Key Takeaways

• Virtual land or property can be used to create gaming experiences, sell products, host different events, and as a meeting place for exchanging work.
• The Sandbox is ranked top in virtual land transaction volumes, with 65,000 transactions totaling $350 million in 2021.
• Per CNBC, virtual real estate sales on the four major metaverse platforms reached $501 million in 2021.
• According to GlobeNewswire, the virtual real estate market is forecast to rise at a compound annual growth rate (CAGR) of 31.2% from 2022 to 2028.
• According to Business Insider, there is growing interest in virtual real estate, which holds the potential to generate $1 trillion a year in revenue.

Introduction

Current or Potential Uses of Virtual Lands or Properties

• Five current or potential uses of virtual lands or properties are detailed below.

• Virtual land or property can be used to create digital experiences, such as creating billboards for advertising to target visitors who may wander around and be attracted to various things.
• For example, Andrew Kiguel, CEO of Tokens.com, which recently spent $2.4 million on buying virtual land in Decentraland’s fashion district, says the company is "talking to companies about putting up digital billboards in virtual conference rooms where people can meet.”
• One can also use a virtual land or property to design a museum to display non-fungible tokens (NFTs). The museum can also be rented to individual artists to show their work.

 

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• People can use virtual land or property to sell products. For example, Reuters says in June 2021, a plot of virtual land in Decentraland sold for 1,295,000 MANA, worth $913,228 at the time. The plot buyers built a virtual shopping center to sell digital clothing.
•  Adidas acquired a plot of land in The Sandbox intending to fill it with exclusive branded content, experiences, and items for purchase.

• British property listing firm MoveStreets invested in a digital plot with the goal of using it in the future as a venue for viewing real-world houses online. According to Propertista, MoveStreets paid eight Ethereum (the equivalent of $26,700) for the land.

• Virtual real estate can be used to host different events. For example, Snoop Dogg bought virtual land on Sandbox and built a digital recreation of his real-life Diamond Bar, California mansion, where he plans to throw exclusive, members-only parties. He will also use the land to create a music venue for concerts.
• In February 2022, JP Morgan became the first bank to enter the metaverse, opening a lounge in Decentraland where people can attend events and explore.
• Andrew Kiguel, CEO of Tokens.com, recently used $2.4 million to buy land in the fashion district of Decentraland, where the company plans to host fashion events and retail shops. The company raised $16 million in funding to invest in virtual real estate and used most of it to buy land and hire staff.

•  Metaverse Group, a subsidiary of Tokens.com, bought virtual land (made of 116 smaller parcels, measuring 52.5 square feet each, 6,090 virtual square feet in size) for 618,000 MANA ($2,428,740) in the "Fashion Street" area of Decentraland's map. Tokens.com said the land would be used to host digital fashion events and sell virtual clothing for avatars.

 

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• Virtual land or properties are being purchased to be used as meeting places for exchanging work.
• For example, according to Business Chief, Portion, an NFT auction house and marketplace, recently bought a plot of virtual real estate for $1.2 million in Decentraland.

• Portion plans to use the land to create a place for artists and creators to congregate and exchange work.

• Virtual landowners can create gaming experiences on their land as done in the real world. The landowner can build any gaming experience and make it available to other gamers. The landowner can also create a free game or one where he or she charges players.
• Snoop Dogg's virtual land on Sandbox called Snoopverse will have digital recreation of his real-life Diamond Bar, California mansion. Residents who buy a plot in Snoopverse can create their own games and experiences.
• According to Forbes, ONE Sotheby’s and Sierra also bought over 40 acres of virtual real estate for future projects, including gaming endeavors.

Future Predictions for the Virtual Real Estate Industry

• Five future predictions for the virtual real estate industry, including using virtual land to decentralize office space, renting purchased property, and developing acquired property, are provided below.

• Per the Centre for Finance, Technology, and Entrepreneurship (CFTE), the virtual real estate industry will experience a situation where landowners rent out their virtual land for others to design their own games, host events, and use for other social activities.
• Andrew Kiguel, CEO of Tokens.com, stated in a CNBC article on 1 February 2022 that "he was about to announce deals with two North American apparel brands that were to rent space on his virtual property to develop digital storefronts or experiences."
• Kiguel added that the real opportunity in metaverse land is commercial, where landowners rent space and host events for companies, including accounting firms, mutual funds, investment banks, and podcasts, looking to advertise to a younger digital audience and to build a presence in the metaverse.

