What do American rap superstar Snoop Dogg and the consulting firm Big Four PwC have in common?
They both own lands in the metaverse. While Snoop Dogg owns 122 plots of land, 67 premium plots of land and 3 estates, consulting giant PwC Hong Kong recently doled out US$10,000 in virtual land.
They both purchased land on The Sandbox platform, one of the four major virtual worlds – Sandbox, Decentraland, Cryptovoxels, Somnium – that have cornered the metaverse real estate market,
These platforms allow users to purchase land on which they can browse, build and monetize. Plots are purchased as NFTs, making them unique, tradable digital assets, with ownership recorded on a Blockchain.
And to ensure the value of digital real estate, supply is limited – with a total of 268,645 plots of land across these four major platforms up for grabs.
While Sandbox, the largest virtual world for real estate purchases, has 166,464 plots, or 62% of the total, Decentraland has 90,000.
In 2021, Sandbox made 65,000 operations totaling US$2,350 million, with some properties selling for up to US$800,000, while Decentraland completed 21,000 transactions totaling US$800,000.
Buying virtual real estate is big business
As you can see from the numbers, buying real estate in the metaverse is big business, and it’s getting bigger and bigger.
In 2021, the market reached $500 million, according to CNBC, with the value of virtual land continuing to climb.
In just six months in 2021, the average price of virtual land has doubled to $12,000, a JP Morgan report reveals. And in November, a digital plot of land in Decentraland sold for a record $2.43 million, more than double the previous record for virtual real estate ($913,000) five months earlier.
Going forward, the market is expected to double to reach US$1 billion in 2022, according to MetaMetric Solutions, and grow to 31% CAGR from 2022 to 2028.
Why do people, companies, countries buy virtual land?
So why the virtual land grab rush? Investors, celebrities, corporations and even countries are taking over virtual plots to create their own digital experiences – whether for gaming purposes, to host parties, concerts or events, or to provide space to explore for customers.
Snoop Dogg has built a digital recreation of his real-life Diamond Bar, California mansion where he will host exclusive members-only parties, according to plans from the Sandbox website. There will also be a music room for concerts – and residents, who buy land from Snoopverse, will be able to create their own games and experiences. A resident just spent $450,000 on land next to Snoop Dogg’s house. Just like in the real world, it’s all about location.
Barbados became the first sovereign state to develop its own embassy within the Metaverse, after buying land from Decentraland, while JP Morgan recently became the first bank to land land, opening a bank branch in Decentraland called Onyx Lounge. .
“The Metaverse is the next iteration of social media,” Andrew Kiguel, CEO of investment firm Metaverse Tokens.com, told CNBC. “You can go to a carnival, you can go to a music concert, you can go to a museum.”
You can also go visit your favorite brands, as more companies buy digital land to create experiences, giving customers an additional touchpoint. Many are using the space to host events, hold conferences, launch products or simply gather clients, while others are still unclear about their intentions.
Gambling, property and auction houses
As natural landowners in the virtual space, many gaming companies, real estate companies and auction houses have already participated in land grabbing. Video game publisher Atari has spent $4.3 million to purchase land in The Sandbox, where visitors can play Atari-themed games and attend branded events.
Describing the rush to buy land in the Metaverse as the “first digital gentrification,” auction house and marketplace NFT Portion recently purchased $1.2 million in virtual land from Decentraland. The goal? Create a place where artists and creators can gather and exchange their work.
And UK property listing firm MoveStreets has also invested in a digital pitch with the aim of one day using it as a place to view real-world homes online.
Consumer brands – fashion, sports, electronics, food
Consumer product brands are also natural providers of digital goods, given the ability to create branded experiences and sell non-fungible tokens.
Sporting goods powerhouse Adidas, which purchased land in The Sandbox with the aim of filling it with exclusive branded content, experiences and buyables, describes the Metaverse as “a natural place for Adidas Enter Originals – a wild world where the possibilities are truly limitless and where everyone can express and be rewarded for their most original ideas”.
It’s a similar story at electronics giant Samsung, which launched its metaverse location, Samsung 837X, in Decentraland earlier this year. Designed to mirror its Samsung 837 flagship physical store in New York, the virtual space offers an immersive experience with NFTs, games, product presentations and live performances, where customers can experience first-hand all kinds of products and launch events can be organized.
Financial institutions, accounting, consulting
However, it is less clear why and how financial institutions, banks and accounting firms might participate in land grabbing.
That said, some are already doing virtual land grabs to capture the potential, with PwC Hong Kong and JP Morgan both taking a punt on property in the metaverse.
In a recently published article reportJP Morgan said it was keen to explore the many “exciting opportunities” the metaverse presents for customers and brands, and that the risk “of being left behind is worth the extra investment needed to get started”.
While William Gee, PwC’s partner in Hong Kong, told the Wall Street Journal that “the metaverse provides new opportunities for organizations to create value through innovative business models, as well as introducing new ways to s ‘engage with their customers and their communities’.
PwC Hong Kong bought land in The Sandbox in November, and this month JP Morgan became the first bank to enter the metaverse, opening a lounge in Decentraland where people can interact, attend events and explore.
CFTE Real Estate in the Metaverse report
JP Morgan Opportunities in Metaverse Report
