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What Is Digital Real Estate? Ultimate Guide

Here is everything you need to know about digital real estate, from what it is to the nuances of buying and selling in the metaverse.
Courtney Luke
March 11, 2022
8 min

With the world of virtual reality exploding, digital real estate investors are quickly snatching up the virtual real estate market in hopes to capitalize on it in the future. This post will discuss the various virtual platforms that can be used to create passive income from real estate rentals and other digital land grab opportunities. 

Digital real estate is a digital asset you can own and monetize. Digital real estate assets are acquired on platforms such as Decentraland, Cryptovoxel, and Sandbox. However, e-commerce stores and blogs are also types of digital real estate. Recently, investors are snatching up metaverse real estate, boosting this multi-million dollar industry. 

Big names are buying digital real estate

Not long ago, PriceWaterhouseCoopers Hong Kong purchased land on the Sandbox platform. The consulting company made itself the initial member firm to purchase digital land. Even Celebrity Snoop Dog has also joined the party and purchased virtual ground on the Sandbox for $450,000, called the Snoopverse. 

A physical real estate company, the Metaverse Group, is also getting in on the action with their purchase of a Decentraland plot for $2.43 million. 

There are a variety of types of digital real estate. Most people think of the metaverse regarding digital real estate, but it must be stated that digital assets come in many forms. Digital real estate includes domains, websites, apps, and digital products. 

What is digital real estate really worth?

The amount digital real estate is worth can vary wildly. Like a physical piece of real estate, you can purchase land with prices based on various factors. You can hold the asset and allow it to appreciate in value naturally or you can apply forced appreciation by adding value. 

A quality piece of digital real estate that is well-designed and offers a lot of value is worth far more than the initial startup costs. 

Digital real estate – real world examples

Some recognizable forms of other real estate are e-commerce stores, domains, apps, blogs, NFTs, and affiliate sites. A newer form of digital real estate is the variety of plots of land available for purchase on different platforms. 

Some of the larger platforms on which you can purchase digital land include Decentraland, Cryptovoxels, Somnium Space, and The Sandbox. 

How much money you need to invest in digital real estate

More developers and investors are taking advantage of the early-stage opportunity of owning digital real estate. Unfortunately, this is causing an increase in the cost of purchasing digital lands, and as of this writing, purchasing land in Decentraland will cost you approximately 4700 MANA or $13,000. 

If you're interested in the Cryptovoxels platform, land here is available for purchase through OpenSea and averages 2.57 ETH or about $7,800.  

What is Decentraland?

Decentraland is a blockchain-based, 3D, decentralized virtual world where you can meet, chat, play games with other players in real-time, and buy and sell land. It's a web 3.0 universe that's best experienced with the digital wallet Metamask. 

Decentraland allows anyone to establish whatever their imagination can generate onto a plot of land for everyone in the world to experience. 

Many things have been built in Decentraland, including games, office space, homes, and museums. Nearly all in-game items can be bought or sold for actual money. Decentraland was first established in 2017 but has grown considerably in popularity and value since then. The in-game currency is called MANA. 

Decentraland is a virtual world built on top of Ethereum. It's a decentralized virtual world where people can own and develop virtual land as digital landlords. Alternatively, you can wander around and explore what other users have created. The landscape consists of interactive objects or static 3d scenery. 

The Digital World Inside Decentraland

Decentraland is filled with art, games, and events that attract thousands of users. All of Decentraland is divided into fragments called parcels. Each parcel measures 52 ft by 52 ft. A parcel is the smallest measurable piece of land that you can own. It's possible to hold several parcels next to each other to form an estate. 

There are larger plots of land dedicated to a specific theme called plazas. One of the most notable plazas is Genesis Plaza, where every avatar initially spawns on the map. 

Location does affect the price of land. The closer your land is to a hub of activity, and the larger the plot, the more expensive it will be. 

All of the land is represented by the parcel's x and y coordinates and corresponding ERC 721 token on the blockchain. All land has some degree of scarcity, increasing the demand for this collectible. Each token is unique and cannot be equally exchanged for another token. 

There are about 90,000 total plots of land in this virtual world. 

You don't need any technical skills to design your plot of Decentraland as you see fit. There's a highly intuitive drag and drop interface where you can create anything your imagination can come up with. 

The entire virtual space is owned and governed by its users. A Decentralized Autonomous Organization, or DAO for short, governs Decentraland. Everyone in the community is free to vote on proposals they want to adopt. MANA is the token that fuels the economy of Decentraland.  