• The virtual real estate industry will experience a situation where landowners buy land to resell. For example, Business Insider says Republic Realm, which owns around 2,500 plots of digital land across 19 worlds, sometimes sits on vacant metaverse property and waits for it to appreciate before reselling it.
• Andrew Kiguel, CEO of Tokens.com, says his company acquired 12 waterfront properties in Somnium that it thinks will rise in value because of how scarce it is and because of visual appeal.

• According to Yahoo! Finance, virtual real estate is a new concept in the real estate market. It has led to the rise of the metaverse real estate agent.
• Metaverse real estate agents will fill the market gap as more people get interested in virtual real estate investment. Although few at the moment, metaverse real estate agents can be found on professional networks.
• Potential investors can rely on the agents to help them find the right metaverse space or property. A metaverse real estate agent can help the buyer, investor, or renter with valuable virtual space or property in a prime location.

• According to South China Morning Post, owners of virtual real estate will develop and flip virtual real estate plots. This strategy is especially essential for undervalued property based on location and other variables.
• For example, Tokens.com acquired a prime plot in Decentraland’s Fashion Street district, and hopes to develop it into a home for luxury brands’ virtual stores.

•  Hannah Jeong, head of valuation and advisory services at Colliers in Hong Kong, predicts that virtual real estate will allow organizations to further decentralize their office space in the commercial sector. Developers will buy virtual real estate land, build virtual office blocks, and sell or rent to occupiers.
• Keeping staff away from physical offices has been made popular by the COVID-19 pandemic. It is used to prevent physical interaction and the spread of the virus, optimize operational costs, and save staff the expense of daily commuting, especially in sprawling cities like Tokyo.
• Having virtual satellite offices in more affordable and accessible areas will cut costs and boost a company's ability to attract talent. In addition, virtual real estate offers companies another space for staff to meet, attend team building, and hold conferences in a tailor-made space.

Statistics Illustrating the Value of Virtual Real Estate

• According to CNBC, virtual real estate sales on the four major metaverse platforms reached $501 million in 2021.
• The Sandbox is the largest virtual world in terms of transaction volumes, with 65,000 transactions in virtual land totaling $350 million in 2021, with some estates selling for up to US$800,000. This is three times the amount on Decentraland, the second largest one with 21,000 transactions and $110 million.
• As per Business Insider, there is growing interest in virtual real estate, which holds the potential to generate $1 trillion a year in revenue.
•  CNBC says the virtual real estate sales in January 2022 topped $85 million, and the market is projected to grow to $1 billion in 2022.
• According to GlobeNewswire, the virtual real estate market is forecast to rise at a CAGR of 31.2% from 2022 to 2028.

 

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• Republic Realm bought land in The Sandbox metaverse for a record $4.3 million from Atari SA, marking the biggest metaverse property sale publicized to date. The record broke the one set by Metaverse Group when it bought a patch of virtual real estate in the online world Decentraland for $2.43 million. The $2.4 million purchase record was more than double the prior record of $913,000 just five months prior.
• Per GlobeNewswire, the "concept of metaverse real estate captured the hearts and minds of around 70% of Americans."
• According to Business Chief, virtual real estate currently has value as supply is limited. Just 268,645 parcels of land on the four leading platforms are up for grabs.
• Per the Centre for Finance, Technology, and Entrepreneurship, overall, the virtual real estate market represents $100 million per month, compared to the monthly NFT transactions of over $2 billion.
• Sandbox land prices are mainly determined by supply and demand in the secondary market and have grown substantially "from an average of $100 per land in January 2021 to $15,000 in December 2021, with a clear acceleration in quarter four of 2021 — when the company released Sandbox Alpha."
• According to Forbes, metaverse real estate prices rose 700% in 2021.
• Research carried out by Republic Realm found that since January 2021, “the average price of a parcel of land in the four major metaverses has increased by tenfold, from $1,265 to $12,684.” In addition, the average price of a plot of real estate is about $11,000 today.
• Republic Realm's research shows that just "around 25,000 individual crypto wallets own metaverse real estate.”
• According to Andrew Kiguel, CEO of Tokens.com, which invests in metaverse real estate and NFT-related digital assets, the prices of digital real estate have gone up 400% to 500% in the last few months. Part of the growth is attributed to Facebook's rebranding as Meta.

 

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Research Strategy