If you thought the metaverse was created when Mark Zuckerberg stated that Meta was constructing the “next iteration of the Internet,” you would be surprised to hear that it is already an established, vibrant ecosystem with a thriving property market.
In recent days, a plot of “land” in the online social world Decentraland sold for €2.1 million, smashing its previous record sale of €810,000 in June.
Users from the actual world may enter Decentraland, create avatars, acquire property, buy wearables on the marketplace, and attend events.
The site has already organised a virtual music festival, which drew heavyweights such as DeadMau5 and Paris Hilton.
The virtual world is also drawing institutional attention, as the government of Barbados just announced a deal to open the world’s first digital embassy in January of next year.
According to the company and data from the website NonFungible.com, which tracks digital land sales, interest peaked on Tuesday when Republic Realm, a company that develops real estate in the metaverse, said it paid $4.3 million for land in the world Sandbox, the largest virtual real-estate sale publicised to date.
Republic Realm purchased the digital land from Atari SA, a gaming developer, and the two companies announced plans to collaborate on the development of some of the properties.
That purchase surpassed a previous high set just last week by a subsidiary of Canadian investment firm Tokens.com Corp., which paid $2.5 million for land in Decentraland’s Fashion District.
Cities where a user’s avatar can wander and shops where they can buy a new winter coat or a painting to display on the walls of their virtual homes are common features of these virtual worlds, which are commonly produced by videogame makers. Users can hang out with avatars of their real-life friends in these digital worlds’ apartments or lounges. Participants use bitcoins to pay for virtual casinos and more lavish activities like virtual boats.
Real-estate investors are interested in selling properties near friends and virtual attractions. They’re also building shop premises that they want to rent to virtual retailers for hard cash or bitcoin rent. Nonfungible tokens, or digital identities that operate as de facto deeds, are used to document land ownership. Property sales are usually conducted in a metaverse-specific cryptocurrency.
Republic Realm is attempting to mitigate risk by purchasing land in a variety of virtual worlds, according to co-founder Janine Yorio. According to the company, it owns around 2,500 pieces of digital land across 19 planets and runs two real-world investment entities focused on virtual real estate. Ms. Yorio worked as a real-estate investment executive for a decade, first at NorthStar Realty Finance Corp. and later at the Standard Hotels, before transitioning to the financial-technology industry.
According to Ms. Yorio, the corporation either acquires land directly from a world’s creator or from other parties via public listings or off-market arrangements. It may choose to simply sit on the unoccupied land and wait for it to appreciate in value. It pays an architect to design virtual homes or malls, and a game developer to build them in other cases.
Zoning laws limit what and where a corporation can build in the metaverse, just as they do in the actual world, and too much development could lead to a market glut, at least in principle. However, unlike in the real world, metaverse buildings can appear to float above the ground, defying physics.