Will There Be a Metaverse Real Estate Boom in 2022?

There's nothing buzzier right now than the metaverse, and nothing more intriguing to a lot of investors than virtual real estate. There are plenty of good reasons to be excited about the metaverse, including potentially big profits for those who jump in before the market really booms.

In 2021, the value of total daily virtual real estate transactions processed through third-party sales platform NonFungible.com has increased 20,572.52%, from a seven-day average of $164,001.52 on Jan. 1 to a seven-day average of $33,903,255.18 on Dec. 17.

Image source: Getty Images.

The value of the average individual transaction has definitely increased as well, from a seven-day average of $439.04 on Jan. 1 to a seven-day average of $11,446.07 on Dec. 17, but that's hardly the whole story. Overall transaction numbers have also made a dramatic 677.43% jump, from a seven-day average of 381 on Jan. 1 to a seven-day average of 2,962 on Dec. 17.

Data source: NonFungible.com, as of Dec. 18, 2021. Calculations by author.

Commercial interest in virtual real estate is driving prices

Although there's no doubt that individual property sales between regular users have gained considerable value in 2021, we also know that some part of the serious price appreciation we're seeing today in the metaverse is due to, for a lack of a better way to put it, the metaverse having suddenly gone from remote and rural to excessively urban and accessible.

A year ago, there were barely any brands in the metaverse space. It was largely player-driven, sprinkled with platform-sponsored events to drive engagement. Then, this summer, brands started taking delicate steps into this world-within-a-world, in hopes of finding a way to better reach a whole new audience. They brought special events, complete with NFT-entangled objects, to platforms and created dedicated event spaces where users could interact with both the company and other users interested in it.

Celebrities started showing up and building estates. Then the virtual real estate companies appeared. As they built it, more people came. And just like that, suddenly lots in platforms like The Sandbox and Decentraland could bring a million dollars or more, depending on where they were located. Suddenly everyone was starting to hear about these virtual rural backwaters, and like a once-quiet farm community suddenly overrun by people looking for vacation homes, the metaverse exploded.

Virtual real estate: Boom or bust in 2022?

I have no doubt that we've not seen the height of interest in the metaverse at this point. Although transactions are slumping a little bit right now, we're also deeply in the middle of the holiday season, a time when even physical real estate tends to get a little saggy. If the real world is any kind of model to go by, this is the time to get in, before things get super hairy.

Although you're not going to see the bump physical real estate gets when it gets close to time for school to let out and parents scramble to buy and sell real estate before their children go back in the fall, spring is inevitably a time of hope and possibilities. For a world still dealing with a pandemic now projected to last until 2024, that hope may be easier to see in a world without disease and where a person can safely interact within their environment without risking hospitalization.

And although not everyone will be buying their own piece of virtual real estate, plenty of companies are going in with plans to develop event spaces, commercial rentals, and even the virtual equivalent of weekend rentals for users who want to spend time in the metaverse without a $12,000 commitment. These are all the same kinds of influences that create interest in a location in real life, and it's not a great leap to think of each metaverse platform as its own walled city.

Will there be a boom in 2022? There's a boom now, but it's got so much momentum behind it that I have a hard time seeing where it will end. Booms always do end, but some end softly, having reached a sustainable level of interest in buying and selling, and some with a very loud popping sound along with a significant drop in value.

For the metaverse in general, at least in the short term, I can't see the bubble bursting. Now that brands and advertisers have started gingerly stepping into those waters, the only thing that will limit metaverse adoption is the price point. But once there's enough data to figure out how to properly value metaverse real estate, widespread use of metaverse mortgages may become a norm that will continue to fuel growth in virtual worlds.

Literally everything is possible right now in the metaverse. We're witnessing a new chapter in human history -- and I don't say that lightly.