When you think of booming real estate markets in 2022, your list of locations probably includes cities like Austin, Dallas-Fort Worth, Nashville, Phoenix, and Atlanta. Those markets certainly have a lot to offer real estate agents, mortgage brokers, and investors interested in residential property. One of the hottest real estate markets isn’t in these or any other city, though. They’re virtual real estate options in the metaverse!
What Is the Metaverse?
Before you can start to understand virtual real estate opportunities, you need to learn about the metaverse. The metaverse is a difficult concept to grasp at the moment. Imagine trying to explain the future of the internet in 1994. You would get very skeptical looks as you explained the potential for streaming high-definition movies without any lag. After all, the World Wide Web (WWW) had only been around for a year, and very few people knew that it was.
Trying to explain the metaverse and its future might get you similar looks today. To some people, it sounds like nothing much more than a new version of Second Life. Even tech leaders like Mark Zuckerberg, who changed Facebook’s name to Meta, talk about the metaverse as a kind of video game, a virtual world where people can meet and interact, and an immersive version of Zoom.
It’s confusing because developers and futurists are far from finishing the metaverse. It’s still in a loose state that will evolve over the upcoming decades. They know that the metaverse is a type of cyberspace, but the visions differ considerably from there. The only thing everyone agrees on is that the metaverse is a 3D version of the internet. How that will look and behave is up for debate.
From the perspective of real estate investors, exactly how the technology evolves might not matter much. What matters is that you can invest in virtual real estate that could grow in value as more people start using the metaverse.
Virtual Real Estate Is Similar to a Website’s Domain Name
When you purchase virtual real estate, you obviously don’t get a physical piece of property. However, your purchase does get recorded in a blockchain. This has some similarities with purchasing a website’s domain name. You don’t actually own a physical piece of the server that hosts your website. Instead, you retain ownership of the URL that identifies your domain name.
Let’s look at an example. You want to own the domain name “prospectnow.com,” so you go to a domain name registrar and pay a fee for the name. As long as no one else owns the domain name, you can buy and retain rights to it. At this point, you can build practically anything on the website with the name “prospectnow.com.”
When you buy virtual real estate, you trade a certain amount of currency with a company that already owns “land” in the metaverse. Popular companies to buy from include Decentraland and The Sandbox. Your purchase gets logged in the blockchain to prove your ownership of the virtual real estate.
What’s the Blockchain?
You’re probably confused right now if you aren’t familiar with blockchain technology. A blockchain is a list of records, called blocks, that verify and record exchanges. It’s a decentralized technology that stores records on thousands or millions of devices.
There isn’t a centralized location where records get stored. Instead, the majority of these devices must agree that an exchange has occurred. When verified, they generate cryptographic blocks. The series of blocks is called a blockchain. Specialists consider this a more secure approach to maintaining records because it doesn’t have a centralized location for hackers to alter.
If that still seems a little confusing, that’s okay. Watch this explanation on YouTube for a deeper understanding.
So, What Is Virtual Real Estate in the Metaverse?
Virtual real estate in the metaverse is an evolving concept, but some fundamentals should hold true for the next several years. While there are similarities between virtual real estate and domain names, it’s important to note that one piece of virtual property can have a more desirable location than a different parcel of land. That isn’t the case for domain names, which become more desirable by providing reliable content and gaining brand recognition.
In the metaverse, virtual real estate is laid out much like property exists in a city. You might have:
- A main commercial area where people can spend time browsing items for sale.
- Entertainment districts where people can play games, watch performances or listen to music.
- Office parks where people spend time interacting during work hours.
- Residential areas where individuals and small groups manage their plots.
Just like in the real world, a premium location in the city’s most popular area will have a higher value than real estate in a place people rarely visit.
In the near future, you could see virtual real estate developers build attractive communities where residential and commercial have high values. Other areas will have lower values and prices because they offer fewer services or less access to popular amenities.
Who Is Buying Virtual Real Estate?
Several companies have already purchased virtual real estate in the metaverse. Some of the most prominent businesses include:
- Forever 21
- Estee Lauder
These companies aren’t investing in virtual real estate just because it’s a fun, new concept. They plan to provide services that will generate revenue. For example, CVS will let customers enter virtual stores where they can select items from shelves. Shoppers can then pay for items and have them shipped to their homes.
