A company recently bought a plot of land that doesn’t physically exist for $2.4 million worth of cryptocurrency. The real estate purchase was in Decentraland, an online environment where users can walk around, visit buildings, and meet people as avatars. “Monetizing virtual real estate is no different than a virtual car or virtual clothes,” Edward Mermelstein, a real estate attorney and advisor, told Lifewire in an email interview. “Creators of virtual worlds and the contents within are monetizing things that have not previously existed.”
Virtual Monopoly?
Virtual real estate is part of a growing interest in the metaverse, a virtual online environment. Facebook recently changed its name to Meta to reflect its focus on developing virtual reality products for this new online space. One area that’s hot right now is a type of metaverse that uses blockchain like Decentraland. Land and other assets in Decentraland are sold with non-fungible tokens (NFTs), an investment that uses blockchain technology. Cryptocurrency speculators are snapping up virtual land in blockchain environments. In Decentraland, the currency of choice is a cryptocurrency called MANA. A subsidiary of Tokens.com, called the Metaverse Group, bought a patch of real estate for 618,000 MANA, which was around $2,428,740 at the time. The real estate purchase was in the heart of the Fashion Street district within Decentraland. Metaverse Group said the real estate would be developed for fashion shows and commerce within the exploding digital fashion industry. The company also said it plans to establish partnerships with several existing fashion brands looking to connect with new audiences and expand their eCommerce offerings within the metaverse. “Fashion is the next massive area for growth in the metaverse,” Sam Hamilton, head of content at the Decentraland Foundation, said in a news release. “So it’s timely and very exciting that Metaverse Group has made such a decisive commitment with this land purchase in the heart of Decentraland’s fashion precinct.”
Stroll Down a Virtual Road
The future looks bright for virtual land grabs, some observers say. Decentraland said the recent acquisition by Metaverse Group was the most expensive purchase of a plot of virtual real estate on the platform. “In the short term, the Metaverse will most definitely give retail a boost,” Mermelstein said. “Event spaces, where large groups can meet, will also dominate this space in the near future, given the continued recurrence of COVID variants.” But purchasing virtual real estate is a lot different than buying a real house, Jeff Holzmann of RREAF Holdings, a real estate investment and development firm, told Lifewire in an email interview. “Historically, real estate was born out of a need for shelter, and creature comforts, location, and other ‘values’ were an add-on,” he said. “With virtual real estate, the formula has been redesigned. As our lives become more digital, our interactions more online, and our data more cloud-based, it is only natural that people want to “invest” their future in the digital realm.” If you’re going to buy virtual land, choose carefully, experts say. There’s an old saying in the real estate world that it’s all about location. “Think about owning real estate in the intersection where everyone wants to hang out, drive-by, and live next to,” Holzmann said, then cautioned that only time would tell if virtual real estate turns out to be a fad. “The status symbol of today may be worthless tomorrow,” he added. “At the end of any economic theory, there’s always someone that has to pay the bill.” However, if you believe in Mark Zuckerberg’s metaverse concept, then buying virtual street space could be a hit, he said. “As more of us shift more of our activities to digital-based platforms, such as Zoom meetings instead of in-person, and social networking using comments and posts instead of going to a bar, then the ’location’ is equally important,” Holzmann added. “Owning, renting, or even securing access to some prime real estate can end up being the difference between being in or out.”
