Is it a surprise that virtual real estate transactions are on the rise? According to data from MetaMetrics Solutions, real estate sales in the metaverse were over $500 million in 2021 and could potentially double in 2022. According to nonfungible.com, the average real estate parcel in The Sandbox metaverse platform was worth $2,620 in mid-October, and once Facebook announced its focus on the metaverse moving forward, that price escalated to $11,042.

A significant factor moving investors toward real estate investments in the metaverse is scarcity and the possibility of high returns on investment. Metaverse worlds like Decentraland have a finite number of plots containing parcels of land. For many investors, the time to purchase is now given that plots are in limited supply. As people increasingly spend time in virtual worlds, property owners hope this will increase the value of their real estate investment proportionally with an eye toward renting their real estate down the road.

In recent months, the volume of transactions for commercial real estate in the metaverse has rapidly also increased. Last fall, Tokens.com, a blockchain technology company focused on NFTs and metaverse real estate, acquired 50 percent of Metaverse Group, one of the world's first virtual real estate companies, for about $1.7 million. Metaverse Group has virtual headquarters in Decentraland in Crypto Valley. Since the acquisition, Tokens.com has broken digital ground on a tower in Decentraland with future plans to build a portfolio of properties.

Purchasing land in the metaverse is easy. You need to obtain a digital wallet to purchase and reserve your cryptocurrency as a first step. Next, you must decide on a real estate platform such as Decentraland or Sandbox. Once you see a parcel you like, connect your wallet to confirm your land purchase. Once connected to your wallet, the virtual land will be affiliated to your account and you become the owner of the property.

People can also purchase virtual property with a mortgage as in real life. Potential virtual landowners intending to fund the acquisition of real estate can count on non-fungible tokens to work as digital asset collateral for land purchase in the metaverse. The virtual land mortgage provider retains the land NFT until the loan is repaid. The borrower will have the "deployment rights," which allows the borrower to construct structures on their property and more.

Money in these digital worlds is a cryptocurrency. Finance in the metaverse is powered by the blockchain, a digitally distributed public ledger that eliminates the need for banks. All those entering a virtual world can buy or trade art, music, and even homes as NFTS, blockchain-based collectibles that are digital representations of real-world items. The NFT provides proof of ownership and is not interchangeable.

Some companies are pioneers in the metaverse. Some will make it big and others could lose everything along the way. Life imitates art, right? It is both a high risk and a high reward proposition with many investors staking their claim, taking a chance and buying virtual land in what they hope will become an investing powerhouse.

There are many advantages to becoming a landlord in the metaverse. You can make a profit while your virtual land increases in value and input costs are modest.

However, you can't escape from the risks involved in metaverse real estate. Metaverse might be racing, but there are problems associated with it. The metaverse properties are a niche market. If a metaverse platform fails, guess what? So does your investment.

Additionally, if you visit this virtual world you might be surprised to find that it is sparsely populated. You'll often come across an Away from Computer (AFC) response. This is a problematic since the utility of digital worlds hinges on interaction so the AFC and low numbers of actual users could challenge the profitability model at its core.

Anyone in the cryptocurrency world has noticed regulations have grown as the technology has matured. The increased oversight has the potential to strangle rising platforms quickly. While real-world property has years of established laws behind it, metaverse virtual land is the new Wild West and you can lose your shirt. Beware of platforms on spec and buying on blueprints. This February, China's financial services watchdog alerted that illegal fundraising schemes and scams related to the metaverse are rising. Regulation is definitely coming!

Meanwhile, cryptocurrencies and decentralized apps (DApps) are being used to transact in brand new ways to get resources to Ukrainians under threat from Russian invaders. We have seen Ukrainians list their properties for rent on platforms like Airbnb for Westerners to get aid directly to individuals, turning it into a first of its kind decentralized aid distribution platform.

This vision is here but its acceptance into the mainstream market is a long way off. Real estate investing in the metaverse still is highly speculative. No one knows whether this boom is the next big thing or the next big bubble. That said, the metaverse offers endless potential for reward to investors who purchase land early. Early investors will receive higher value for money as those who choose to purchase later will be buying properties at a premium as the urge to take part in the metaverse progresses.