Buying parcels of virtual land has become all the rage among “crypto whales,” but if you plan on purchasing property in this strange new world, please exercise caution.
In 2021, real estate on metaverse platforms reached half a billion dollars. If current trends continue, sales this year could reach $1 billion.
All of this sounds a little surreal. Today, companies like Metaverse Group, a Toronto-based virtual real estate agency, are busy dropping millions of dollars on parcels of digitised land, developing them, and then leasing them out.
But leasing them out to whom, you might ask. People willing to take a gamble. Lorne Sugarman, the CEO of the Metaverse Group, compares the great “land grab” to “the early days of European settlement in the US.”
In the metaverse, real estate “will appreciate as more people and brands arrive.”
Will it, though? Is “digital gentrification” here to stay?
Perhaps it is. Nevertheless, Edward Castronova, a professor of media at Indiana University, certainly won’t be investing in virtual property.
Castronova, author of “Life is a Game,” has published numerous papers on the economies of synthetic worlds. Now, of course, some academics argue that the metaverse is not a synthetic world; in fact, it’s just as real as the “real” world, they protest.
Castranova told TRT World that the “current metaverse real estate boom is a speculation market,” and that booms “like this have been happening every four-five years since the early 2000s.”
Contrary to popular belief, there is “no content in most of these places. There is nothing that attracts eyeballs. And only eyeballs generate value.”
Castranova added, a “URL is a ticket to virtual land too, but at least it gives access to a genuine value stream.”
Although “short term speculative gains are possible,” Castranova has “never seen long-run value emerge from a virtual land product.”
Castranova, clearly no fan of the property rush occurring in the metaverse, believes that we are witnessing “the slow-moving decay of naively invested money, exactly as you would find with day traders and sports gamblers.” Others, though, are less sceptical.