Non-fungible tokens (NFTs) aren’t exclusive to the art world, in fact, nearly anything can be sold as a digital asset these days. And while a song or a piece of art that’s minted as an NFT can be downloaded by its owner — giving it a ‘physical’ feel — other digital assets are much more abstract.
Real estate has become the latest industry to embrace NFTs. Livabl has previously reported on an LA realtor who tried and failed to auction his Thousand Oaks duplex alongside a pop art-inspired NFT, as well as a listing for an $87.7 million Bel Air estate that includes a $7 million NFT art collection.
The latest NFT craze within the real estate sector isn’t related to physical properties at all, but rather digital land and structures that exist in virtual worlds like Decentraland. For the uninitiated, Decentraland is a blockchain-based, online multiplayer game that allows users to buy, sell and develop digital land. Save for the roads and a community hub known as Genesis Plaza, everything in the metaverse can be acquired using a cryptocurrency called MANA.
The virtual parcels within Decentraland are aptly known as “LAND,” and the game’s blockchain infrastructure allows real estate transactions to be recorded or transferred with ease. Measuring 256 square meters, each parcel of LAND is purchased as an NFT, which has a unique identification code. LAND-owners have total control over their properties, and can decide what virtual developments they build onsite to attract other users, whether it be an art gallery or a music venue.
Brands have even begun to advertise in Decentraland. In June, Atari announced it would be “[taking] over a large Estate in the metaverse” — an Estate is defined as a cluster of neighboring parcels of LAND — to create a retro arcade with classic Atari games like Pong and Break-Out!
Beyond profiting from buying, selling and developing LAND, digital real estate investors who own desirable parcels within Decentraland could feasibly get paid by real-life companies to create interesting virtual spaces as a form of sponsored content.
If this all seems like the fever dream of someone who played The Sims too often in the early 2000s, here’s some food for thought: A Decentraland Estate consisting of 259 parcels recently sold for 1.3 million MANA — more than $900,000 — making it the most expensive virtual land transaction of all time. The Estate was purchased by a US-based virtual real estate firm called Republic Realm.
Interest in virtual real estate is picking up. The Alibaba-sponsored Taobao Maker Festival, taking place from July 17th to the 25th in Shanghai, features over 1,000 virtual structures designed as a collection of NFTs by Chinese artist Heshan Huang. Comprising 10 freehold luxury villas, 300 high-end building units and 1,000 umbrellas, the for-sale NFT collection exists within the virtual Bu Tu Garden Community. Huang told Blockcast.cc that the structures exude a “socialist cyberpunk” aesthetic.
While virtual real estate is laughable to some, others see it as a legitimate asset that could appreciate in value. And hey, you won’t have to ask your friends to help you move when you purchase a new “home” on the metaverse.