Famous NFT giants, Bored Ape Yacht Club, offered 55,000 land deeds for sale in their newly announced metaverse called Otherside. Without access to this land even in place for users yet, the deeds sold out in a day, grossing $350 million in sales. With virtual land deeds flying off the shelves at this rate, your average investor is undoubtedly taking a second and third look into the metaverse, and an inevitable sense of FOMO is setting in.
The average home in Los Angeles has appreciated 15% from 2021 to 2022, while a parcel of land in The Sandbox has appreciated 700% in the same time. The numbers are so staggering, you might think they’re made up. Similar growth can be seen in Decentraland, as a parcel that sold for $1,900 in 2017 was sold again this year for $14,460, marking a 761% appreciation rate. It’s astonishing appreciation isn’t the only factor that’s making digital real estate ownership appear more favorable, it’s also infinitely easier to manage. Our hypothetical investor, Jane Doe, just spent her savings replacing the shoddy flooring in her Airbnb. With prodigious appreciation, no upkeep, and no property taxes, digital real estate may represent an economic opportunity we have never seen before.
The value of virtual land
Still, paying $2.4 million for real estate you will only see on a computer screen is an unfathomable notion to most. For companies, like Metaverse Group, the business possibilities were so evident they set a record for the largest virtual land acquisition by purchasing a 116-parcel estate in Decentraland last November. With lessees like Forever 21 and Skechers committed to building virtual storefronts, their decision to develop land in Decentraland’s Fashion District has proven to mimic real-life investment opportunities.
“Not only do we own valuable virtual real estate, but we also generate recurring revenue,” commented Metaverse Group Executive Chairman, Andrew Kiguel. Even with one-off sales to the tune of millions in Decentraland, The Sandbox is still the largest metaverse based on transactional volume, while other contenders, Cryptovoxels and Somnium Space, are still vying for supremacy.
What about location? Could that still be a determining factor when valuing metaverse real estate, or are we just pulling numbers out of a hat? Many argue that since you can transport from one end of a metaverse to another with the click of a button, location has no bearing on land value. However, Sam Huber, CEO of the metaverse advertising agency called Admix argues, “Bringing a big brand or big project raises the value of the land around it.“
How could this be untrue when land next to Snoop Dogg’s estate sold for $453,000 while you can pick up land on the outer limits of The Sandbox map for considerably less? It seems there is a difference between investing in land next to Gucci, versus moving next door to User0017490 in the metaverse.
It’s clear that ownership of digital real estate in the metaverse is taking off in a big way, so if you’re interested in joining the likes of Gucci, Snoop Dogg and many others, don’t miss your chance.