In a time when nothing about investment is as certain as the uncertainty that seems to be coming in waves and a slow-burning war with Russia seems increasingly imminent, a lot of people are taking their money to safe havens. For many investors, that certainly makes sense, but by doing that, they're also missing out on opportunities with massive growth potential.
According to a recent Citi (C 0.21%) report, the metaverse now represents a potential total addressable market of up to $13 trillion by 2030, made up of 5 billion users. Those users are going to want stuff to see, things to do, and most importantly, ways to spend their money -- and metaverse real estate investors who get in now will be the ones who reap the biggest rewards.
The metaverse market is down from record highs, but this is a perfect time for you to score a bargain on a prime real estate lot on either of the main metaverse platforms.
Interest in The Sandbox remains strong
The Sandbox (SAND -3.35%) has attracted a lot of attention since it first opened land sales in February 2021 (just 1,200 lots were on offer during that first sale). It's still in the alpha development stage, however, and is only live for special events, such as the Alpha Season 2 event in March 2022. Because of this, users haven't had a lot of exposure to what it's really like to use the platform. Primarily, larger brands and land speculators are choosing virtual real estate parcels they think will be valuable to their end goals.
There was a huge boom in virtual real estate in The Sandbox after the initial announcement in November that the parent company of Facebook would be changing its name to Meta Platforms (META -0.06%), then a drop as Russian aggressions began in Ukraine. However, prices are still much higher than they were in the pre-Meta era. In October 2021, the average price for a lot in The Sandbox was $2,754.52. The average price in March 2022 was $7,423.73. This is despite the number of daily sales dropping from a high of over 500 a day in November 2021 back to a pre-Meta level of approximately 95 per day in April 2022.
The combination of still-high prices combined with large numbers of daily sales produced a very respectable $21.9 million in land sales in The Sandbox for March 2022, a gain of over three times the $7.5 million in sales in October 2021.
DATA SOURCE: NONFUNGIBLE.COM, AS OF APRIL 21, 2022. CHART BY AUTHOR.
Decentraland continues to build steam
Decentraland (MANA -3.06%) is the other main player in the metaverse real estate space right now, and the oldest. It opened land sales in March 2018. Having a more mature real estate market didn't completely insulate it from the same financial and global dramas that have affected The Sandbox sales, but growth has still been impressive for this metaverse platform.
The overall sales volume for October 2021 in Decentraland was just over $6.9 million from not quite 1,100 sales during that month. Compare that to March 2022 -- sales are up to 1,826, worth $12.4 million. Without any attention-grabbing events like The Sandbox's new land auctions and promotional world-previewing Alpha seasons to provide a little extra oomph to Decentraland, seeing this much interest continue in the face of so much contraction in many areas of investment in general is a positive sign for the future of Decentraland.
DATA SOURCE: NONFUNGIBLE.COM, AS OF APRIL 21, 2022. CHART BY AUTHOR.
Where the metaverse goes from here
Although there is definitely some slumping from highs in both sales volume and land prices, the metaverse isn't exactly done. Preliminary data from April shows some signs of stability in a difficult time for investors.
For example, Decentraland's April average sales price is up 16.18% to $8,624.95 from March's $7,423.73 as of April 21, 2022. The Sandbox is telling a similar story, with April's average secondary sales price (sales between users and not those purchased directly from the platform, such as have been taking place during recent land sales events) more or less consistent with March 2022 at $7,767.31 as of April 23, 2022; March's number was $7,757.60.
There's no reason to think that Citi is overhyping the potential of the metaverse, and there are a lot of small hints that the current dip in pricing is temporary. The best time for you to have bought metaverse real estate was before November 2021, but if you're looking for a long-term investment in this space, the second-best time to buy it is now -- 2030 isn't that far away.
