Highly prized plots of land are fetching fortunes on the biggest platforms. How do the economics of metaverse real estate stack up?
Are you hoping to buy a home but frustrated with the sky-high prices? Are you worried the housing market is in a bubble?
Then consider a lovely piece of real estate that goes for only $4,873, as of the time of this writing. No HOA fees. No noisy neighbors. And you might even qualify for a mortgage. It’s a beautiful plot of land called “Parcel 148, -35,” and the only catch is that it exists solely in the digital metaverse of Decentraland.
This article is part of CoinDesk’s Metaverse Week series.
Metaverse real estate is booming, or at least it has for much of the bull run, topping $500 million in 2021. (Where it goes now is anyone’s guess.) In The Sandbox, someone spent $450,000 to buy land next to to Snoop Dogg’s virtual “Snoopverse.” Tokens.com spent over $2 million on virtual land and has formed a metaverse real estate company.
Why do people buy land in the metaverse?
Almost everything in the market, of course, has a whiff of the absurd. But especially for those not paying close attention to the space, the idea of “digital real estate” can seem particularly bonkers.
The short answer: People think the price of metaverse land will go up. And so far, for many, this has been a good bet. One reason is the forced scarcity…There are only 90,601 parcels in Decentraland. “If it becomes a place where millions of people are hanging out, land will continue to appreciate. Supply and demand,” says Dan Reitzik, CEO of metaverse real-estate company TerraZero, which now has 30 employees.
The longer answer has to do with virtual Miller Lite.
Unlike when you buy many virtual assets, when you buy virtual real estate, you can actually do stuff with it. You can build games on it. Display advertisements on it. Flaunt your non-fungible tokens (NFT) on it. Host a virtual Kendrick Lamar concert on it. Or even rent it out to others who need the digital space. All of these activities could bring you passive income.
And this is where the beer comes in. At halftime of the most recent Super Bowl, Miller Lite opened a virtual bar in Decentraland. Dan Reitzik’s company helped that come to life and “20,000 to 30,000 avatars visited over the day,” says Reitzik, who adds “the average length of time that each person interacted with Miller in the bar was 23 minutes, which in marketing is incredible.”