Market-savvy content writer approaching 4 years of experience. My second passion is SEO.
2020 has been quite challenging for a lot of people. When the year started, the COVID-19 pandemic hit, and the majority of nations went into lockdown, which caused the global economy to plunge. A number of important industries have been negatively affected, and one of the sectors that suffered the most was the real estate space.
A new report from the Urban Land Institute and PwC dubbed “Emerging Trends in Real Estate 2021” states that the COVID-19 is not done with the real estate market. In fact, it is expected that the coronavirus will cause some major changes in the way property is used, bought, and sold.
Now, when we look at the virtual real estate market, we see a completely opposite trend. Back in February 2020, crypto enthusiasts and the gaming community had collectively invested close to $1 million worth of fiat money into virtual land in just one week. At that time, the three largest virtual world games, The Sandbox, Cryptovoxels, and Decentraland saw a total trading volume of their digital tokens surpass $940,000 USD, according to Nonfungible.
The cause of such popularity and value increase was reportedly promoted by a big virtual sale of land that took place in The Sandbox. At that time, the blockchain-fueled virtual world was selling around 7% of its land in its second land sale. In one week, the project saw $168,000 in land sales and registered 6,000 users.
With things changing rapidly in the world, is it possible we might see virtual real estate take over the “real” real estate? Let’s discuss this.
Virtual Land vs Real Estate: What Is the Difference?
Real estate refers to the land, property, buildings, and air rights that are located above the land, as well as it includes the underground rights below the land. Real estate is a term that involves physical, tangible property. In other words, real estate refers to what you can see and touch. You can relax in your apartment, invest in the real estate market seeking profits, or rent your grandma’s old cottage.
Virtual lands are the real estate of the virtual world – they represent the three-dimensional virtual world space. When users buy a piece of virtual land, they get a right to use the property however they please. We’ll touch on this topic a bit later.
While the functions of virtual real estate are pretty much the same, there is one key distinction. Yes, you guessed it – it is not real, you can’t see or touch it. However, this does not mean you can’t enjoy it or that it does not have value. Quite the opposite – at the moment, virtual lands are rising in value and people are ready to pay big bucks for it.
When it comes to pricing in the virtual estate market, it is still far away from that of the real world estate market. While the prices differ from country to country, if we take the US housing marketing as an example, the average price for a square foot to buy a home in New York’s Manhattan stands at $1,376. In contrast, a 1,100 square foot plot in the virtual world can be sold for $200,000 on Decentraland.
Just like with any blockchain-fueled exchange, the value of the asset is determined by limited supply and increased demand. With virtual lands, there is a set amount of land produced – and it is usually gone before you know it.
In fact, we are seeing a positive trend in the valuation of virtual lands. Just like that, a lot of big players in the industry are pouring their money into the digital land. For instance, one of the leading cryptocurrency exchanges, Binance, announced that it has purchased 4,012 LAND NFTs in The Sandbox.
After The Sandbox metaverse saw an increase in demand for its LAND, the prices started climbing. In one of his latest Tweets, Sebastien Borget, the co-founder of the project, mentioned that The Sandbox ecosystem saw the sale of two estates at 210 ETH ~ $76,931 USD (28x original price of $1,400 each).
What is the Use of Virtual Land?
Real estate uses in the real world are obvious and easily understandable for the majority of us. We use real lands to build property, we live in apartments, we invest in the real estate market and we use the property for retail purposes.
But when it comes to virtual land use, many people are confused – what am I going to do with it?
Well, first of all, one of the key factors that attract thousands of investors to the virtual real estate market is the chance to “flip” the land. In other words, they are purchasing virtual land when it is still priced relatively low and then adopt a “wait-and-see” approach, until the price of that land rises to the point where they’d want to sell it.
In addition, just like with real property, users can sell and rent their virtual property. They can build things on top of their lands, such as shops and malls, or run business enterprises. In fact, many claim that the virtual reality world is just as “real” as our world – thanks to great technologies and amazing graphics these virtual worlds employ, people are able to immerse themselves into a completely different dimension.
Additionally, the virtual reality world allows users not just to be consumers, but also to be creators. Users can produce their own unique creations in these virtual worlds and sell them. The new vertical of the economy is potentially opening up in virtual reality and it attracts a lot of gaming enthusiasts and innovative entrepreneurs.
How To Get a Piece Of Virtual Land?
Now, when everyone is familiar with the process of purchasing real estate in the real world, how does one get his hands on a piece of property in the virtual world?
While the exact processes of purchasing a virtual land vary from platform to platform, the overall steps are usually similar. Let’s take a look at the example of how one would get a LAND on The Sandbox metaverse.
A LAND is a piece of the digital estate in The Sandbox virtual ecosystem that allows users to build various experiences on top of it. For instance, players can populate it with Assets and Games. A LAND is a non-fungible token built on the Ethereum blockchain (ERC-721).
The first-ever presale of LAND on The Sandbox metaverse took place back in December 2019 – all the LANDs were gone in a few hours.
Now, with The Sandbox’s upcoming LAND Presale that takes place on November 12th, 2020, users still got the chance to get their hands on these digital properties. According to the guide from The Sandbox, users are able to purchase LAND by following four steps:
1. Set up the digital currency wallet
A user would need to create an account on The Sandbox’s website and connect a cryptocurrency wallet to it. Once the LAND is purchased, it will be stored in this digital currency wallet.
2. Buy $SAND and $ETH
Once the user has set up the wallet, he/she needs to purchase $SAND and $ETH tokens. This can be done in a variety of ways, but the most common one would be to get tokens from a cryptocurrency exchange.
3. Transfer $SAND tokens to The Sandbox account
Then, tokens would need to be sent to the user’s Sandbox account. The process is relatively simple and requires just 4 steps, according to the guide from the Sandbox.
4. Buy LAND on The Sandbox map
Now, the user will be able to purchase LAND. In order to be able to buy LAND, the user would also need to have $ETH in his wallet to cover the transaction fees associated with the Ethereum blockchain network.
Once ready, the user should go to https://www.sandbox.game/en/land/, and choose among the available LAND parcels. Users will be able to see the information about the LAND’s size, location, blocks included, and its price.
When the user has decided upon the desirable land, he/she would need to click on the “Buy LAND” button and complete the transaction via wallet.
Buying and owning property has long been seen as one of the most successful investment strategies. Yet, as we see the world going more digital, a unique new type of the real estate industry is emerging thanks to the developments of the Virtual Reality.
While virtual worlds and lands are still at the very nascent stage, we’ve seen a growing interest from major investors and organizations toward this industry. In addition, the VR community has been working tirelessly on the research and advancements of the new virtual world concepts and we might just see the virtual land gain more momentum during the coming years.
Some enthusiasts even predict that commercial brands might tap into the virtual worlds to promote their products. Just like the big brands are using the opportunity to push their services and products at football matches or music concerts, the same might apply to virtual reality events.
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