Apparently, unlike its real-world counterpart, virtual land valuations depreciate.
After its much-talked about investing boom last year that saw multimillion dollar purchases, the metaverse real estate industry has seen a dramatic fall in the first half of the year. Based on the data published by The Information, “the average price per parcel of virtual land has tanked by more than 66%.”
The price decline is supposedly an aftermath of the cryptocurrency price collapse, affecting the selling price of non-fungible tokens. Early virtual real estate buyers were aiming to be able to sell or rent their digital lands to companies hoping to build their virtual presence. The drop in price might trigger this but the discount would cost virtual real estate owners.
“Investors who bought at the peak are now sitting on land that has tumbled in value. Meanwhile the real-world economic downturn could weigh on brands’ appetite for spending on building out their metaverse presence,” the article noted.
The total monthly trading volume – coming from six major Metaverse real estate platforms – also fell by 90% over the last six months.
One of the key “developers” in the space, Metaverse Group, a venture co-owned by Tokens.com Corp (NEO: COIN), has been purchasing virtual lands in the metaverse Decentraland through a digital currency called MANA. After initially buying land in the digital world’s so-called fashion district for US$2.52 million, the company further increased its “real estate” with an additional $0.7-million purchase in the same district and another US$0.7-million purchase in the so-called music district.
At the current MANA prices, the transaction that saw parcels of land initially purchased at US$2.52 million or 618,000 MANA would now be worth US$0.68 million.
Billionaire entrepreneur Mark Cuban has strong words on firms making their high-priced investment in virtual real estate, describing the act of buying land in the metaverse as “super mega immaculately dumb.”
“The worst part is people are buying real estate in these places. I mean, that’s just the dumbest sh*t ever,” said Cuban.
Information for this briefing was found via The Information, Benzinga, Coingape, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.