What do US rap superstar Snoop Dogg and Big Four consulting firm PwC have in common?
They both own land in the metaverse. While Snoop Dogg has 122 plots of land, 67 plots of premium land, and 3 estates, consulting giant PwC Hong Kong recently doled out US$10,000 on a virtual plot.
They both bought land on The Sandbox platform, one of four top virtual worlds – Sandbox, Decentraland, Cryptovoxels, Somnium – that have cornered the metaverse real estate market,
These platforms allow users to buy plots of land that they can navigate, build upon, and monetise. The plots are bought as NFTs making them unique, tradeable digital assets, the ownership of which is recorded on a Blockchain.
And to ensure digital real estate has value, supply is limited – with a total of 268,645 parcels of land on these four main platforms up for grabs.
While Sandbox, the largest virtual world for real estate purchases, has 166,464 plots, accounting for 62% of the total, Decentraland owns 90,000.
In 2021, Sandbox made 65,000 transactions totalling US$2350m, with some estates selling for up to US$800,000, while Decentraland made 21,000 transactions totalling US$800,000.
Buying virtual real estate is big business
As you can see from the numbers, buying real estate in the metaverse is big business, and getting bigger.
In 2021, the market reached US$500m, according to CNBC, with the value of virtual land continuing to climb.
Within just six months in 2021, the average price of a plot of virtual land doubled to US$12,000, a JP Morgan report reveals. And in November, a plot of digital land in Decentraland sold for a record US$2.43m, more than double the prior record high for virtual real estate (US$913,000) just five months prior.
Looking ahead, the market is expected to double to US$1bn in 2022, according to MetaMetric Solutions, and rise at 31% CAGR from 2022 to 2028.
Why are people, companies, countries buying virtual land?
So, why the virtual land grab rush? Investors, celebrities, companies and even countries are snapping up virtual plots to create their own digital experiences – be that for gaming purposes, to hold parties, concerts or events, or to provide a space for customers to explore.
Snoop Dogg has built a digital recreation of his real-life Diamond Bar, California mansion, where he will throw exclusive, members-only parties, according to plans on the Sandbox website. There will also be a music venue for concerts – and residents, who buy a plot in Snoopverse, will be able to create their own games and experiences. One resident just spent US$450,000 for land next to Snoop Dogg’s house. Like the real world, it’s all about location.
Barbados became the first sovereign state to develop its own embassy within the metaverse, having bought a plot in Decentraland, while JP Morgan recently became the first bank to land a plot, opening in. Decentraland a bank branch called the Onyx Lounge.
“The metaverse is the next iteration of social media,” Andrew Kiguel, CEO of metaverse investment firm Tokens.com, told CNBC. “You can go to a carnival, you can go to a music concert, you can go to a museum.”
You can also go and visit your favourite brands, as increasingly companies buy up digital land as a way for them to build experiences, offering customers a further touchpoint. Many are using the space to hold events, deliver conferences, launch products, or simply bring customers together, while others still aren’t clear on their intentions.
Gaming, property and auction houses
As natural landowners in the virtual space, many gaming companies, property firms and auction houses have already got in on the land grab action. Video game publisher Atari splashed out US$4.3m on the purchase of land in The Sandbox – where visitors can play Atari-themed games and attend branded events.
Describing the rush into buying land in the metaverse as the “first digital gentrification”, NFT auction house and marketplace Portion recently purchased a US$1.2m plot of virtual real estate in Decentraland. The aim? To create a place for artists and creators to congregate and exchange work.
And British property listing firm MoveStreets has also invested in a digital plot with the aim of one day using it as a venue for viewing real-world houses online.
Consumer brands – fashion, sport, electronics, food
Consumer product brands are also natural property purveyors of digital given the opportunities to create brand experiences and sell non-fungible tokens.
Sporting goods powerhouse, Adidas, which purchased a plot of land in The Sandbox with the aim of filling it with exclusive branded content, experiences and items for purchase, describes the metaverse as “a natural place for Adidas Originals to enter – a wild world where possibilities are truly limitless and where anyone can express and be rewarded for their most original ideas”.
It’s a similar story at electronics giant Samsung, which launched its metaverse location, Samsung 837X, in Decentraland earlier this year. Designed to reflect its flagship physical Samsung 837 store in New York City, the virtual space offers an immersive experience with NFTs, games, product introductions, and live performances, where customers can experience all sorts of products directly, and launch events can be held.
Financial institutions, accounting, consultancy
It’s less obvious, however, to see why and how financial institutions, banks and accounting firms might get in on the land grab action.
That said, some are already making virtual land grabs in order not to miss out on the potential, with PwC Hong Kong and JP Morgan both taking a punt on property in the metaverse.
In a recently released report, JP Morgan said it was keen to explore the many “exciting opportunities” the metaverse presents for customers and brands alike, and that the risk of “being left behind is worth the incremental investment needed to get started”.
While PwC Hong Kong partner William Gee told the Wall Street Journal that “the metaverse offers new possibilities for organisations to create value through innovative business models, as well as introducing new ways to engage with their customers and communities”.
PwC Hong Kong purchased a piece of land in The Sandbox in November, and this month, JP Morgan became the first bank to enter the metaverse, opening a lounge in Decentraland where people can interact, attend events and explore.
JP Morgan’s Opportunities in the Metaverse report