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Deepti Sri · · 9 min readBehind the metaverse real estate rush
On November 19, 2021, Justin Bieber performed a 30-minute live concert on the virtual music platform Wave. He joined fellow musicians Ariana Grande, Travis Scott, Lil Nas X, and The Weeknd, who all held virtual concerts last year as in-person events were halted due to Covid-19 restrictions.
The metaverse as an immersive, interoperable, virtual realm may still be in its infancy, but interest in virtual property has certainly exploded. In March, virtual land investor Everyrealm raised US$62.5m in its series A funding. The round was backed by Web3-focused institutional investors such as Andreessen Horowitz, Coinbase Ventures, Animoca Brands, Dapper Labs, and Lightspeed Venture Partners as well as a slew of celebrities including The Weeknd, singer Marc Anthony, and actor Will Smith.
Metaverse NFTs, which are used to represent ownership of digital assets, have been consistently outperforming other NFTs in the market, according to trend tracker NonFungible. Year-on-year data shows that while the price for the average NFT jumped by around 252.4%, the price for the average metaverse NFT rose by almost 2x at 462.4%.
Furthermore, while dipping crypto prices this quarter have reduced the average NFT price by nearly half, the price for the average metaverse NFT has dropped by only 10%.
However, it might be better to hold off for a little while before going all in with metaverse assets. Similar to property in the real world, premium virtual environments with blockchain components will take time to develop.
Photo credit: Roblox
Online video game Fortnite, which hosted the virtual concerts of Grande and Scott, is not on chain yet. Neither is Roblox, which hosted Lil Nas X, nor short-video platform TikTok, which collaborated with The Weeknd.
That doesn’t mean that there aren’t profits to be made right now. There already are several operational virtual worlds and associated in-game NFTs that are currently trading in marketplaces such as Opensea.
Tech in Asia spoke to several experts to gauge if holding such investments is a good bet.
Location, location, location
Two names stand out in the virtual property space: The Sandbox and Decentraland. Both are sandbox games that have no predetermined goal, allowing users to decide for themselves what the purpose of the virtual environment is.
Between the two, The Sandbox has proven to have the busiest property market in terms of transaction volume. It saw 65,000 digital land transactions amounting to US$350 million in 2021, according to a study by the Centre for Finance, Technology and Entrepreneurship (CFTE). That’s more than 3x the number of real estate transactions in Decentraland, which logged 21,000 virtual real estate transactions worth US$110 million during the same period.
A heatmap of land on The Sandbox / Photo credit: CFTE
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As the prices of virtual land skyrocket, Tech in Asia spoke to several experts to gauge if holding such investments is a good bet.
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