Real Estate Metaverse Floods Of Interest, Is It Safe To Invest?
Writer: Ferry Sandi, CNBC Indonesia
Jakarta, CNBC Indonesia - Real estate sales in the metaverse reached US$ 500 million or equivalent to Rp. 7.17 trillion (exchange rate of Rp. 14,350/US$) last year and could double this year, according to data from investors and analytics firms.
MetaMetric Solutions said real estate sales across the four major metaverse platforms reached US$501 million in 2021. Meanwhile sales in January this year had reached US$85 million (Rp 1.22 trillion), the metaverse data provider said. With this rate, this year's sales are projected to reach nearly US$ 1 billion (Rp 14.35 trillion) this year.
The recent spike in sales was fueled by Facebook's announcement late last October that it was changing the company's name to Meta to focus on the metaverse. In November or right after the rebranding, real estate sales on the metaverse jumped nearly ninefold, to $133 million, according to data from MetaMetric. Sales growth has faded since then, but total January sales will still be more than 10 times their January 2021 level.
A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual growth rate (CAGR) of 31% per year from 2022 to 2028.
"There's a big risk, but the potential payoff is huge," said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.
Developers 'big four' dominate
Republic Realm paid a record $4.3 million for land on the largest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and associated boat and jet ski markets. Ninety islands sold in the first day for US$15,000 each and several are now listed for resale for over US$100,000.
For investors, the big question is how to assign value and risk to assets that are artificially scarce and whose futures are still empty.
More than a dozen platforms are now selling real estate in the metaverse, with new ones popping up almost every week. So far, real estate sales are concentrated in the "Big Four" - Sandbox, Decentraland, Cryptovoxels and Somnium.
There are a total of 268,645 fields across the four platforms, all of varying sizes.
Sandbox dominates the market, holding 62% of combined land across four platforms and three-quarters of all land sales by 2022, according to a report from Republic Realm. The sandbox has 166,464 fields, each measuring 96 meters by 96 meters, and each sold in Ether which cost the equivalent of US$ 12,700 in December.
Decentraland has 90,600 fields, which measure 16 meters by 16 meters, and are sold in Ether which costs the equivalent of US$ 14,440 each.
A rush of companies, big brands, and investors flooded the new artificial land, hoping to become a new digital city like Manhattan or Monaco. Yorio says the value of land in the metaverse will be determined by what the owner does with the property - such as designing popular attractions, museums or features - rather than location.
"You can teleport anywhere so location doesn't really matter," he said.
Yet other investors say that just like in the real world, location in the metaverse is everything in real estate. Prices for plots of land near the virtual world of Snoop Dogg's planned partnership in the Sandbox are at a premium, along with plots of land near the Atari development.
Andrew Kiguel, CEO of Toronto-based Tokens.com, recently raised $16 million to invest in metaverse real estate, nearly all of which has been earmarked for buying land and hiring staff. The company recently spent $2.4 million on land in the Decentraland fashion district, where it plans to host fashion events and retail stores.
Kiguel said he would announce deals with two North American clothing brands in which he leases space on his property to develop a storefront or experience. Kiguel says there are real commercial opportunities in the land of the metaverse – renting space and hosting events for companies looking to advertise to a younger digital audience. He says he has been in talks with accounting firms, investment banks, podcasters and mutual funds to build a presence in the metaverse.
Tokens.com purchased 12 waterfront properties on Somnium which they said would increase in value because of their rarity and visual appeal, Kiguel said.
However, others say metaverse land is just the latest iteration of a crypto ponzi scheme, luring unwitting investors into projects that may ultimately prove worthless. While real land has natural rarity - so the old adage of old ownership is not the same as virtual land which is so easy to code. There is no limit to the number of new metaverse platforms that can be launched. Even large existing platforms can create more land, as Sandbox did when it decided to increase the size of its plots.
"Metaverse land sales are generally pyramid schemes and have been going on for more than 20 years," said Edward Castronova, professor of media at Indiana University. "Metaverse is El Dorado for internet startups. They chased him into the woods and died."
While older investors may scoff at the land of the metaverse, Kiguel said, younger consumers and investors alike can see the appeal right away.
"The problem a lot of people have is that there's a generation that has a hard time associating values with things that are digital, that you can't hold onto and that don't hold weight," says Kiguel. "Young people don't mind. Like NFT, blockchain technology allows things to be digital, irreplaceable and rare. You can hold them, store them, display them and sell them."
https://www.cnbcindonesia.com/market/20220202003816-17-312127/real-estate-metaverse-banjir-peminat-aman-buat-investasi/1
Jakarta, CNBC Indonesia - Real estate sales in the metaverse reached US$ 500 million or equivalent to Rp. 7.17 trillion (exchange rate of Rp. 14,350/US$) last year and could double this year, according to data from investors and analytics firms.
