How Is Virtual Land Valued in the Metaverse?

Physical real estate is traditionally valued by its location, proximity to businesses, work, or popular destinations, net operating income, and so on. The metaverse introduced a new asset class, virtual real estate. Here, the land is located digitally online, and it is purchased directly from the platform or through a developer. However, investors are left with challenges on how to allocate value and risk.

3 Ways Land Is Valued in the Metaverse

It is no surprise the metaverse is changing how consumers use technology, but due to the unknown future of the virtual world, it leaves them begging the question: How is real estate valued in the metaverse? Below are a few ways, including:

     1. Scarcity: With limited quantities of virtual land available and no anticipation to produce more, metaverse real estate is determined by scarcity.

    2. Utility: How landowners plan to use their parcels will contribute to the value and appreciation of their assets.

    3. Consumption: Users interacting with the land will play a role in the valuation of the real estate.

What Should Investors Evaluate Before Buying?

In the metaverse, people will be able to socialize, work, shop, play, and much more in this online space of interconnected 3D worlds. In addition, owning a well-used space increases the value of a real estate investment.

Virtual real estate investors use the same metrics they would use in the real world and will essentially mirror the physical world. This includes location, traffic that can come from a virtual street, marketing announcements on social media, or anything generating income. A virtual plot of land, for example, might have an owner who hasn’t decided what they want to do with it yet. An investor will undoubtedly value this land lower.