If you'd like some unique clothes to dress up your avatar with, you can find them in the marketplace. Community members have created a variety of wearables to dress up your avatar with. You can quickly jump to any location that piques your interest by opening the map.  

You can also type "/goto" followed by coordinates to visit a specific location.  

What is the Metaverse, and how does it work?

The metaverses are actively being built and transforming the internet we know today. While in its infancy, the Metaverse is actively impacting how we interact with one another. 

For example, Microsoft Mesh is creating a blend of mixed-reality and augmented reality for Microsoft Teams. The U.S. Army is also developing augmented reality technology compatible with the Hololens 2. 

The most identifiable characteristic of a metaverse is your 3D digital avatar. There are many games that contain a universe of customizable avatars, including Roblox, Minecraft, Fortnite, and even World of Warcraft. However, the previous games are not decentralized and do not have an in-game cryptocurrency.  

Facebook's Metaverse will support users with Oculus VR and augmented reality headsets.  

The metaverse is attracting some of the sharpest minds from the realms of computer science and neuroscience. Part of the attractiveness of metaverse development is its open-sourced nature, user-controlled keys, and community-owned and generated networks. As a result, developers are actively creating more spaces to shop, play, and interact. 

The Metaverse is opening a new way to interact with the web that isn't owned by a single entity. Decentralization is one of the most essential parts of understanding the metaverse. This new technology, specifically NFTs and the blockchain, allows us to verify ownership reliably. 

For example, Nike patented their digital goods with blockchain technology. It's a good idea to read the whitepapers of different types of technology and connect with the community on Discord or Telegram to get a full grasp of the project. 

Metaverse worlds are quickly becoming where many people choose to spend their time. As a result, more people are gaming, meeting, and socializing in digital spaces.  

What is an NFT?

An NFT is a nonfungible token, which means it cannot be replaced. They are used for digital collectibles such as games, virtual items, and other assets. The Ethereum blockchain allows developers to create smart contracts that use these tokens to represent ownership rights. 

What is a digital plot?

A digital plot of land is any parcel located in any one of the metaverses. Similar to physical property, digital plots are simulated areas located in virtual reality. 

How to get started investing in online real estate

If you're interested in purchasing your own digital real estate, follow these steps to get the most for your money. 

Preparing to buy land

It's best to research the different virtual lands first, so you know what type of currency you'll need to purchase land. For example, if you want to buy a plot in Decentraland, you will need MANA to make the purchase. 

To purchase land in Somnium Space, you will need a Metamask wallet that contains Ethereum. Each platform is a little different from the next, but they all operate on the same basic premise that you will need some initial currency to begin purchasing plots of land. 

Searching for the right property

Your land parcel's proximity to popular areas will affect its value. In Somnium Space, owning properties next to each other allows you to build higher in this virtual world and is referred to as an Estate. 

Buying, holding, or selling your land

Decentraland

Ripio Credit has partnered with Decentraland to offer mortgages. You can take out a mortgage on land by paying 10% of the parcel value. The "Request Mortgage" application is available by clicking on a parcel on the map. You can purchase properties in Decentraland in the marketplace from other users. Land sales occur in the same market. 

Somnium Space

Somnium Space is a virtual reality world built on Salona and Ethereum Blockchains. All Somnium space parcels are NFTs or ERC 721 tokens. The land in this virtual space is available for sale on the OpenSea marketplace. 

Land prices are affected by proximity to popular parcels, proximity to the waterfront and central waypoint, and of course, the size of the lot in question. 

You can build something exciting on your land to cause appreciation and value should you decide to sell later. Each world is customizable and programmable to your liking. You can create portals to enter the world by dropping a blockchain token onto the parcel. 

Somnium space assets can be purchased on the FTX marketplace. You can buy, sell and store Somnium space on the official market, Gemini, Uni swap, and OpenSea. You also have the option to monetize your land by renting parcels. 

Cryptovoxels

Cryptovoxels land is currently selling for the lowest going rate of 3.03 ETH or about $9,792. The primary market of Cryptovoxels is available on their website, with a secondary market on OpenSea. Cryptovoxels also include the feature of renting land. 

Like other worlds, each parcel of land is an ERC 721 token or NFT. You need a Metamask wallet to buy land in Cryptovoxels. You don't have to own any land in Cryptovoxels to play. However, you officially own any land you purchase in the game. 

The value of land is determined by build height, proximity to favored locations, and proximity to the center of the world.  

