The metaverse has been a subject of a great deal of debate and speculation since Meta Platforms announced its name change back in the fall of 2021. For a hot minute, the real estate of the metaverse, non-fungible tokens (NFTs) generally known as "lands," were bringing more money than real estate in the real world. A lot of real money was invested in property in the metaverse, with the expectation of some kind of return.
For some people, those land investments turned a few hundred or thousand dollars into payouts worth bragging about; for others, buying at the peak of the metaverse land boom left them wondering just how to exit their investment.
Some metaverse sales records
If you weren't part of that boom, don't worry, because it's a well-documented period, and we can walk through it briefly for context's sake. I cover it in more detail in a recent research piece on real estate in the metaverse.
The largest single transaction in the metaverse was in Decentraland (MANA 0.46%) on Nov. 22, 2021, right at the beginning of metaverse mania. It was a virtual estate (a collection of adjoining metaverse lands that are bound together as a single NFT) called EST #4339, and it sold for a whopping $2.4 million.
I know this sounds like a one-time folly. But the truth is that it wasn't, and it isn't -- the metaverse saw another great real estate boom with the opening of real estate sales for Otherside, a metaverse project by The Bored Ape Yacht Club. The No. 2 record sale for all time was on May 7, 2022, when an Otherside parcel known as #59906 fetched $1.65 million.
Metaverse floor prices are looking up
When evaluating the value of NFT real estate in the metaverse, it can be hard to really figure out what metrics matter the most. And it can be harder to compare prices between properties in different metaverse worlds since they may not be at the same developmental stage.
However, one metric you can always count on is the NFT floor price, which is a value that shows exactly what the lowest price was for a real estate NFT on any given day, month, or year. I track these on a daily basis, because when the metaverse moves, it can move very quickly, and with an impact that monthly tracking won't necessarily reflect accurately. When it comes to NFT real estate floor prices, we saw some really significant highs right after the Meta announcement, and then things kind of fell off.
However, another significant spike occurred in July 2022, with Otherside's floor price reaching a high of $4,322.48, Decentraland's reaching a high of $3,448.36, and The Sandbox (SAND 0.27%) reaching $3,080.75.
From the end of the summer of 2022, it was pretty much all downhill, which was pretty disconcerting for anyone invested in the metaverse. But, after hitting all-time post-Meta lows in winter 2022, the metaverse started gaining momentum yet again.
In the month of January 2023, Decentraland saw a jump from its December 2022 low of $1,306.51 to $2,758.21, more than doubling in about two weeks. Otherside also had a similar increase, from its lowest floor of $1,040.78 in November 2022 to $2,060.69 in January 2023. The Sandbox also saw an increase, though smaller, from $1,033.71 on the last day of December 2022 to $1,477.82 in mid-January 2023.
Remember, this is not an average price -- this is the minimum amount of money it takes to get any skin in the game. In other words, this is the worst lot that's for sale that day, or the lot that is sold by someone who is trying to quickly turn it around to free up some cash. So a floor price really represents an extreme fire-sale price, and the amount of real money it takes to part the most desperate owner from their worst metaverse lands is increasing.
Metaverse real estate is recovering
Based on data collected for our research piece, as well as data that's part of ongoing monitoring, I think it's safe to say that metaverse real estate is slowly recovering from its lowest lows.
The Sandbox continues to struggle, but when the platform is finally opened up to full-time users, more interest may drive prices upward yet again. Currently, it's giving users "alpha passes" that allow them to preview the platform for short, set periods of time, rather than leaving them to explore at their leisure 24/7.
Decentraland, however, has been live since before the Meta-induced boom, and that has given it a great deal more value, since landholders can rent properties, act as metaverse real estate consultants, and perform other real estate-related functions that give their virtual real estate more value than the basic face value would imply. Although we can track the prices Decentraland lands sell for, we have significantly less data on those rental rates, price of construction crews, and so forth, making it more difficult to really calculate the full value of that real estate.
Otherside also continues to have a great deal of momentum, largely due to the efforts of The Otherside's team, who have been releasing mini-games related to The Otherside for holders of real estate NFTs there, or who are members of The Bored Ape Yacht Club.
Metaverse real estate (and other NFTs) seem to trend with the Bitcoin Fear and Greed Index, and it's been in the positive for weeks now. This may well be the beginning of the next land boom for the metaverse, or at least a season for establishing a healthy baseline set of real estate values that are well above the crypto winter's lows.
Investors who have been curious about metaverse real estate could still grab a great deal right now on metaverse real estate, but you should also be aware that there are no guarantees in the metaverse and your investment is always at risk of going to zero.
