Virtual land is already selling for millions in the metaverse! The metaverse has been in the news a lot lately, especially since Facebook changed its name to Meta. So I thought it might be interesting to do a different video on real estate investment in the metaverse!
Real estate in the metaverse is exploding!
And I must admit that I'm not sure we'll ever be able to experience the simple pleasures of life, whether it's interacting with real people, tasting good local food, having real perceptions, looking at the beautiful colonial architecture of St. Louis.
But as I was also a fan of Roller Coster Tycoon when I was younger, I thought it would be interesting to take a closer look at real estate in the metaverse!
And we'll see that there can still be concrete uses!
First of all, what is a metaverse? Or rather the metaverse, because there are several of them!
It is a virtual universe, often designed as a video game. This term dates back to the 1970s but has developed strongly in recent years, notably thanks to augmented reality and 3D glasses, but especially thanks to blockchain technology.
And the most common example one can think of is the film directed by Steven Spielberg in 2018 "Ready Player One".
Where people people find solace in the OASIS because it's the collapse on earth in 2045!
So while of course I hope that's not what happens to us, I think whatever happens is the direction we're heading in one way or another.
How soon remains to be seen...!
But what practical uses for the metaverse?
And if a priori, unlike the real world, virtual universes can be infinite, as in traditional real estate, location (as I remind you in my book) is important. For example, major brands are already starting to have projects in the metaverse, to have a virtual presence.
We can therefore develop villas and other real estate complexes as in real life to host events.
It's a place for artists, designers, DJs and brands to promote themselves in a different way and to reach an audience that might not have been able to travel physically.
Roller Coster Tycoon, Snoop Dog, the walking dead or Richie Hawtwin are already developing their presence in this universe.
In my opinion, the clear advantages of the metaverse are to be able to create 3D experiences that are difficult to achieve in the real world.
It's a way to connect socially that's more fun than traditional social networks in an immersive experience, a 3D social network where everyone is an avatar.
We can also imagine instead of doing our meetings via Zoom or Google meet, doing them in a virtual room or coworking in the metaverse. And this can be practical in some cases, as with this Covid pandemic for example. Even the island of Barbados has announced its intention to establish an embassy in the metaverse.
In short, these are autonomous virtual cities, games and economies that simulate interactions in the real world and thus make the link between the physical world as we know it and the digital world where the only limit is the imaginary.
For example, imagine you live in the depths of Costa Rica and you want to experience a Jean-Michel Jarre concert in Notre Dame de Paris. Well, instead of taking a plane you just need an internet connection!
Jean Michel Jarre video
Well, this virtual show was not realized in the metaverse, but in my opinion it's quite something you can imagine in the metaverse!
The 4 main ones are The Sandbox , Decentraland, CryptoVoxels and Somnium Space and there are many more, you can see the list on Open Sea. Last week alone, more than 100 million dollars were spent on these metavers!
They all work on the blockchain and via NFTs (non-fungible tokens), I talk about them in one of my previous videos but tell me in the comments if you want me to make a more detailed video.
The best known is
Sandbox: founded by 2 Frenchmen, it has 166 000 limited lands, which creates a scarcity effect, the tokens are SAND. More than 86 million dollars of transactions were made last week. When you look on their map and on OpenSea, at the time I'm shooting this video, it's hard to find 1x1 land (the equivalent of 96m by 96m) for less than 3-4 ETH (which is more than 10 000€). And there are also 3x3 and 6x6 plots.
Then there is Decentraland: The number of lands in Decentraland is capped at 90,601 lands that can be bought in MANA tokens. Each land parcel measures 16 metres by 16 metres and is represented by an NFT.
Fashion Street Estate in Decentraland, the equivalent of the Champs Élysées, has just been sold for 618,000 MANA, or over 2 million dollars.
In this metaverse, again users can log in to play games, earn MANA, buy LAND or collectibles, vote on economic governance or create NFTs.
On Axie Infinity, another metaverse, a single plot of virtual land sold for 550 Ethereum (ETH) or over $2 million!
The giant BlackRock estimates the size of the metaverse market at over $5000 billion by 2030.
They have just launched their newest ETF based on patent analysis.
What is the objective?
To unearth and identify the companies that will be the pillars of the metaverse world of tomorrow.
iShares Metaverse Ucits (the new ETF) is now available on Euronext.
Investing in the metaverse is a really interesting concept because traditional real estate is valued in large part because of the proximity of services and shops, and the time it takes to move (the catchment area). In addition, there is no longer the problem of potential water leaks!
It is therefore possible to develop a project, a building, on this land and then rent it out to artists who want to create an experience in the metaverse. There are for example requests for renting on the decentraland discord. You can organise events and charge those who want to attend!
However, the value of all these virtual real estate investments will depend on the number of visitors to the platforms concerned. For the time being, these virtual worlds are not yet widely used as such.
Moreover, these lands, being NFTs, are less liquid than the underlying tokens like SAND or MANA.
So it's clearly a speculative investment at the moment because it's still early days, and it's hard to know which metaverse will win and where. Imagine that you buy a property in a neighbourhood that is supposed to be in the making because a metro station is expected to be built in the near future but the construction is cancelled. So, as with any investment, there are studies and analyses to be done before you take the plunge!
There will clearly be opportunities for growth, and some analysts estimate that revenues from virtual game worlds could reach 400 billion dollars in 2025, compared to 180 billion dollars in 2020.
So even though it may seem crazy to spend so much on virtual land, especially when you see that there are real villages where you can have a real home for 1€ in Italy or in some countries, I still think it could be interesting to diversify your assets by allocating about 5% of your portfolio to it.
You have to remember that it's a rental investment and not count on the money invested. That way, if the plots increase in value in the future, it will boost your portfolio and conversely, if they lose value, you won't be too affected.
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