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5 Wealth Building Tips in Digital Real Estate in the Metaverse

Experts estimate the metaverse to be a $1 trillion industry, though largely untapped. Moreover, with a projected CAGR of 31.2% from 2022 to 2028, some might argue that it’ll be even more significant than many expect. 

The metaverse is a virtual reality space mirroring the “real” world, where people can visit and interact. You can meet friends or family here, explore new experiences, and even conduct business. And just like in the physical world, there is a growing market for digital real estate in the metaverse.

Digital real estate has grown to become an integral component of the metaverse. For perspective, virtual real estate prices surged by over 700% in 2021. Sandbox, the world’s largest P2E project, witnessed a record-high virtual land sale worth $4.3 million. Similarly, the price of a plot of land on Decentraland, the second-largest metaverse project, crossed $3.5 million.

Consequently, firms like Amazon, Microsoft, and Meta are betting big on metaverse’s potential, investing in competing versions that blur the lines between real and digital. And as the sector proliferates, there’s a growing need for awareness and due diligence among participants. 

Dropping Alpha on Metaverse Real Estate

You can, of course, make immense gains by getting involved in the metaverse early on. But for optimal returns and sustainability, you must consider the following tips. 

1. Research projects thoroughly

Although land in the metaverse might be cheaper than its physical counterparts, buying land from popular metaverse projects is still very expensive. Therefore, it’s best for metaverse users to identify worthwhile projects with a credible team and a realistic vision.

Becoming an early user in promising projects usually pays off well. However, this involves a lot of risks and volatility. In a space rife with rug pulls and crypto scams, it’s vital for users to research thoroughly before buying digital land with their hard-earned money. One can never stress this point enough. 

So, here’s a short checklist of things you need to do to identify the suitable projects for you to participate in:

  • Check the project’s website, creators, and whitepaper. 
  • Understand their tokenomics. Check for locked liquidity. 
  • The promise of unrealistically high yields in the short term—it’s a red flag. 
  • Study the community engagement and predictions for the project. 

2. Look for land utility

When buying land in a metaverse of your choice, explore what use cases the project offers. Most digital land ventures allow people to rent out their property to tenants like physical real estate.

As demand soars, this could become more popular. Already, brands who wish to market in the metaverse are seeking out digital billboards and properties to launch virtual showrooms.

Take, for instance, VR Lands, which lets landowners have an absolute say over what to do with their properties. They can combine adjacent plots into one, rent out properties for a tenure of their choice, and forge commercial partnerships. You can also build custom business models virtually, similar to the real world. 

3. Seek fractionalized ownership

As mentioned, plots in popular metaverses can be costly and unaffordable for most people. But fortunately, you can own fractions of land on the metaverse, if not the entire plot. This is possible because virtual land, like physical land, is divisible into subplots. 

Innovative metaverse projects offer fractionalized NFTs, allowing multiple individuals to own a single plot of land. Thus, they lower entry barriers and promote inclusivity. You can also benefit from minimal downside risks and a superior experience. 

4. Spot growth opportunities

The location of digital real estate is a critical factor in determining its price. Just like in the physical world, prime locations fetch a higher price than the less desirable ones. For example, someone purchased the plot adjacent to Snoop Dogg’s property for $450,000 to become his metaverse neighbor. 

As the metaverse evolves, people will build, rebuild, and renovate utilitarian structures, boosting the value of nearby plots. Spotting these developments before others will allow you to get your hands on promising metaverse assets. 

5. Have a long-term strategy

The metaverse is still in its nascent stages, with much development yet to happen. Thus, virtual land prices are subject to wild swings and could be volatile in the short term. 

Therefore, it is best to take a long-term view when buying digital land so you can weather the storms and come out on top when the market matures. Moreover, digital real estate offers a broad scope for passive income generation where the returns are significantly higher in the long run. 

A New Paradigm of Digital Assets

The metaverse has brought a new paradigm to real estate. There are risks, of course, due to the domain’s nascency. But if done right, these digital assets can be impressive wealth-building instruments. Thus, to reiterate, tread with caution and perform due diligence. 

The returns will come to you, but only if you’re responsible on your part. That’s the key to success, after all. And because the decentralized world is all about mutual support and collaboration, make it a habit to participate only in projects solving real problems with a long-term approach. Victoria VR is one of them, but there are others, as well. Seek them out and help them grow.