The BIG RISK

Market fluctuations in the metaverse are to be expected, just as with cryptocurrencies and nearly any other asset. But the biggest risk with metaverse real estate is that the specific platform you’ve invested in fails completely.

After all, I see us eventually zeroing on one capital-M Metaverse. Right now, though, there are many, and even if we settle on two or three, that still means more will go by the wayside than will survive. These platforms will go blank along with all the property and assets.

Even in the worst real estate cycles in the physical world, it’s hard to imagine a parcel of property that loses all of its value forever. The equivalent situation would be if a beachfront property sunk into the permanent ocean bed or if the Earth were destroyed along with all possible investors.

Who’s Going to Buy?

I can see four types of people who will buy a parcel of property in the metaverse, whether for residential or commercial development.

Advocates

These are the true believers in the metaverse who are ready to build their personal space or their company because it’s where they want to be, and it’s where they believe most everyone else will be too. They live through their avatars and want them to be comfortable and successful.

Marketers

These brand owners want to market and sell their NFTs and other virtual goods or services. They also see the opportunity to strategically place their ads on the sides of buildings and popup billboards.

Hobbyists

Just like gaming is an addictive element of the metaverse, so too will be real estate investing. Buying, swapping, improving, bragging, one-upping … to these metaverse real estate enthusiasts, it’s a game of its own kind.

Speculators

I divide this group into three subgroups. The first is the cynical devotees of the “greater fool theory,” which holds that an investor is willing to pay “X” for an item as long as they’re convinced they’ll be able to sell it for “X+1” to the next person. Second, speculators also include less nefarious long-term investors looking for an alternative bull market option. Finally, other speculators are “fix and flippers” who are skilled at purchasing properties, furbishing them inside and out, and then reselling them to advocates, marketers, and hobbyists who aren’t quite as adept in this space and want a move-in ready property.

Final Word

I’m a futurist, not an investment coach. So please don’t take investment advice from me. Period.

Having said that, and again speaking as a futurist, we’re nearing a tipping point. I think there’s a very good chance the metaverse will be around for a long time and that over time, it will mimic nearly all the good and bad elements of our physical world.

That’s true for real estate in the metaverse too. There will be fluctuations and even bubbles. Ten years from now, any investor’s property might be worth 0 or else 100X what they bought it for. You might be the former, you might be the latter.

New metaverse platforms will emerge and many more will die away, along with all of their meta mansions, shopping centers, and convention centers. But the metaverse real estate market overall will consolidate and survive over time and property owners can too if they can avoid all those nasty pitfalls along the way.