Additionally, a health-oriented company like CVS could provide virtual healthcare services. When you got to the pharmacy, you could meet with a real pharmacist to discuss your prescriptions. The pharmacist would have an avatar within the virtual world, but you still get the same information and recommendations as talking to that medical professional in person.
Companies have also used the metaverse to advertise their products. During Super Bowl LVI, Miller Lite ran a commercial that you could only experience in the metaverse. The beer brand even opened a virtual bar in the metaverse so people could gather and watch the commercial together.
How Much Does Virtual Real Estate Cost?
The cost of virtual real estate can vary significantly, just as it does in the real world. Somewhat incredibly, prices in the virtual world have already shown plenty of opportunity for growth. In January 2021, investors could expect to spend about $100 on a piece of land. By the end of the year, that amount grew to $15,000.
To some extent, the increase comes from a small number of people spending large amounts of money on virtual real estate. One person spent $450,000 to purchase a plot of land next to Snoop Dogg’s virtual estate.
Interestingly, Snoop Dogg is a major player in virtual real estate. Snoopverse includes three estates, 67 plots of premium land, and 22 plots of land. The musician, actor, and entrepreneur expects to host exclusive gatherings in his virtual space.
At some point, virtual real estate could become an investment, just like real estate in the physical world. Someone might own a property for a few years before deciding to move to a nicer area or a larger building. Companies could change locations to connect with their core audiences more easily.
Once this happens, predictive analytics will likely play a role in finding off-market properties. Instead of waiting for someone to put their property on the market, you could use a tool like ProspectNow to connect with owners before they list their properties.
How To Buy Virtual Real Estate in the Metaverse
Buying virtual real estate in the metaverse involves several steps. It can seem complex at first, but it gets much easier after you’ve done it once.
Buy the Right Cryptocurrency
You can’t buy virtual real estate with regular money. Instead, you need to exchange your money for cryptocurrency. Three cryptocurrencies stand out as good options: Ether, SAND, and MANA. Each currency is built on a different blockchain. Buying Ether makes it possible for you to interact with the Ethereum blockchain. SAND is used by the metaverse platform The Sandbox. Decentraland uses MANA.
Buying cryptocurrencies has become easy and secure in recent years. You can buy any of these popular cryptocurrencies from Coinbase and similar exchanges. Cryptocurrency values can fluctuate wildly. You can avoid the negative effects of fluctuations by purchasing the amount of cryptocurrency you need to complete a sale. As long as you finalize the sale quickly, volatility shouldn’t have a significant effect on your cryptocurrency’s value.
Put Your Cryptocurrency in a Wallet
You will need a wallet that supports cryptocurrencies and NFTs (non-fungible tokens). Metamask and Binance are popular wallets that you can use to store the cryptocurrency you need to buy virtual real estate.
Buy Your Virtual Real Estate
You can buy virtual real estate directly from a company like The Sandbox. Alternatively, you can buy land from a third-party auction site. Regardless of the option you choose, you will want to pay close attention to the price and features of any virtual real estate you purchase.
Keep in mind that you could potentially generate profits by auctioning the virtual real estate you own. If your investment works in your favor, auction sites give you an easy way to sell your virtual property to the highest bidder.
Should You Buy Virtual Real Estate in the Metaverse?
The metaverse is too young for anyone to predict how it will change over the next few years, let alone how it will evolve over decades. That makes it nearly impossible for anyone to say whether virtual real estate is a good investment.
There is quite a bit of risk in buying virtual real estate. Then again, the high risk could lead to high returns. Getting involved now might mean that you pay a low price for virtual real estate that becomes much more valuable in the future.
One day, you might have more tools that help you make informed decisions about which pieces of land to buy in the metaverse. Currently, you can’t use an online platform like ProspectNow to generate a lead list like you would for real-world properties. That day could come, though.
How ProspectNow Can Help
At the moment, ProspectNow’s database doesn’t have information about virtual real estate in the metaverse. As a company dedicated to giving clients the tools they need to succeed, though, you can expect ProspectNow to grow with changes in real estate. That could include adapting to emerging trends in virtual real estate.
The metaverse is still in its infancy. It will take some time to determine whether virtual real estate holds true potential.
In the meantime, you can gain a competitive edge over professionals in your area by taking advantage of ProspectNow’s robust commercial and residential databases, predictive analytics, and intuitive user interface.
Start a free trial with ProspectNow today to see how it can help you earn stronger returns on your investments.