Blockchain-based virtual real estate prices soar

The blockchain data platform Chainalysis recently conducted research that reveals the price of blockchain-based virtual real estate (VRE) increased by 879% between September 2019 and March 2022.

The study also discovered significant differences in land prices among various metaverse projects, with the underlying blockchain that the metaverse is built on appearing to be the primary determining factor.

In an attempt to analyze the purchasing and selling behaviors of virtual real estate investors, Chainalysis researchers discovered that in 10 of 11 metaverse projects studied, users held their VRE NFTs for less than 25% of the time the NFT collection was live, and in the majority (6 out of 11), they held it for less than 15%. This would imply that the majority of VRE purchases are currently made for the purpose of ‘flipping,’ or holding the asset for a short period of time with the intention of quickly selling it for a profit.

“Blockchain-based virtual real estate (VRE) offers both present-day and prospective benefits to the people who own it. Currently, the ability to create exclusive virtual events and communities is one of the major use cases that is translating into the sale of virtual real estate. Companies and individuals are also utilising these virtual spaces to set up digital galleries where videos, images, NFTs, and interactive objects can be showcased,” said Ethan McMahon, Economist at Chainalysis.

Providing insight into the external factors that will determine the long-term value of virtual real-estate, McMahon added, “Because the metaverse is such a nascent space, most of these are hard to foresee. That said, we believe that a couple of drivers may be whether AR/VR systems are more interoperable or proprietary, and the pace of adoption of new computing technology.”

Big-name tech companies like Meta, Microsoft, and Epic Games formed the Metaverse Standards Forum in June of this year (MSF). This group is tasked with developing open standards for everything metaverse, including AR, VR, and 3D technology. Nvidia, Unity, Sony, and the World Wide Web Consortium are among the other well-known companies (W3). It remains to be seen whether these companies will build their metaverse(s) in a way that is interoperable with existing metaverse projects and blockchain technology, but such integration would logically increase the value and demand for blockchain-based real-estate projects.

“In the near future we see this demand being driven further by use cases such as renting and leasing, free airdrops of future Virtual Real-Estate NFTs, and perhaps most importantly, integrations with virtual reality and augmented reality functionalities. The more immersive and life-like the virtual experience, the more likely it is for NFT-based ownership to feel tangible to users. So, the faster VR technology grows, the better it is likely to be for metaverse land offerings,” McMahon concluded.