According to Mckinsey, the market cap of the metaverse will be over $ 5 Trillion by 2030. Well, this seems to be the future of the internet. This primer breaks down all you need to know about investing in real estate on the metaverse.
What is the metaverse
The metaverse is described as a virtual world where you can interact, build a home, play games, host events and even attend meeting s and concerts. Think of anything you can do in the real world, and now take that online- except eating, at least not at the moment 😊. It is mostly powered on the blockchain and leverages web 3.0 technologies such NFTs and Cryptocurrencies.
The concept of having a metaverse is not entirely new as gaming companies have been trying to create them on their platforms. The recent foray of blockchain, its popularity and widespread adoption has given impetus to the metaverse, enabling gaming developers to create 3 D models of the world that replicate day to day real-life activities. Users can visit the metaverse through their laptops/ phones or they can access it through virtual reality headsets.
Buying Land on the Metaverse
These are popular sites where you can buy parcels of land on the metaverse:
- Sandbox- native token is SAND
- Decentraland- native token is MANA
- Upland- native token is UPX
- Somnium Space- native toke is CUBE
- Axie Infinity- native token is AXS
- Illuvium- native token is ILV
- Roblox-native token is Robux
Parcels of land on the metaverse are usually limited and scarce. For example, on Sandbox metaverse, there is a total of 166, 464 parcels of land. This means that once all these have been sold, no new land can be developed on this metaverse. There are over 12000 land owners on the Sandbox Metaverse and this number keeps increasing. These parcels are big in size and are measured in Voxels. To put it into perspective, one parcel of land has a length 96 meters, width of 96 meters and height of 128 meters. One meter is equivalent to 32 voxels.
When purchasing land, visit the metaverse where you would like to purchase the land from and sign up. Once logged in, go to the market place and check various offering available. You need to have the native currency of the metaverse on which you will buy your land from. For example, if you are buying your land on Decentraland, you will need MENA tokens. If you are buying it from Sandbox, you need SAND tokens. The value of these tokens fluctuates with market forces and are also affected by the price of ETH. You can check the prices of these token on coinmarket cap. In some instances, you can purchase land from these metaverses on NFT marketplaces such Opensea. To get an experience of parcels on Opensea, get the coordinates of the land and insert them on the metaverse you are buying from; it should give you details of the land and a general feel of the neighborhood. Before making any purchase, check and see how the parcel of land looks like by clicking on it and experience the area surrounding it.
Once the purchase has been made, you can build whatever you want on that piece of land. These lands are basically virtual grounds from which players can build their own experience and unlock their creative potential. When we talk about anything, we mean anything. This can range from property, wearables, games, parties, events, meeting and even a manufacturing plant. Metaverses are basically hinged on User generated Content- the users create the kind of world they would want and interact from there. On the metaverse, all assets created are NFTs- they are unique, represent ownership and can be traded.
The Value of Land
Value of land on the Metaverses is determined by the following factors:
- Location/ Popularity
What’s the population and traffic that frequents that location? Are there events that are hosted within your neighborhood? The higher the traffic, the higher the value of that parcel. As a buyer, you can also check the map and see who owns the parcels of land that surround your neighborhood. Land that is surrounded by big brands or notable names may be of higher value.
Land sizes that are large tend to gain value over time as they can host multiple businesses and can be rented out to large enterprises. Large piece of land means developers have enough room to create more experiences within that parcel, ultimately leading to more traffic.
In Sandbox metaverse, there’s a limited number of land that can be developed. This scarcity tends to push the value of the land up since once all land has been sold on that metaverse then no more land can be developed.
Price of Land
The price of land depends on its value and the metaverse you will be buying the land from. This can range from a few thousand dollars to millions of dollars. Land is usually priced in the native token of the host Metaverse. You can check the price of each land on the market place section of your preferred metaverse.
Uses of land/ Making Money from your Parcels
- Buy and wait
You can buy your piece of land as a speculative asset and simply wait for its price to appreciate before selling it.
- Build business and profit from it
You can basically build any business you want on your piece of land. Every asset you build is considered an NFT. Most metaverse platforms offer user friendly, no- code tools that gamers can use to build assets on their parcels of land. Land owners can create businesses that sell NFTs, assortments, in game ammunition and even avatars.
- Rent it out
Land owners can also rent out their parcels of land to other buyers and earn rental income from the land.
- Build a home
You can also build a home and customize it to your liking, invite friends over, host parties and meetings from this home.
Alternative strategies for Investing In Metaverse Real Estate
Investors who consider buying land directly from the metaverse as being too tedious still have a chance of benefiting from this tech trend. Here are some alternative land buying strategies to consider:
- Metaverse Reits
Reits is short for real Estate Investment Trust. It is basically a fund that is managed by investment professionals who will invest on metaverse real estate on your behalf. As an investor, you will get annual returns from our investment based in the performance of your fund manager.
- Metaverse Index
This is a basket of tokens that are related to the metaverse. If you invest in them, you get access to an assortment of tokens in the metaverse, thus, you are not exposed to the fluctuations from one token.
- Invest in Metaverse Platform tokens
You can also invest in the native tokens of different Metaverse platforms. Seeing that this is still a novel technology, investors stand a chance to profit from the upside potential of these tokens as the market grows.
- Invest in Metaverse Stocks/ Tech companies
Companies such as Facebook ( Meta) have expressed their desire to pivot into the metaverse. Investors can take advantage of this by investing in their stocks early enough.
From all these, we see that there exists lots of opportunities to invest in land in the metaverse. Savvy investors can take advantage of this and invest in land on the metaverse.
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