25 May 2022

Metaquette #VirtualRealEstate Q4


Weekly QA with the Doyenne of the Metaverse....Pooky Amsterdam

Virtual worlds allow for people to own, trade and build upon their virtual land. And within Virtuality, prices are often a fraction of what they can be in the physical world. When a server sets up the grid for one metaverse or another, they create a place where your virtual feet will land. And this land, if you want a home in that metaverse is usually available to rent, or own. 

While many folks only want an outpost of some sort, just as most of us only want an apartment, or a house for ourselves / our loved ones, some will aspire to own and trade Meta Real Estate. The press is fond of reporting big numbers, and in this we have seen some really big ones.

Q: I've heard so much about buying land in some of the new metaverses. it seems like a great real estate empire is going on and I have FOMO! Any tips?

It depends if you are a long term or short term player in this market. Short term fluctuations mean you need the cohones of a day trader, so longer term investment might be a safer bet. With so many virtual currencies which buy different properties it is a challenge to know which one(s) you are going to back.

There are premium virtual NFT real estate properties in major blockchain Metaverses including Decentraland, Somnium Space, The Sandbox, Cryptovoxels and Upland. Parcels here do have resale value now, and possibly for some foreseeable future, supported by The Metaverse Group (see below) in what seems an attempt to protect investment with diversification in their real estate portfolio.  Blockchain currency is tied intimately with virtual land sales, as we have recently seen with losses in the crypto market, caution is advised.

There is an excellent model in Second Life for virtual real estate ownership then subsequent subdivision of parcel for rentals, which have been going on for over 15 years. It was in 2006 that Anshe Chung made a million USD in Second Life real estate, which continues to be a vibrant part of the Metaverse building on micro-payments of $7 - 30$ a week for rentals. Becoming a virtual landlord is more than buying low and selling high, it requires tenant management, monthly payment systems, a longer term investment and one you must have a few organizational skills for.

Some really big deals have been in Decentraland, which has its own currency called MANA, and where parcels next to major spawning areas can go for $36,000. That is all about monetization of the space, selling advertising, developing brand recognition and of course NFTs. The high price reflects proximity to n00b spawning grounds which means prime space in front of new flush wallets too and first purchase aroma in the ether. What really makes Decentraland so expensive is the hard cap on the amount of land which creates the digital scarcity. Prices have been high. An example? A nice piece of land there sold for $2.4 Million towards the end of last year. Fashion Street went for $3.5M one week in January, yet dropped more than $2M the following week, speculation much?

On the outermost sections of Decentralands main civilization of 6 months ago, one could find a parcel for a mere $6K. The market for land and MANA is strong, as you can see on CoinmarketCap, which shows the price of just about every coin based blockchain currency. There are a LOT of them.  

There is SAND in The Sandbox, where it cost 71,000 SAND or $450,000 to live in the parcel next to the famous Snoop Dogg. other locations away from the Snoop go for less, but there is great fluctuation in prices. Look for scarcity of land, activity and proximity to popular hub destinations as these factors can affect a better chance of increasing value. You do NOT have to look for a good school district.

Investing heavily in virtual real estate is The Metaverse Group, the same one that tokens.com just bought a 50% stake in and which launched a REIT (Real Estate Investment Trust) based on virtual property. it is one of the first NFT based real estate companies to own a portfolio of properties mentioned at the top of this blog.  Will they return astounding profits? No one can can be certain at this point.

The best piece of real estate advice I ever heard came from a man named Bob Hope, who made a fortune in it. Asked for advice, he said, "See the city limits kid? Buy there." What this means is find the outer edge of the most popular places in your metaverse and plunk your chunk down there, people will be expanding into the hinterlands around "the city." 

1 comment:

Anonymous said...

Terrific insights Pooky! It's an exciting and fast-moving space.