Would you pay a million dollars for a house you couldn’t move into? For buyers of virtual real estate, the answer is yes. Seemingly overnight, virtual real estate has become a booming industry. While it has been around for several years, virtual real estate has grown white hot since October, when Facebook announced that it would be rebranding as “Meta” and launching Horizon Worlds, its own virtual reality world.
So, for those who are scratching their heads at this, here’s a quick primer on what virtual real estate actually is. It’s defined as the virtual land or buildings that can be bought and sold in online digital games or other types of virtual assets that have a specified location, web address, in-app address or id, or geo-reference. Its value is dependent upon being a place for the creation, sale, and purchase of NFTs. Currently, people can access virtual worlds through a normal computer screen, but most virtual reality companies are planning on expanding to fully immersive 360-degree worlds which require virtual reality goggles. Plots of virtual land can range in price from a few thousand dollars up to the millions.
The spaces we see in virtual real estate are created with the same technology used to create the landscapes in games such as Fortnite and Minecraft. While the immense popularity of the gaming industry and its 2.5 billion users has fueled demand, virtual real estate has other applications beyond gaming. Virtual real estate is a potent lure for advertisers, brands, and household-name celebrities. Justin Bieber and Ariana Grande are among the recording artists who have recently performed as their own avatars. Even Snoop Dogg is developing his own Snoopverse, where someone recently bought a plot of land for $500,000.
While plots of virtual real estate can be purchased for a few thousand dollars, they can cost millions of dollars too. One reason that virtual real estate can be so expensive is similar to actual real-world real estate: location, location, location. If your real estate is next door to a popular celebrity or any other type of high-profile real estate, your ability to sell products and engage with others is much greater. Also, virtual worlds have a built-in scarcity, so if a virtual world is highly sought after, the cost of land will rise.
While massive financial gains are possible with virtual real estate, experts caution that it’s an unpredictable asset, so don’t invest any money that you can’t afford to lose. Despite that, there’s nothing to indicate that virtual real estate is a passing fad. Instead, experts are seeing signs that this will be the next iteration of social media, and is poised to become a trillion dollar industry.
