For the past few months, the term digital real estate and Metaverse has been cropping up more and more among the Web3 community. Physical Real Estate has become the world's largest asset class, and with the way Digital Real Estate is heading, it'll either overtake or not be far behind its physical counterpart.
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This article will answer some of the most important questions regarding investing in digital real estate, whether it's worth owning virtual land, and what virtual land platforms to use.
What is Digital Real Estate?
Digital real estate has been a growing area of the web3 ecosystem for around a year now, but nothing propelled the space more than Facebooks announcement into the Metaverse.
Most, if not all, people who access the internet regularly have quickly become aware of the various virtual worlds and the record-breaking sales of virtual real estate within those worlds.
But, what actually is digital real estate?
Digital real estate can be summarized as a virtual property within digital worlds such as Sandbox or Decentraland, where users work, communicate, participate in events, activities and create a digital life for themselves. Just like you buy a property in the real world, you can do the same but in a virtual world and with crypto rather than fiat cash.
The Metaverse hit the headlines not just for its ability to give users a second life but for the record-breaking profits digital landowners were making buying and flipping land in decentraland and sandbox, two of the largest virtual worlds.
In the future, as more users enter virtual reality and choose a digital world, digital real estate will need to be utilized to house avatars, businesses, and much more.
Can You Make Money Investing in The Metaverse?
Yes, you can make money with digital real estate; plenty of worlds allow you to invest in digital real estate and make a huge profit.
The most popular way is to buy up land in an emerging virtual world or if prices have crashed due to market volatility, hold until prices increase and sell for a profit. Another way is to rent the land out to other people or even businesses.
Brands like Nike, Rolex, Adidas, and many more all own land within various worlds, mainly to advertise their own products and NFTs. With this digital land grab, people are paying millions of dollars for parcels of land, and someone even paid $450,000 for digital real estate next to Snoop Dogg's land.
Decentraland is the second-largest digital world, amassing real estate transactions worth $110 million in 2021. For both Sandbox and Decentraland, the average transaction for a plot of land was $5300.
Investing in Digital Land To Gain Exposure to Physical Real Estate
You might be wondering, how does someone invest in digital real estate to gain exposure to real estate in the physical world? Well, before Web3 technology, such as synthetic assets and smart contracts, it was pretty hard. Now, not so much.
Parcl allows the average person to invest in real estate across the US without having to own the physical property. You'll have the ability to invest in a broad or granular selection of real estate across major US cities, including New York, Miami, Austin, and much more.
This is done using synthetic assets, which are a tokenized version of traditional derivatives; this allows us to offer real estate investing opportunities for a fraction of the money it'd typically cost and without the long, tedious process.
Not only that, but thanks to Web3 technology, we can provide you with real-time property data to make even better, more informed investment decisions instead of waiting for the latest real estate research reports coming out every quarter.
Feel free to check out our intro to Parcl article that goes into even greater detail about how Parcl operates and why we're making it our mission to make real estate investing accessible to all.
What Other Digital Assets Can Make You Money?
Land in the Metaverse isn't the only thing you can own, buy and sell. It also includes avatars, clothing, and in some worlds, spaceships and customized gaming accessories.
A lot of projects don't even have an up and running virtual world of their own; they merely sell the items to customers with the promise that one day the project will fulfill their goal of making it possible to use the digital assets in the Metaverse. We've got a whole article dedicated to NFTs and even cover the ways that NFTs could benefit the real estate industry.
To find all of these types of digital assets, you need to look on an NFT marketplace such as OpenSea or MagicEden; here, you'll find thousands of different projects selling avatars, gaming items, clothes, land, and even cool pfp NFTs (profile pictures).
Parcl Homeowners Association NFTs
Homeowners Association is an NFT project by Parcl, consisting of unique combinations of iconic homes from four unique cities. Ownership grants all eligible HOA owners exclusive benefits to real-world events, early access to the Parcl Protocol, staking benefits, priority access to future drops, discounts on merchandise, and participation in charitable initiatives.
Our community is on a mission to lower the barrier to entry for individuals trying to get started in real estate investing and offer opportunities to folks who have been disadvantaged by the current state of the traditional real estate market.
All proceeds from the HOA mint will be pooled into a charitable fund to show our commitment to this mission. These funds will be distributed to five deserving individuals to help them with their housing costs. The grand prize winner will have a physical home purchased for them by Parcl. Submissions will be community-driven, and the HOA community will help select the grand prize winner.
Mint your dream home, and help someone deserving move into theirs. Plus, once you're part of the HOA community, you'll benefit from the countless exclusive benefits & early access to the Parcl protocol.
The Bottom Line
With metaverse land prices on the rise, more users are flooding in to make their money in this digital land grab. But will land prices continue to rise? In theory, unlike the real world, there is an unlimited supply of land within the Metaverse. The more popular the virtual world, the more premium the price will be.
Considering we're only at the very beginning of this digital real estate trend, Sandbox and Decentraland won't always be the only two major worlds to choose from. The more saturated this market becomes, the less that people will be willing to pay for the land, even if Snoop Dogg is your neighbor.
Shared content and posted charts are intended to be used for informational and educational purposes only. Parcl does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. Parcl does not accept liability for any financial loss or damages. For more information please see the terms of use.