7 ways to make money with digital real estate

Owning digital real estate can give you several options for generating income. Here we expand on some of the more common ways to profit from your virtual land ownership. 

1. Buy land

If you believe that the value of your parcel will increase due to the popularity of the platform, you can always buy and hold. Land value can increase because large, well-known companies buy digital real estate. 

Atari, Steve Aoki, the Smurfs, and other well-known companies & numerous celebrities have purchased land in the Sandbox, which stimulates the popularity of virtual worlds. 

The country of Barbados will establish a virtual embassy in Decentraland in 2022. This is the first country to take this sort of action in the metaverse.  

If you purchase land, it may naturally appreciate value as metaverses' popularity increases. You can encourage the value of your land to go upwards by creating interactive virtual spaces where people enjoy spending their time and money

The more foot traffic you have on your parcel of land, the more you may be able to charge for advertising on your lot. Every month, you can collect cryptocurrency from advertisers who want to market their product, service, or land coordinates. 

Since the property you purchase is entirely yours, you can choose to sell at any time and collect your investment and hopefully profits too. 

2. Virtual jobs

It's possible to get a job in the Metaverse of Decentraland. The company hires for many jobs, including casino hosts, part-time trainees, and technical support. Hours and rates vary for each position, with trainees making $200 per month. 

Pay increases along with the responsibilities of the job. After being a trainee, you can move up to a part-time position which pays $700/month for about 24 hours per week. Full-time workers can make $1300-$1500 per month. 

Hosts send prizes to players during casino and poker events, monitor Discord and Telegram, and other duties. There's also a hiring section in the Decentraland Discord. 

In addition, there's a virtual hiring fair at coordinates 12, 51 in Decentraland. 

3. Play to earn

You can visit play to earn games in Decentraland, where you're able to play games in exchange for points. You can then use the points to get NFTs or wearables to keep or sell to other players. 

If you'd like to try your hand at blackjack or other casino games, you can visit the Tominoya Casino located at -120,136 in Decentraland. 

By owning a casino NFT, you are entitled to 30% of all profits generated on that parcel of land every month. The money is sent to the crypto wallet that contains the casino NFT. The Tominoya casino offers blackjack, roulette, and slots. 

4. Hold tokens, also known as "hodl"

You can generate some profit by holding the $DG token of Decentral Games, an online gambling license holder. All of the money generated by the casino goes into a treasury. Purchasing a governance token allows you to have some voting input on how the funds in the treasury are used. 

For example, if the vote passes, the governance token holders could build a new poker room and redistribute the profits back to the token holders. By staking your governance tokens, you can earn 9.07% staking APR as of this writing. 

5. Digital property management

Metaverse properties offer property management services of digital real estate. Managing a real estate investment by yourself may be time-consuming so they help facilitate potential income on your property by renting your digital real estate to clients and collecting the rents. 

By investing in a real estate business, their services span across the metaverses, including Upland, CryptoVoxels, Somnium Space, Decentraland, and Sandbox. Metaverse Properties offers marketing services to get the word out if you have a digital plot of land that you'd like to advertise. 

6. Buy the index

If you're unsure which metaverse you'd like to capitalize on, you can buy a little piece of all of them through an index. 

The Metaverse Index (MVI) contains cryptocurrencies linked to several metaverses; MANA, SAND, ERN AXS, ENJ, WAXE, and many others. 

The index allows you to purchase a broad assortment of the currency types used in the most popular digital spaces with the most active communities. 

7. Create NFTs

It's important to remember that to make money from creating NFTs, you want to make something useful and creative. 

If you have artistic skills, you can profit from making buildings, art, products, and avatars for the metaverse of your choice. This is useful because it saves your customers time since they didn't have to create and mint the NFT themselves. 

Customized art and avatars make for greater self-expression and help landowners decorate and entertain people who visit their digital plots. Anything you can create digitally can be uploaded to a metaverse as an NFT. 

Top reasons to invest in digital real estate

Here we list some of the benefits of owning a piece of the virtual world. 

Generate income/profits

The main reason many people want to invest in digital real estate is to generate a profit. Generating income is a goal of many since the cost of metaverse land has increased dramatically since the day it was initially sold. 

However, not all real estate deals are beneficial. There are also extremely inflated prices in some areas of the metaverse so make sure you check around to get the best price for land possible without getting taken advantage of.  

Build a community

Owning tokens allows you to connect with the community in the digital space of a metaverse and enables you to vote on the outcome of that token.  

  

  

This article was written by Courtney Luke from Arrest Your Debt and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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Courtney Luke

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