3 reasons why you should buy a property in the Metaverse
IInvesting is a huge trade-off between risk and potential reward, but sometimes it feels a bit more like gambling, especially when you reach new and uncharted territory. Take, for example, the Metaverse. Virtual real estate is the newest investment worth considering right now, but it’s not new, nor without merit. In fact, if you have the courage, I firmly believe that you should invest some money in the right metaverse real estate.
If you know anything about me, you know that I am a cryptocurrency skeptic and a reasonably conservative investor by nature. I buy stocks in grocery chains and food manufacturers but also in aerospace and electric vehicles. All of this is reasonably based on known quantities and has enough data to provide predictable, long-term results (although some of the projects are yet to be proven).
So when I tell you to buy real estate in the metaverse, that does mean something. Maybe it means my cheese has slipped completely from my cracker, or maybe it means it’s not as speculative as it looks. There are a number of reasons why I think Metaverse properties are where they will be for investors over the next five years.
Image source: Getty Images.
1. Trade names jump in the metaverse
Nike (NYSE: NKE) is the latest in a series of big brands entering the metaverse (no pun intended). This month he announced the purchase of a company that makes NFT sneakers called RTFKT. Yes that is correct. He makes sneakers that only exist in the Metaverse.
Nike wants to make sure all of the Metaverse avatars are wearing Nike shoes, and it’s going to get big and quick. He doesn’t wait to see what other companies are doing because he has a solid understanding of what drives these platforms and how he can profit from them.
For example, Gucci, a division of Kering, ran a limited promotion this summer where it created a digital version of the Gucci Garden exhibit and distributed and sold metaverse versions of popular bags and other limited edition items on Roblox (NYSE: RBLX). Items initially cost between $ 1.20 and $ 9 each, but some sold for up to $ 4,100 from Robux, demonstrating both a primary market need and a secondary market interest in branded products.
2. Real estate developers pour millions into the metaverse
Virtual real estate developer Republic Realm just set a record by purchasing $ 4.3 million land on the metaverse platform The Sandbox, breaking a record set a week earlier by Tokens.com for a land purchase of 2 , $ 5 million to Decentraland. It is traveling money.
Since these companies have every intention of creating spaces such as virtual malls and other rental properties (where, for example, Nike could set up shop), and both have given serious thought to how to determine the value of the Metaverse property, I have time to laugh at this as some kind of weird publicity stunt. These guys are as serious as cancer – and have the business plans to prove it.
They envision a world where they can rent storefronts to businesses that want to sell goods but not maintain virtual real estate; rent virtual condos to people who wish to visit the metaverse without losing $ 12,000 on their own; or even design and build custom homes for celebrities who feel a metaverse presence is good for their branding but don’t have time to cope with the messy pieces.
3. Metaverse real estate is nothing new
While the most popular metaverse platforms are relatively new, they are far from the first examples of people stepping into virtual real estate and doing outright murder. Bloomberg covered first Second Life millionaire Ailin Graef in 2006. She entered Second Life early, spent two years building virtual lands and developing custom avatars, and is now investing heavily in technology groups with a fortune made in a virtual world.
This year alone, Second Life (started in 2003) brought in a GDP equivalent to $ 600 million and over $ 80 million in cash out to creators based on their investments in the community. The Second Life Marketplace offers a wide range of rentals but rarely real estate for sale. Presumably, owners earn enough on these rentals, even at $ 4 or $ 5 a week, that they have no desire to sell. These transactions are largely processed through real estate groups native to the platform.
If a platform that hardly anyone has heard of before social media has captured the hearts and minds of around 70% of Americans and can continue to make that kind of money for that long after its debut, it’s surely a platform that has been built with all the lessons of Second Life in mind can be just as stable – and potentially at least as profitable.
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Kristi Waterworth has no position in the stocks mentioned. The Motley Fool owns and recommends Nike and Roblox Corporation. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.