Virtual real estate sold for a record $2.4 million

A patch of virtual real estate has been sold for a record $2.4 million worth of cryptocurrency to buyer, Tokens.com - a crypto investor, reported Reuters.

The plot of land is located in the online world, or metaverse, Decentraland where users can not only visit buildings, explore the environment, and meet people but they can also buy land. 

The Metaverse Group, a subsidiary of Tokens.com, bought a patch of real estate for 618 000 MANA, the currency used in Decentraland, on Monday - which at the time was worth $2 428 740. 

The plot of land is in the “Fashion Street” area of Decentraland’s map and is made of 116 smaller parcels, measuring 52.5 square feet each, making the land 6,090 virtual square feet in size.

According to Tokens.com they will use it to host digital fashion events and sell virtual clothing for avatars.

Andrew Kiguel, CEO of Tokens.com, said the assets would complement the real estate already held by Metaverse Group

The technology behind Decentraland relies on blockchain, which allows land and other items to be sold via non-fungible tokens (NFTs).

Virtual land as an NFT

According to experts virtual real estate is booming. Recently PwC bought virtual land NFT in the Sandbox's metaverse for an undisclosed amount, while Snoop Dogg’s virtual world in Sandbox also sold a plot of land to one user for $450 000.

Generally, transactions are done using either cryptocurrency or NFT. NFTs are unique digital assets that are primarily digital art (such as videos, images, music, or 3D objects) but it can also be virtual real estate. For example on OpenSea, a platform where NFTs are bought and traded, users can also buy virtual land or houses.

Supply however is limited to ensure that there is value to the virtual real estate.

For example, in July 2021, Republic Realm bought a plot of land in Decentraland for almost $1 million, and now Metaverse Group has broken that record with their purchase - however, the plot of land is smaller than the Republic Realm purchase. The Republic Realm plot of land is 259 parcels while the Metaverse Group’s is only 116 parcels.

One Sotheby's is taking a different approach - they are using the metaverse to sell a real-world home and its Sandbox counterpart. The 'MetaReal' Mansion which is being built in Miami, set with a completion date in late 2022, will be sold alongside its metaverse counterpart using Voxel Technologies and general contractor and NFT collector Gabe Sierra as partners. This is the first time something like this has been done.

The real-world home will be set on a one-acre plot in one of the most prestigious neighbourhoods in the city, spanning over 11 000 square feet and boasting seven bedrooms and nine bathrooms. The virtual property will exactly mirror this and Voxel Architects is helping to create it. The ‘MetaReal’ Mansion will be auctioned off in 2022 at a yet-to-be disclosed reserve price

But what does this mean?

For many, the question on what to do with the virtual land once you have bought it remains, what value does it add to your financial portfolio?

For many like the Metaverse Group, they intend to use the space to sell products and host events which turns a profit for them. For others, it could become the next property development frontier where developers can buy parcels of land, build homes and communities and sell those to buyers at an increased price.

Some are predicting that the metaverse will become a fully functioning economy in the next couple of years. How accurate this prediction is, depends on whether the metaverse becomes so interwoven with our daily lives that we accept it as a part of how things work. Before the pandemic, the idea of hosting virtual parties and livestreaming weddings and funerals seemed foreign but over the last two years there has been an increase of virtual events, hosted not by companies or corporates, but by neighbours and friends that couldn't meet in person to mark milestones. Will this be true for the metaverse?

While values are increasing the question of whether this is the next big boom or bubble remains just that. Investment is speculative at best