The age of the metaverse has arrived and we have a whole other life to create. That seems exciting, right? The metaverse has created a connected virtual reality with a whole new world with millions of possibilities. As real estate professionals, we wanted to explore what this world has to offer to the real estate industry or what the digital real estate industry means, and most importantly, how we will be part of it.
What is Digital Real Estate?
The metaverse is a virtual reality, meaning that almost all of the things that exist in real life will be replicated in the digital world, including real estate. We’ll be able to buy and sell digital real estate which will be an extension of the real estate market that we experience in our everyday lives.
The metaverse is said to offer more options than simply just buying or selling a piece of virtual land. In the virtual world, building a home or a commercial building on digital land will also be feasible. This means that there will also be digital real estate agents and property managers as well.
There are quite a few advantages of metaverse real estate, such as the fact that there aren’t any geographical boundaries. If you’ve dreamt it, it could happen. In addition to this, there are lower entry barriers with a potentially high return on investment – not to mention, it’s more environmentally friendly to buy virtual real estate.
How can you invest in the metaverse?
Purchasing a metaverse property is similar to buying an NFT. Each metaverse land has a unique code on a blockchain that certifies your ownership of the digital land. This ownership allows you to do whatever you’d like with it including selling, building a property, or renting it.
To be able to purchase metaverse land, you first need to have a crypto wallet. Before filling your wallet with cryptocurrencies, you need to check what cryptocurrencies are used in the platform you want to buy land from. After doing so, you’ll need to sign up to the virtual metaverse platform to create a new account. After your profile is created, you’ll need to link your digital wallet to the platform so you can start buying land.
Also, it’s worth mentioning that a lot of metaverse land can be bought through brokers and property managers. The main difference from the real-world properties is that there is no requirement for licenses or any regulations for brokers to abide by in the metaverse. So if you’re planning to buy through a broker, double-check that your broker is reliable and trustworthy.
Where can I buy or sell metaverse real estate?
There are multiple online marketplaces at which you can buy/sell real estate. Here are just a few:
- Decentraland: one of the most popular digital real estate market places. Backed by the Ethereum blockchain, this metaverse platform stocks the finest digital assets that you can buy and sell.
- SuperWorld: ever thought of buying Eiffel Tour or maybe the Colosseum? Superworld has created a virtual replica of the globe enabling you to buy these landmarks and other virtual properties. This company currently has 64 billion different plots of land ready to be sold. For instance, the Great Pyramid of Giza is on sale for 0.1 ETH ($345) and the magnificent Burj Khalifa is priced at 50 ETH (about $172,545).
- Metaverse Properties: a real estate marketplace that has a global virtual land registry that makes buying and selling digital assets easier than ever. You can buy or rent digital real estate on several platforms including Decentraland, Sandbox, Somnium, Cryptovoxels, and Upland. They also provide property management and development services.
What are the risks of investing in digital real estate?
Like any investment, there are always risks involved. When it comes to real estate in the metaverse, some of the risks include regulatory risk, platform risk, liquidity risk, and security risk.
- Regulatory risk: Since digital real estate is a relatively new concept, there are not many regulations in place governing this type of investment. This lack of regulation could lead to problems down the road if investors are not careful.
- Platform risk: This is the possibility that the platform on which you are investing could suddenly become obsolete or no longer supported. This could lead to a loss of your investment.
- Liquidity risk: You may experience difficulty in selling your investment if you need to cash out. Because digital real estate is still a relatively new concept, there may not be a large market for selling these types of assets.
- Security risk: This refers to the possibility that your investment could be hacked or stolen. When investing in digital real estate, it is important to choose a reputable and secure platform to increase your likelihood of preventing such issues.
What are some tips for investing in digital real estate?
Here are some tips that we think you should consider if you are thinking about investing in real estate in the virtual world:
1. Do your research
Start with researching the different types of real estate platforms that are available in the metaverse. Each platform has its advantages and disadvantages, so it is important to find one that best suits your needs.
2. Invest in a reputable platform
The platforms that we mentioned above are all reputable and have a good track record. However, there are many other platforms out there, so make sure to do your due diligence before investing.
3. Diversify your investments
Don’t invest all of your money into one digital asset. Instead, spread your investments out across several different assets to diversify your risk.
4. Have a long-term perspective
Investing in digital real estate is not a get-rich-quick scheme. It is important to have a long-term perspective when investing in this asset class.
5. Be patient
The digital real estate market is still in its early stages of development. This means that there will likely be ups and downs along the way. It is important to be patient and ride out the waves.
What will be the most valuable real estate assets in the metaverse?
It’s difficult to say what will be the most valuable asset as it largely depends on the development of the metaverse and how it will be used. Some people believe that the most valuable assets in the metaverse will be those that are centrally located and easily accessible. These types of assets would be similar to prime real estate locations in the physical world and would likely command a high price. Other factors that could affect the value of digital real estate include the availability of virtual services and amenities and the overall popularity of the metaverse.
The Future of Digital Real Estate
Digital real estate is still in its early stages of development but it holds a lot of promise for the future. The advantages of digital real estate make it an attractive investment opportunity for those looking to get involved in the metaverse. With blockchain technology, digital real estate can be a more secure and transparent way to invest in real estate. As the metaverse continues to develop, we can expect to see more innovation in the digital real estate space.
If you are thinking about investing in this type of asset, be sure to do your research and invest in a reputable platform. Want to discuss more? Make sure to visit our free office hours to have a more in-depth discussion about real estate in the metaverse.