A metaverse real estate firm, Republic Realm, has purchased a virtual plot of digital land from video game company Atari, and paid $4.3 million for it in the largest public virtual real estate sale to date, the company told the Wall Street Journal.
Investor interest in virtual real estate got a boost in October after Facebook renamed itself Meta Platforms Inc. and said it would focus on online worlds, commonly called the metaverse.
The metaverse is a digital space where social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies combine to allow users to interact virtually.
The two firms, Republic Realm and Atari, said they plan to partner on the development of some of the virtual properties.
The new purchase broke the record set on Nov. 23 by a subsidiary of Canadian investment firm Tokens.com Corp, which purchased a patch of digital land for about $2.43 million in the fashion district of a user-owned virtual world called Decentraland.
“This is like buying land in Manhattan 250 years ago as the city is being built,” said Andrew Kiguel, CEO of Tokens.com.
These virtual worlds are mostly created by videogame developers to include cities where users’ avatars can stroll and shop for a new winter coat or a painting to hang on the walls of their virtual homes.
The digital worlds also feature apartments or lounges where users can hang out with avatars of their real-life friends.
By buying digital land in online worlds, companies are betting that property values will go up as more people join in. The metaverse is the hottest real-estate market for gamers and digital property sales are setting new records.
Some investment firms are diversifying their assets among several virtual worlds, despite the risks involved due to the volatility of cryptocurrencies.
Unlike real-world real estate, which retains some value even during a market downturn, the value of virtual properties could fall to zero if the world they are in goes out of fashion and people stop visiting it.
“If I buy a building for 40 ETH, and then Ethereum goes from $4000 to $100, that’s a fundamental risk that I’m not really taking when I’m buying a piece of physical real estate,” said Zach Aarons, general partner of the real estate-focused venture-capital firm MetaProp.
Republic Realm is buying land in different virtual worlds to reduce the risk, according to its co-founder Janine Yorio.
The company owns 2,500 virtual land plots throughout 19 virtual worlds, with two specific investment vehicles focused on virtual real estate, including a mall, a community of 100 virtual residences and a private island, according to the Wall Street Journal.
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