The digital environs of the metaverse are not enough to protect virtual property owners from a downturn towards reality.
After surging in the fall, metaverse real estate values are plummeting, The Information reported. The drop in value and sales volume comes alongside a similar drop in the value of cryptocurrency and NFT prices in recent months.
Metaverse real estate trade volume rose in November, following Facebook’s rebrand to Meta Platforms. The rebrand highlighted the metaverse’s potential to a larger audience who saw one of the world’s biggest technology companies leaning into the virtual world.
It’s been a rough ride since. Trading for land on six platforms, including Decentraland and The Sandbox, is down 97 percent from its November peak, according to data from WeMeta. Trading volume topped out with $229 million in November, before sliding to only $8 million in June.
Total sales and the average price of land are also drawing premonitions of the blue screen of doom. Total sales fell from 16,000 in November to 2,000 in June. The average price of land, meanwhile, was $3,300 in June, down nearly 80 percent from a peak of $16,300 four months earlier.
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The decline in cryptocurrency prices is only partially tied to the fall. From February to June, the average sales price fell 58 percent on a crypto-denominated basis.
MetaSpace REIT founder Eric Klein
“The metaverse had so much hype at the beginning of the year and we’ve kind of lost it,” Eric Klein, founder of MetaSpace REIT, told the outlet.
Commercial real estate in the metaverse has been viewed as one of the next frontiers. Much like the physical world, property owners develop land by creating virtual storefronts and selling or renting to companies looking to sell items or employ marketing.
As the macroeconomic picture in the physical world grows worrisome for many, the the still-limited market of the metaverse is losing appeal. Some companies are starting to think the payoff isn’t worth the problems the metaverse brings.
Many people still have a vested interest in the success of the metaverse’s real estate gambit, however, and see brighter days ahead. Klein said the promise of metaverse real estate will “come to fruition within the next couple of years.”
— Holden Walter-Warner