Back to reality in the metaverse. After the insolent growth of prices and transactions between September 2019 and March 2022, the real estate speculative bubble around these persistent virtual worlds has burst, Les Echos reports this Thursday.
It’s simple: the sale prices of residences, offices and other land in the various metaverses have literally collapsed. In fact, on Decentraland and The Sandbox, the two main real estate transaction platforms in the metaverse, the average sale price of land has decreased by 84% and 90% of its value respectively in 2022.
In question, the spectacular drop in the value of cryptocurrencies and NFTs that began in late 2021 and continues this year. Cryptocurrencies are used to settle the buying and selling of real estate in the metaverse. However, the crisis in the cryptocurrency market has strongly affected the economy of virtual universes by causing a significant drop in the price of land, offices and other residences.
Excessive speculation and valuations
Decentraland’s cryptocurrency Mana has lost two-thirds of its value this year. Its counterpart, The Sandbox, lost three quarters. Another factor: short-term speculation that pushes many owners to rush to resell their acquisitions (5-6 months in The Sandbox and Aether City) for significant profit.
This technique, which worked for a long time because real estate supply in the metaverse was low and demand was strong, de facto led to higher prices. Investors have grown tired of these predatory valuations.
A still uncertain market
The model ran out of steam and sales began to fall. The number of real estate transactions fell 97% in Decentraland and The Sandbox in 2022, WeMeta’s market analysis details. Sales of 2,000 were listed last June. Far from the peak seen at the end of November 2021 during which 16,000 property sales were recorded every day in the metaverse.
If the prices to buy virtual possessions are now attractive, the current crisis dynamic could continue despite the most optimistic studies announcing significant growth in the metaverse market. The latter could go from 47.7 billion dollars in 2020 to 829 billion dollars in 2028.
Source: BFM TV
Emily Miller is a voice to be reckoned with in the world of opinion journalism. As a writer for News Rebeat, she brings a unique and thought-provoking perspective to current events and political issues, delivering insightful and engaging commentary.