Even as portfolios have fallen in 2022 for both traditional stock investors and many crypto enthusiasts, another sort of investment seems to be holding steady: metaverse real estate in platforms like Decentraland and The Sandbox.
How and why it’s holding tight isn’t really any sort of mystery if you look beyond the surface of the situation. After all, the metaverse — where people interact virtually — is made up of semi-insulated, self-contained economies, each housed within individual virtual realms with rules all their own. But self-containment isn’t the only reason the value of metaverse real estate is holding relatively steady despite a free fall for a wide range of other investments.
Image source: Getty Images.
1. Virtual real estate is often purchased for a specific purpose
Unlike stocks and other investment instruments, real estate — even the virtual kind — is a purchase that’s often made with an intention to do something specific with it, like build a rental unit or billboard or create some kind of experience for people interested in interacting with a brand.
For example, Republic Realm — which calls itself “one of the most active developers of metaverse real estate” — purchased a large parcel of land in Decentraland and built a mall called Metajuku, which was meant to be a sort of fashion zone. The company has already rented space in the mall to such names as financial giant JP Morgan, which has set up a “lounge,” and digital fashion brands Dress-X and Tribute Brand.
The buy-and-hold mentality of the owners of metaverse real estate increases the scarcity of an asset that’s already limited, which can increase value.
2. Interest continues to build
As more people hear about the metaverse and realize the potential for their business or social life, more things are happening there. That’s how the metaverse grows. The more content that creators add to the various platforms, the more there is to do, the more people show up, the more money people make, the more things that can be funded, and so forth. It’s a cycle that begins and ends with investment in metaverse platforms — and right now is a massive boom time for them.
From Panera‘s planned “Paneraverse” — an interactive virtual Panera in the metaverse that will allow in-metaverse purchases of home-delivered, real-world food — to the upcoming replica of Manchester City’s Etihad Stadium, where soccer fans will be able to track favorite players and experience the thrill of a live game, the metaverse is expanding explosively. And this explosive growth is giving more people more reasons to be there, spend money there, and maybe even invest their own money and time in the space.
3. Metaverse real estate is getting easier to buy on installments
Recently, metaverse real estate developer TerraZero issued its first official metaverse mortgage for the purchase of a $45,000 parcel in an entertainment district in Decentraland. This is a test case, to be sure, but with other big financial players like JP Morgan eyeing financial opportunities in the metaverse, it may not be long before these loans are easier to get, and more people are getting them.
As more opportunities are opening up, more people will feel safer putting their money in the metaverse, whereas they might be too frightened of market volatility to invest in stocks. Sometimes, belief is all it takes to keep a dream moving forward, and the metaverse is nothing if not a land of dreamers. The more people who feel like they can afford to invest in the metaverse, the better for its long-term outlook.
Things are looking good, for now
When you look at the prices of basic land in Decentraland or The Sandbox on marketplaces like OpenSea or Non-Fungible.com, compared to the major stock indexes, it’s apparent that the stock market’s current correction is not hugely influencing virtual real estate prices.
This doesn’t guarantee that the metaverse will always be a safe haven for investors. Still, for the moment, interest and, most importantly, belief in the future of the metaverse continue to be strong enough to keep prices relatively steady despite a year that has produced absolutely startling gains in metaverse real estate prices.