Late last year, a ton of cash from tech enthusiasts and corporate marketers set Metaverse real estate prices on fire. With stars in his eyes and cash in his pocket, the Alt-coin owner and his CryptoPunk NFT collector bought properties near celebrities in an attempt to justify the inflated prices. Many celebrities used the metaverse for promotional purposes rather than views.
To say that the boom was not built on solid ground is an accurate understatement.
A famous example is Snoop Dogg, who built a digital replica of his Southern California mansion in the middle of the Sandbox metaverse, calling the 144-block square the Snoopverse. Snoop’s virtual neighbors include his Steve Aoki, a mega DJ, and his large Atari development, where visitors can play the company’s games and attend events.
Record purchases quickly made headlines, like when one buyer, known only as P-Ape, spent $450,000 on a nine-lot property right next to the Long Beach rapper. I hit Just below the virtual block, an anonymous buyer paid her 25 ETH (valued at about $60,000 at the time) for her 16 x 16 meter parcel.
Prices peaked earlier this year, but a bear market for cryptocurrencies and slower-than-expected metaverse adoption has driven prices down 85% since January, with little buying volume.
P-Ape’s parcel is now worth just $25,000, but having Uncle Snoop as a neighbor might help a little. Sandbox’s digital map shows dozens of properties for sale. Some ambitious sellers have list prices in the hundreds of thousands, but in the current market it is said that this won’t happen anytime soon.
According to WeMeta, a metaverse data and analytics company, the average price of a parcel in the five largest Ethereum-based Metaverse projects has fallen from about $21,000 in January to about $2,500. In Sandbox, the largest metaverse world by amount of land sold, the average dropped from $35,500 to around $2,800. The weekly volume of assets purchased in the top five metaverse worlds fell nearly 99%, from $62.5 million in mid-November to $650,000 in the week of August 7.
“Investing in the metaverse is risky. You can very well lose everything,” says Fabian Shah, professor at the University of Basel and managing director of the university’s Center for Innovation Finance.
Most corporate property owners wanted to buy land for marketing purposes and place experiential advertising and virtual stores along the busiest boulevards in the Metaverse metropolis. We built a virtual version of our store, New York, to allow our guests to test our products. Adidas owns assets in the sandbox and pitches digital sports gear as his NFT.
These companies paid out hundreds of thousands of dollars at a time when the metaverse and cryptocurrency hype was running high and money was pouring into digital assets. The grim economic outlook makes it difficult to justify spending that money on virtual world land. But usefulness (or lack thereof) has remained largely unchanged.
Lorne Sugarman, CEO of virtual real estate company Metaverse Group, said: Sugarman added that he is not worried about falling prices.
“We haven’t seen a significant drop in traffic, but having said that, we haven’t seen any particularly high traffic,” says Schär. “What’s changed is people’s expectations.”
They remain very high for some. Management consulting giant McKinsey said in June that the Metaverse predicted he could grow to be a $5 trillion market by 2030. This is comparable to Japan’s economy, which is her third largest in the world.
Billionaire businessman Mark Cuban is skeptical about selling land in the Metaverse, despite his investment in the Bored Ape Yacht Club (BAYC) and its counterpart Yuga Labs, creators of the Metaverse world Otherside. was one of the most vocal critics. Yuga has made about $320 million from selling Otherdeeds, his NFT that grants ownership to his 55,000 parcel of land in BAYC’s virtual hangout spot.
“The worst part is people are buying property in these places. Cuban added that buying land in the Metaverse is silly.
Cuban added that he believes some properties will have value if the metaverse community is strengthened. According to a paper by Schär and other researchers, the most valuable metaverse lands are in areas where chance encounters are facilitated by existing communities.
“It’s the attention economy. People are interested in having land in a high-traffic area.” “But if the interest of the whole world wanes, the price of all these land plots will fall.” It adds that companies cannot attract attention.
Another important factor is a memorable address. Metaverse visitors can be teleported anywhere within a given virtual world by entering X,Y coordinates.Shah said catchy numbers like 100 degrees x 100 degrees, For example, you got more than 271 or 73 visitors.
Some companies profit from using short-term rentals instead of buying metaverse properties. Companies like Sugarman’s Metaverse Group rent land and have teams of developers to build their tenants’ visions.
The Australian Open rented virtual land from another Metaverse company to hold the festival at the same time as the annual tennis tournament. The space included a digital stadium where enthusiastic fans could interact and watch historic matches together.
Sugarman expects his company to see more adoption over the next one to three years, but without further development of better game-like traffic-driving features, that won’t happen. He said he doesn’t think so. Metaverse Group is taking advantage of falling prices to build on cheaper land, and Sugarman believes other companies understand that now is the time to develop.
“We need other tools and different experiences to make the metaverse more interesting, and that will drive traffic,” says Sugarman. “We believe there will be a critical mass as we understand and learn.”