The term “metaverse” is growing more popular, significantly when Facebook changed its name to “Meta” and brought attention to the virtual world and its future. Thanks to that, Virtual lands are now selling for exorbitant prices. Such as the $450,000 sale of a metaverse plot next to Snoop Dogg in a virtual world. Why is metaverse land so expensive, and is it a good investment?
For some, the Metaverse can be puzzling, and it is frequently associated with virtual reality, but the Metaverse will be about more than just VR technology. Metaverse will become the new gateway to the internet if it becomes as Meta told. If that succeeds, everything we do on the internet can be done in the Metaverse. Of course, the way we consume media and the ads which keep alive the internet will also change.
Metaverse now is like an Open world-like space, so obviously, the land of the virtual world is blooming. Even now, not only is the real estate market scorching in the actual world, but it is also hot in the virtual world. Although these metaverse lands may appear to some to be worthless, they can actually be highly valuable. So impacts the virtual lands?
Scarcity and Location
Several causes contribute to the skyrocketing metaverse land values. According to CoinMarketCap, the rebranding of Facebook to Meta as well as the rise of NFT investment have both spurred interest in virtual real estate.
Plots of metaverse land are offered in NFT form, which means they are limited-edition assets. Scarcity causes the investment’s value to rise over time. Property owners can benefit by selling, renting, or building on their land.
According to CNBC, location is essential in determining the value of metaverse land. Prime positions, like genuine real estate, attract higher costs, according to Andrew Kiguel, CEO of Tokens.com, and Janine Yorio, CEO of Republic Realm. An NFT collector, for example, paid $450,000 to live next to Snoop Dogg in his Sandbox.
One advantage of virtual real estate over physical real estate is that buyers avoid owning real-world land’s legal and insurance costs. Natural calamities that can endanger physical property will also not be a concern in the Metaverse.
Giant corps interest in the Metaverse Land
Republic Realm recently paid $4.3 million for a piece of virtual land. Tokens.com, Kiguel’s startup, paid $2.5 million for land in the metaverse realm Decentraland. Kiguel further stated that digital real estate prices for that land have increased by 400%–500% in recent months.
According to The Wall Street Journal, accounting firms are also investing in metaverse land. On the Decentraland, Prager-Metis paid $35,000 for virtual property. PricewaterhouseCoopers’ Hong Kong unit also purchased Sandbox metaverse land.
The significant reason for the price hike for Metaverse land is its increasing popularity. It’s the same reason as the price hike of the NFT platform. If something is popular or going to be the next big thing, then people don’t wanna be left out of that.
Tech enthusiasts know the Metaverse is gonna change the way we interact. So everyone wants to preserve their existence in the Virtual world, thus making the Metaverse land expensive.
Should you take action and buy land in the Metaverse now?
Despite the high metaverse property prices and rising demand, several financial experts warn that investing in metaverse land is unwise. According to CNBC, Yorio stated that digital real estate is speculative and fickle, but it has the potential to be “massively profitable.”
Mark Stapp, an Arizona State University professor, similarly stated that he would not invest more than he was willing to lose. Because “you’re buying something that isn’t related to reality,” he predicted that virtual real estate will become a “bubble.”
If the Metaverse can continue to draw bitcoin buyers to its digital realms, metaverse lands may hold and increase in value. Holding assets for a long course of time, like in traditional real estate, increases the likelihood of profitability.
According to CNBC, crypto asset management Grayscale believes the digital world will someday be worth $1 trillion per year.
Now it all comes down to the proper research when investments are involved. Like Mark Stapp said, if you have spare money you are willing to lose, you can invest that. For me, I would probably research a lot and wait for the right time.