MetaMetric Solutions said real estate sales across the four major metaverse platforms reached US$501 million in 2021. Meanwhile sales in January this year had reached US$85 million (Rp 1.22 trillion), the metaverse data provider said. With this rate, this year's sales are projected to reach nearly US$ 1 billion (Rp 14.35 trillion) this year.
The recent spike in sales was fueled by Facebook's announcement late last October that it was changing the company's name to Meta to focus on the metaverse. In November or right after the rebranding, real estate sales on the metaverse jumped nearly ninefold, to $133 million, according to data from MetaMetric. Sales growth has faded since then, but total January sales will still be more than 10 times their January 2021 level.
A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual growth rate (CAGR) of 31% per year from 2022 to 2028.
"There's a big risk, but the potential payoff is huge," said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.
Developers 'big four' dominate
Republic Realm paid a record $4.3 million for land on the largest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and associated boat and jet ski markets. Ninety islands sold in the first day for US$15,000 each and several are now listed for resale for over US$100,000.
For investors, the big question is how to assign value and risk to assets that are artificially scarce and whose futures are still empty.
More than a dozen platforms are now selling real estate in the metaverse, with new ones popping up almost every week. So far, real estate sales are concentrated in the "Big Four" - Sandbox, Decentraland, Cryptovoxels and Somnium.
There are a total of 268,645 fields across the four platforms, all of varying sizes.
Sandbox dominates the market, holding 62% of combined land across four platforms and three-quarters of all land sales by 2022, according to a report from Republic Realm. The sandbox has 166,464 fields, each measuring 96 meters by 96 meters, and each sold in Ether which cost the equivalent of US$ 12,700 in December.
Decentraland has 90,600 fields, which measure 16 meters by 16 meters, and are sold in Ether which costs the equivalent of US$ 14,440 each.
A rush of companies, big brands, and investors flooded the new artificial land, hoping to become a new digital city like Manhattan or Monaco. Yorio says the value of land in the metaverse will be determined by what the owner does with the property - such as designing popular attractions, museums or features - rather than location.
"You can teleport anywhere so location doesn't really matter," he said.
Yet other investors say that just like in the real world, location in the metaverse is everything in real estate. Prices for plots of land near the virtual world of Snoop Dogg's planned partnership in the Sandbox are at a premium, along with plots of land near the Atari development.
Andrew Kiguel, CEO of Toronto-based Tokens.com, recently raised $16 million to invest in metaverse real estate, nearly all of which has been earmarked for buying land and hiring staff. The company recently spent $2.4 million on land in the Decentraland fashion district, where it plans to host fashion events and retail stores.
Kiguel said he would announce deals with two North American clothing brands in which he leases space on his property to develop a storefront or experience. Kiguel says there are real commercial opportunities in the land of the metaverse – renting space and hosting events for companies looking to advertise to a younger digital audience. He says he has been in talks with accounting firms, investment banks, podcasters and mutual funds to build a presence in the metaverse.
Tokens.com purchased 12 waterfront properties on Somnium which they said would increase in value because of their rarity and visual appeal, Kiguel said.
However, others say metaverse land is just the latest iteration of a crypto ponzi scheme, luring unwitting investors into projects that may ultimately prove worthless. While real land has natural rarity - so the old adage of old ownership is not the same as virtual land which is so easy to code. There is no limit to the number of new metaverse platforms that can be launched. Even large existing platforms can create more land, as Sandbox did when it decided to increase the size of its plots.
"Metaverse land sales are generally pyramid schemes and have been going on for more than 20 years," said Edward Castronova, professor of media at Indiana University. "Metaverse is El Dorado for internet startups. They chased him into the woods and died."
While older investors may scoff at the land of the metaverse, Kiguel said, younger consumers and investors alike can see the appeal right away.
"The problem a lot of people have is that there's a generation that has a hard time associating values with things that are digital, that you can't hold onto and that don't hold weight," says Kiguel. "Young people don't mind. Like NFT, blockchain technology allows things to be digital, irreplaceable and rare. You can hold them, store them, display them and sell them."
https://www.cnbcindonesia.com/market/20220202003816-17-312127/real-estate-metaverse-banjir-peminat-aman-buat-investasi/1
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