What Real Estate In The Metaverse Actually Means
You may have heard the term metaverse thrown around before, but just in case the concept is a little hazy, it refers to what is essentially a virtual world you can visit and live an entirely different life within — think of it as Facebook 3.0, except in a 3D kind of way. While it may have a slightly dystopian ring to it, the metaverse is here and is wide open for anyone to access. This parallel online universe is slowly but surely mimicking aspects of the physical world to become a place where you can shop, play games, and socialize with friends.
Although it is not an entirely new concept (the original word comes from a 1992 science fiction novel by Neal Stephenson), the term has become vastly popular since Facebook changed its name to Meta in October 2021 (via The Washington Post). There is no denying that businesses have dipped their toes in a number of realms in the metaverse, including areas like real estate, which may not make much sense to the average person considering the metaverse technically is not real. Why would someone want to own digital property in the metaverse? The answer is complicated.
How much is it worth?
Real estate in the metaverse is hot. Although it exists as pixels on your screen, it represents places where you can socialize, play games, and more in a virtual environment. Since Facebook changed its name to Meta in late 2021, companies have been rushing to profit from the VR real estate boom that followed. CNBC reported in February 2022 that sales involving metaverse real estate increased almost ninefold to $133 million as of November 2021, and sales across the four biggest metaverse platforms hit $501 million last year. Some of the plots are just as costly as buying an actual house, with prices ranging up to the millions for prime digital real estate.
There are a few factors that determine how much a piece of the digital frontier is worth. Janine Yorio, CEO of Republic Realm, a metaverse real estate investment firm, told CNBC that location may not be a reason to spike land prices. Rather, the designated value may be determined by attractions or special features such as a museum or coffee shop.
However, this is arguable as it is seen that users are interested in plonking down their plot in places where they think they will get the most value from it. Time reported that an anonymous buyer bought a piece of property next to (virtual) land belonging to the rapper Snoop Dogg for a reported $450,000, thinking that a celebrity neighbor would boost the property value. But, is it worth the hype? For experts like Janine Yorio, she told CNBC, "There are big risks, but potentially big rewards."