• Sales of metaverse real estate reached $500 million last year and could double this year, according to investors and analytics firms.
• Janine Yorio, CEO of Republic Realm, a metaverse real estate investment and consultancy organisation, remarked, "There are significant risks, but possibly big returns."
• The "Big Four" - Sandbox, Decentraland, Cryptovoxels, and Somnium — have dominated real estate sales thus far.

Sales of metaverse real estate reached $500 million last year and could treble this year, according to investors and analytics firms.

Real estate sales on the four major metaverse platforms totaled $501 million in 2021, according to MetaMetric Solutions.  ales in January exceeded $85 million, the metaverse data provider said.  Sales might reach over $1 billion in 2022 if sales continue at this rate.

Facebook's Oct. 28 statement that it was rebranding as Meta to focus on the metaverse spurred a recent surge in sales. R eal estate transactions increased over ninefold in November, to $133 million, according to MetaMetric. Although sales growth has slowed since then, January's total will still be more than ten times that of January 2021.

A report from BrandEssence Industry Research, from 2022 to 2028, the metaverse real estate market is predicted to increase at a compound annual rate of 31% each year.

Janine Yorio, CEO of Republic Realm, a metaverse real estate investment and consultancy organisation, remarked, "There are significant risks, but possibly big returns."

‘Big Four’ dominate the space

Sandbox, the largest metaverse real estate platform, saw Republic Realm pay a record $4.3 million for land. The corporation is building 100 islands named Fantasy Islands, each with its own villas and a boat and jet ski market. Ninety of the islands sold for $15,000 on the first day, and some are now on the market for more than $100,000.

The big dilemma for investors is how to allocate value and risk to an asset whose scarcity is fictitious and whose future is unknown. In the metaverse, over a dozen sites are now selling real estate, with new ones appearing on a weekly basis. The "Big Four" - Sandbox, Decentraland, Cryptovoxels, and Somnium — have dominated real estate sales thus far. On the four platforms, there are a total of 268,645 parcels of various sizes.

Sandbox dominates the market, with 62 percent of available land on the four platforms and three-quarters of all land purchases in 2022, according to a report from Republic Realm. In December, each of Sandbox's 166,464 plots sold for the ether equivalent of $12,700. The plots are 96 metres by 96 metres in size (106 yards by 106 yards).

Decentraland has 90,600 parcels, each measuring 16 metres by 16 metres and selling for $14,440 in ether.

Location may still matter

Companies, large brands, and investors are rushing to get in on the ground floor of the next digital Manhattan or Monaco, hoping to cash in on the ground floor of the new land boom. Rather than location, Yorio believes that land worth in the metaverse will be determined by what owners do with it, such as constructing a popular destination, museum, or feature.

"Because you can teleport anyplace," she explained, "location isn't as significant."

Others argue that, much as in the real world, location is key when it comes to real estate in the metaverse. Parcels near Snoop Dogg's planned cooperation and virtual world in Sandbox, as well as parcels close the Atari development, are fetching a premium.

Andrew Kiguel, the CEO of Tokens.com in Toronto, recently established a $16 million fund to invest in metaverse real estate, with nearly all of the funds going toward property acquisition and staffing. The corporation recently paid $2.4 million for land in Decentraland's fashion area, which it intends to use for fashion events and retail shops.

Kiguel said he is set to announce arrangements with two North American garment labels for the development of stores or experiences on his land. The real money in metaverse land, according to Kiguel, is in renting space and staging events for businesses trying to reach a younger digital audience. He claims he's in talks with accountancy firms, investment banks, podcasts, and mutual funds to establish a metaverse presence.

"We're even talking to firms about putting up digital billboards in virtual meeting rooms," he said.

Tokens.com bought 12 beachfront homes in Somnium that it believes will appreciate in value because to their scarcity and aesthetic appeal, according to Kiguel.

Others argue that metaverse land is simply the latest incarnation of the crypto ponzi scheme, luring unsuspecting investors into projects that may turn out to be worthless in the end. While real land is limited by nature — hence the idiom "They're not making any more of it" — virtual land can be easily manufactured using code. The number of new metaverse platforms that can be launched is limitless. Even large established platforms can expand their land holdings, like Sandbox did when it opted to raise the size of its parcels.

Many argue that earlier virtual land grabs, such as "Second Life," failed to deliver on their promises.

"For more than 20 years, metaverse land sales have been a pyramid scheme," stated Edward Castronova, a media professor at Indiana University. "For internet startups, the Metaverse is El Dorado." They pursue it into the woods, where they perish."

While older investors may be sceptical of metaverse land, Kiguel believes that younger customers and investors may immediately recognise its value.

"A lot of people have a hard time giving value to things that are digital, that you can't hold, that don't have weight," Kiguel explained. "It doesn't bother the younger generation." Blockchain technology, like NFTs, permits something to be digital, irreplaceable, and scarce. It's something you can handle, store, show, and sell."