Is Virtual Real Estate A Good Investment?
- June 29, 2022
The real estate industry has recorded tremendous growth over the last few years due to its resilience to a myriad of market forces. As new technological advancements continue to shape the digital world, the real estate sector has also not been left behind. Today, real estate investors are shifting from the “real and tangible” real estate portfolio to a less tangible virtual real estate portfolio. This virtual concept involves simulation of the real world by creating a virtual reality of digitally owned real estate properties in virtual worlds. The Metaverse is where all things web3 will live . The Metaverse is not one place but an ecosystem of endless possibilities in the digital realm that can and will be interoperable with IRL (in real life) people, objects and assets just to name a few. Everything will be digitized.
What is Virtual Real Estate in the Metaverse?
Virtual real estate refers to parcels of land in virtual worlds. The land is traded the same way a piece of land is traded in the real world. Celebrities such as Snoop Dogg are some of the pioneer owners of virtual land in different virtual worlds. Digital land or real estate exists on a digital platform where people can easily interact and communicate as avatars in a 3D-rendered community style. Or it can be augmented reality based here on earth with digital attributes added and overlayed into this reality we live in, as an example.
Can you invest in the digital land?
The idea of investing in virtual real estate has gained attraction from many investors and renowned corporations. Since Facebook announced it’s going to change its name to Meta and demonstrated interest in investing in virtual reality space, the demand for virtual land has skyrocketed.
Just like in the real world, virtual real estate parcels are limited, but only based on how much digital land is built in any one virtual world. The number of virtual worlds that can be built and developed is limitless. When an investor buys digital land, they are given an opportunity to add value by carrying out income-generating activities such as leasing, building, or creative interactive venues that can be hired by brands to host events.
Each parcel of land is secured through a unique Non-fungible token (NFT). This serves as a unique digital deed that proves ownership of that particular virtual parcel of land and grants the investor power to resell that digital real estate property to another investor. All the transactions in that virtual real estate property are recorded in that digital NFT deed and recorded on a blockchain.
Which virtual platforms are the best to invest in?
Many platforms offer virtual real estate investment opportunities globally. The most popular ones are;
The Sandbox, Decentraland, Axie Infinity
How do we buy digital land?
The process of buying land in is simple. Most platforms are easy to access using a computer and you can review the various virtual real estate plots available for sale before you can make a buying decision. If you are convinced to make a purchase, you need to follow the below steps;
- Cheap ideas
If we’re talking about folks who don’t know much about real estate investing but have some cheap ideas to share with others, here, we’re talking about people who don’t know how to do things properly. This is also not a good point for everyone because they give incorrect information to others as well as to themselves, and so they struggle to get things done.
a) Get a digital wallet – this wallet will be on a crypto exchange and a second wallet will be a non custodial wallet meaning you will have full control of your funds. When you get your own non-custodial wallet you will be given a seed phrase. This is the “virtual key” to unlock your account anywhere in the world. This is not something you want to ever share or lose.!!!
Unlike the tangible physical real estate properties where you buy using real-world currencies such as the real dollar, you will need cryptocurrency to purchase virtual real estate. Typical platforms to complete these transaction include a market place called OpenSea, most popular for now. Also the non custodial wallet most used is Metamask. Options, fees and access will vary from one platform to another. Your due diligence and research is a must.
If you are buying on Decentraland, you will need to buy cryptocurrency known as MANA. If it is the Sandbox, the currency you need to buy is SAND. Once you purchase your preferred cryptocurrency on an exchange you will need to transfer it to a non custodial wallet that can communicate with the onchain directions needed to but on an exchange.
b) Select your preferred
When buying your digital real estate property, you have the option of choosing to buy directly from your preferred platform such as Decentraland or Sandbox. While the mint is still live. Alternatively, you can opt to buy your virtual real estate plots through other third-party platforms such as NonFungible.com and OpenSea.
For first-time virtual reality real estate investors, buying through a third-party platform is ideal as it gives you the option of buying multiple virtual real estate plots from different platforms in one centralized location.
c) Make your offer and close
The process of making an offer on virtual real estate properties is quite simple compared to real-world tangible real estate. Once you log in to your preferred platform, you will review the various virtual plots that are available for sale. Once you settle on a particular virtual plot that meets your specifications, you will just click the buy now button and complete the purchase.
Once the transaction is complete, the same is recorded in your digital wallet where an NFT title file is generated to give you exclusive ownership of the virtual real estate plot. Thanks his transaction is recorded onchain into perpetuity.
Would you buy a house in a virtual world?
Investing in virtual real estate properties is only worth the risk if the demand for virtual reality technology continues to grow. By the end of 2022, it’s estimated that the value of Metaverse real estate sales could rise to over $1billion. Therefore, buying a virtual real estate plot is a good investment as the demand is still high. Platforms give users a virtual reality space where they can connect, play games, trade, and socialize.
Metaverse real estate is still a speculative investment?
To a large extent, virtual real estate investment in the Metaverse platform is a highly speculative investment as the value of the investment increase with the demand for the virtual reality technology used. By purchasing digital land the investors can also monetize the asset class by charging fees for use by others, building on them, or trading their NFTs.
However, compared to the real estate investment in the real world where risks are minimal, investing in virtual real estate plots in Metaverse comes with high risk levels as the whole digital real estate investment idea is highly speculative. Virtual real estate is a good investment for investors who are risk averse and highly knowledgeable in the space.
Before you consider any purchase you want to review the team behind the project, join and communicate in the discord server, visit the website, understand the goal and mission of the team, understand what they have accomplished to date, how are they funded. What is their track record, do they start and finish projects with success or do they start and never finish works!!! Please be aware that scams are plentiful in this realm so please proceed into the digital age with cautious optimism and never take or accept anything for free unless you know what you are doing.
