Real estate crisis: the price of land plunges by more than 80%! Real estate sales are collapsing… In the metaverse

Not even a return to reality

Land prices have collapsed by 80% in the metaverse, according to sector specialists. News that shows that the metaverse is indeed a world apart, not a projection of our world into the virtual. Land prices could never collapse by 80% of their value. In these virtual universes, with the fall of cryptos, speculators would rather have taken care of their real portfolio than virtual worlds. This is not a return to reality for this market, since precisely, nothing is real, except the sums exchanged. By the way, in the metaverse, there is only new real estate? No, of course not.

Upside Down Metavers

Parallel worlds are an important source of inspiration for the series. But in the metaverse, it’s serious, pure business. Thus, according to Chainalysis, the real estate speculative bubble of the metaverse (residential, offices, land) burst this year in the context of the collapse of cryptocurrencies and NFTs (non-fungible tokens). Between September 2019 and March 2022, the peak of the metaverse bubble, virtual real estate prices jumped 879%, or 23 times more than traditional real estate (+39%).

The owners of real estate in the metaverse quickly resell their land, after a few weeks (5 to 6 months on The Sandbox and Aether City) in the hope of short-term capital gain. “Most markets, with the exception of OVR Land, are showing signs of speculative activity,” according to Chainalysis. Like what, you have to be an expert to know that this is speculation.

Virtual worlds have been overtaken by the “reality” of the virtual world, the value of which remains to be defined. Short-term speculation worked very well for a long time with a peak in profitability in November. Over two years (2020-2021), the purchase and rapid resale of land (less than thirty days after its acquisition) on The Sandbox had generated profits 98% of the time according to the Messari company. This year this technique still worked 88% of the time. Specialist traders still manage to make money in a much riskier environment. 21,700 owners are listed on Sandbox and 7,500 on Decentraland, according to data from NFT-Stats reports as well The echoes in a detailed article on this subject.

Showered speculators

But crypto-denominated land prices have also fallen. The price of the cheapest plot on Decentraland fell 3.5 ethers to 1.90 ethers this year, a drop of half. The real estate market collapsed due to excessive valuations, which deterred buyers. The imbalance between limited supply and high demand benefited prices in 2021. But the number of virtual real estate speculators and traders fell sharply. They were nearly 9,000 on The Sandbox last April, against only 600 this summer.

Financial magnitudes… Frightening

The Technavio company predicts that the metaverse real estate market will reach a size of 5.4 billion dollars in 2026. Some also predicted that Bitcoin was to reach $100,000… These forecasts only engage those who make them. The value of the land depends on its rarity and its location, but these links are less strong than in “classic” real estate, notes the company, which is obviously well advised to make such conclusions (sic). Too strong and irrational fluctuations “ metaverse real estate prices could negatively affect market growth “. This remark borders on divination. The land has soils that are more or less rich in natural resources (metal, stone, wood, etc.), which make up part of their value. They are traded in ApeCoin, the cryptocurrency created for Otherside. Its capitalization had reached $7 billion in April. It is worth 2.2 billion today which is, for a rational being, already enormous!