Let's Get Digital: Why Digital Real Estate Investments are Exploding

Digital real estate investing existed long before the metaverse did. It started with a rush for top-level domain names, then we gradually evolved to 'likes' on a Facebook page and search engine optimization to ramp up website traffic.

Digital real estate refers to any exclusive online property that could be bought, sold, and traded similar to traditional real estate assets. Originally, digital real estate meant selling domain names and social media accounts that generate value by being popular internet destinations. Today, this definition has expanded to include digital property in virtual worlds known as the metaverse but still includes some parallels like NFT domain name protocols such as ENS.

Metaverse real estate

Also known as virtual land, digital real estate in the metaverse is usually structured as plots of land in a shared virtual world that users can own by holding non-fungible tokens (NFT). Owners of virtual real estate can use it to host events, build structures, or rent it out to other players. The value of virtual land mostly depends on its dimensions and proximity to other landmarks in the digital world, but there are other creative ways to profit from digital real estate investing.

Metaverse digital marketing

One way to profit from digital real estate investing is by selling ad space on your digital land. For example, someone with digital real estate investments in a popular metaverse like Decentraland could sell virtual billboards to advertisers. Just like physical real estate next to a busy highway, digital land that sees lots of player traffic is more likely to draw in advertisers and rake in higher profits.

Another way a digital real estate investment could translate into real-world dollars is by turning your virtual land into a metaverse attraction. For instance, an investor uses their virtual property in a metaverse like the Sandbox to build a venue for shows and concerts that people visiting the digital world can buy tickets to attend. This is how digital assets can be just as productive as real-world real estate without the hassle of maintenance, utilities, or property taxes.

Biggest digital real estate deals

One aspect that makes digital real estate investing riskier than regular property investing is speculation. Virtual worlds have surged in value this year as major brands have begun investing in NFTs and the metaverse, but that doesn't mean your digital real estate investment will necessarily flourish. So while there are lots of legit digital real estate investing opportunities, the performance of a digital asset depends on the popularity of the virtual world it's in.

As the metaverse concept exploded in popularity, many companies and upstart projects have capitalized on the hype. A cheat code for forecasting the success of a metaverse project is observing how much its branding has proliferated into popular culture. For example, Board Ape Yacht Club's the Otherside metaverse had a wildly successful land sale because Yuga Labs cultivated a powerful brand presence for the NFTs. That's why virtual reality platforms with a large user base and solid artistic direction that you're sure is going to be a hit are safer to invest in.

The fastest way to purchase digital real estate is through an NFT marketplace where users are selling digital real estate such as OpenSea. Metaverse platforms like the Sandbox and Decentraland also have their own marketplaces where investors can buy and sell virtual land and other assets that can be used in their respective digital worlds. These are the quickest ways to buy property in a digital world, but the secondary market isn't the cheapest place to purchase digital real estate.

To get the best deals on digital assets you'll have to mint them yourself on the blockchain. Some developing virtual worlds offer early supporters an opportunity to mint digital real estate for cheap with the hope that their metaverse will become popular and make their digital real estate valuable. Minting means generating the virtual land NFT before the digital real estate exists, so you can technically purchase virtual land before it has even been built. Minting digital real estate usually requires connecting through a DeFi wallet to pay for it with a metaverse crypto.