1 minute read
Digital Real Estate and the New “Neighborhood”
1ST YEAR ON THE LIST
As properties in popular virtual worlds sell for higher and higher record prices, speculators are eager to invest in this volatile but potentially high-return asset.
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KEY INSIGHT
Though the metaverse is arguably infinite, shared spaces within it have finite boundaries and emulate traditional cities and towns. Some of these spaces are becoming popular hubs for virtual communities, gaming, commerce, and culture, giving rise to a digital real estate market in which users exchange currency to rent and own virtual property.
EXAMPLES
In an episode of HBO’s “How To With John Wilson,” the titular documentarian interviews a man who works as a “land baron”—essentially a virtual real estate agent—in the metaverse platform Second Life. The man explains how his avatar helps users tour and select properties in the platform’s virtual world, collects monthly rents, and even evicts delinquent tenants. As metaverse platforms attract more users (individuals as well as those with business interests) and integrate more functionality, new “neighborhoods” are taking shape around the same criteria that define their real-world counterparts: like-minded communities, property values, zoning codes, gentrification, strategic retail locations, and locally accessible services and cultural resources. The digital real estate market is booming as the metaverse rises in popularity—last November, a new record was set when digital real estate investors and developers Republic Realm purchased a plot in metaverse platform The Sandbox for $4.3 million.
DISRUPTIVE IMPACT
The market for digital real estate in the nascent metaverse is subject to the same opportunities and pitfalls of any real estate rush. Savvy buyers may be able to snap up affordable properties now that eventually skyrocket in value, but this volatile market is best suited to investors with a high risk tolerance.
EMERGING PLAYERS
• Gala Games • The Sandbox • Metaverse Group’s Decentraland • Republic Realm • Somnium Space • Spotselfie’s Spotland • SuperWorld • Upland
