Sales of real estate in the metaverse topped $500 million last year and could double this year, according to investors and analytics firms.
Real estate sales on the four major metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions. Sales in January topped $85 million, the metaverse data provider said. It projects that at this pace sales could reach nearly $1 billion in 2022.
The recent surge in sales was sparked by Facebook’s Oct. 28 announcement that it was rebranding as Meta to focus on the metaverse. Real estate sales surged nearly ninefold, to $133 million, in November, according to MetaMetric. Sales growth has faded since then, yet January’s sales total will still be more than 10 times the January 2021 levels.
A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31% a year from 2022 to 2028.
“There are big risks, but potentially big rewards,” said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.
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Republic Realm paid a record $4.3 million for land in the largest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and a related market of boats and jet skis. Ninety of the islands sold on the first day for $15,000 each and some are now listed for resale for more than $100,000.
For investors, the big question is how to assign value and risk to an asset whose scarcity is artificial and whose future is a blank slate. Over a dozen platforms are now selling real estate in the metaverse, with new ones sprouting up almost weekly. So far, real estate sales have been concentrated on the “Big Four” — Sandbox, Decentraland, Cryptovoxels and Somnium. There are a total of 268,645 parcels on the four platforms, all of varying sizes.
Sandbox dominates the market, with 62% of the available land on the four platforms and three-quarters of all land sales in 2022, according to a report from Republic Realm. Sandbox’s 166,464 parcels each sold for the ether equivalent of $12,700 in December. The parcels are 96 meters by 96 meters (106 yards by 106 yards).
Decentraland has 90,600 parcels, which are 16 meters by 16 meters, and sold for the ether equivalent of $14,440 apiece.
A rush of companies, major brands and investors are pouring into the new land craze, hoping to get in on the ground floor of the next digital Manhattan or Monaco. Yorio said land value in the metaverse will be determined by what owners do with a property — like designing a popular attraction, museum or feature —rather than location.
“You can teleport anywhere so location isn’t as important,” she said.
Yet other investors say that just like in the real world, location in the metaverse is everything when it comes to real estate. Prices for parcels near Snoop Dogg’s planned…
Read More: Metaverse real estate sales top $500 million, MetaMetric Solutions