HomeReal EstatePropTechWhy Are New Yorkers Purchasing Digital Real Estate? 

Why Are New Yorkers Purchasing Digital Real Estate? 

Buying digital land in the metaverse has become a trending topic in the investment world. Is the digital real estate craze in New York representative of lasting opportunities or momentary ventures?

According to MetaMetric Solutions, virtual property sales topped $500 million in 2021 alone. Experts are following the growth of digital real estate on major virtual platforms and believe that the market could soon grow into a trillion-dollar industry. 

As celebrities have started purchasing property in the metaverse, fans eager to be their digital neighbors have followed along. Last summer, a buyer going by the name P-Ape purchased a plot of digital land next to the ‘Snoopverse’ for $450,000.

In its initial phases, metaverse properties appeared as plain, gray squares on users’ screens. Now, they resemble detailed replicas of society, displaying homes with furniture, stores with products, and even carnivals with rides. 

Virtual design companies, such as Bileca, offer digital architecture services to build and develop homes on virtual plots of land. Projects can cost anywhere from $10,000 to $300,000, depending on the level of complexity desired. Owners can choose to keep their plots of land simple or humanize them with daily commodities.

As demand for digital properties grows, so does the need for professionals in the industry. Titles such as ‘Digital Real Estate Investor’ and ‘Metaverse Architect’ may have sounded far-fetched in the past, but that’s no longer the case.  

Several Investors Have Fared Well

After just a few months, Samuel Arnold’s $294 investment produced an exponential ROI in the metaverse. The 30-year old purchased three plots of land in the Financial District, which are now valued at roughly $60,000. Arnold owns a crypto and NFT consulting management firm and is a self-proclaimed ‘crypto hype-man.’ He believes “buying metaverse real estate right now is like buying land in Manhattan in 1812.”

He compares skepticism around the metaverse with the disbelief of online shoe sales in the 90’s. “In 1990, they said you’re going to buy your shoes online and people thought you were [crazy],” says Arnold. “I’m going to hold [the properties] until my grandchildren are grown and I own the next Grand Central.”

Will a virtual real estate investment pay off? Or will it fade into distant history?

Not everyone shares his enthusiasm, but it’s undeniable that demand for virtual land is growing dramatically. In November of last year, a plot of digital land sold for a record-breaking $4.3 million in the Sandbox, one of the four major metaverse platforms.

Gaming platform, Axie Infinity recently witnessed a sale of $2.3 million for a plot of land. A 16-square-meter tract on Decentraland is currently asking for the same price. These prices are up tenfold from just a few months back, when plots of land in the metaverse averaged just a couple thousand dollars in value.  

Innovative Opportunity or Calculated Sham?

The industry’s low barriers to entry and massive ROI potential has made digital real estate appealing to many. Both amateur and seasoned investors are taking a stab at what seems to be the next big thing in the investment world. 

Cofounder of Flamingo Capital, Chris Adamo, believes that virtual land is a viable investment option for those of us who may not have enough capital to purchase physical real estate. “I see this as a good bet to build wealth, knowledge and ownership in the new Web3 environment that is being built,” says Adamo. 

With four dozen virtual properties to his name across multiple metaverse platforms, Adamo is confident that investing in digital land is the right move. He claims the value of his collective properties has increased tenfold in the past year.

As with all new financial ventures that gain rapid and widespread popularity, there are voices who object. However, not everyone is a believer. For every eager early-adopter of digital land investment there’s an equally apathetic skeptic. “Virtual land is a pyramid scheme that’s reappeared two or three times since Second Life in the early 2000s,” comments Edward Castronova, media professor at Indiana University. Professor Castronova is known specifically for his work on the economics of synthetic worlds. 

He maintains that investing in the metaverse doesn’t bring about any substantial gains. “An NFT or virtual land guarantees that you and only you are the owner of this particular piece of nothing,” says Castronova. 

The stock market seems to share Castronova’s perspective. After announcing it had invested $10 billion into its metaverse project, Facebook’s stock price sank a staggering 22%. 

Brilliant or Bogus, Digital Land Is on the Rise

While the traditional investment world may be raising its eyebrows at the new kid on the block, digital real estate isn’t showing any signs of slowing down. According to industry analysts, 2022 could see sales volume more than double from last year’s $500 million. 

Big name companies such as PwC, JP Morgan, and Samsung have started investing in Metaverse real estate, adding credibility to what is still a novice investment opportunity. CEO of Voro, Danny Shamooil, compares what’s happening in the Metaverse with the almost abrupt adoption of Netflix. 

When Blockbuster went out of business, viewers had no other choice but to download the streaming platform. Whether it was a desirable platform to use or not wasn’t much of a concern anymore—it became the most convenient (if not the only) way to watch movies at home. 

“People don’t do good with change. But they are adapting, learning and getting educated. People are learning how to open wallets and use crypto more frequently,” says Shamooil. His cloud-based real estate brokerage helps metaverse investors do just that, by advising clients on what kind of land to buy and where. 

Voro also teaches subscribers how to fund virtual wallets to ultimately purchase virtual land. The company has a total of 1,000 remote brokers spread across seven states. It’s one of many new startups entering the business world in response to metaverse growth.

Vivian Tejada is a freelance real estate writer from Providence, RI. She writes SEO blogs for real estate, travel and hospitality companies. She's passionate about the future of work and helping Latin American freelancers achieve time, location, and financial freedom. When she’s not writing you can find her at the gym, a family cookout, or at brunch with her girls. Follow her on Linkedin to learn more.