Is Virtual Real Estate in the Metaverse a Good Investment?

Metaverse platforms intentionally limit the size of their digital worlds, so they can parcel out pieces of land to be bought and sold on virtual real estate marketplaces.

Across the top 4 metaverse platforms — Sandbox, Decentraland, Cryptovoxels, and Somnium — there were over $500 million worth of virtual real estate sales just last year. Virtual real estate got a boost during the pandemic, when people started spending more time online, and then another one when Facebook changed its name to Meta.

Virtual real estate is a highly speculative investment.

Still, there are some basic principles to evaluating virtual real estate.

• Building something interactive on the land can raise a property’s value because it allows you to charge for admission or lease out space.
• Heavily-trafficked areas are also going to be worth more. The more avatars that visit a property, the more you can make from foot traffic or selling ad space.
• Being close to other valuable properties can make yours more valuable.
• The value of virtual real estate depends entirely on how much other people value it — just like money.