Selling digital land is a trend that is reaching “fever” in Hong Kong as the world tech becomes more and more fascinated by the virtual ” universe metaverse “.
The term “metaverse” is suddenly everywhere, becoming a buzzword among technologists and crypto enthusiasts. But the latest group to take an interest in the new internet trend are tycoons and real estate professionals looking to buy land in the digital world. Selling virtual land has become one of the hottest trends in the technology world. Virtual land valuations sometimes exceed the valuations of real-world parcels.
According to the South China Morning Post, a plot of land on popular metaverse platform The Sandbox, controlled by Hong Kong video game company Animoca Brands, sold for about $4.3 million last month to Republic Realm, based company, New York- specializing in real estate development in the metaverse.
In Hong Kong, where housing is scarce and real estate is seen as the most important investment, interest around virtual land sales is running high. Not only large corporations have flocked in, individuals including former property brokers and wealth managers have also been busy getting in. This week, Adrian Cheng Chi-kong, the third-generation heir to New World Development in Hong Kong, announced the purchase of one of the largest plots of land in The Sandbox. The 42-year-old billionaire said he will set up a “GBA Pavilion” hub, where startups from the Greater Bay Area can sell their products virtual.
Andrew Man, Hong Kong investment specialist at public property firm investment, also started buying land in The Sandbox. Mr. Man said that a large number of buyers interested in virtual land is not surprising. “Last Saturday, a new area opened for sale and the land was sold out in the blink of an eye. About 100 new plots of land were created at that time. I joined a WeChat group with several landowners and we all failed to buy. It’s really a race of speed.”
Mr. Man now owns three pieces of land, one of which has nearly quadrupled in value in just a few short weeks. “When I bought it, it was about 1.8 ether ($7,241). Now it is close to 7 ether,” said Man. Ether is the second-largest cryptocurrency in the world. Virtual land is often sold as a non-fungible token (NFT). After that, NFTs are usually traded through cryptocurrencies.
However, the craze of virtual land sales is causing concern in Beijing, as the state media has repeatedly issued warnings in recent times. Newspaper People’s Daily (People’s Daily), the mouthpiece of the Communist Party of China, said last week that speculators risk of “burn bag” as quickly buy virtual land. The article states that selling real estate by metaverse method is like “financing the product”, bringing with it the risks of volatility, fraud, illegal fundraising, and money laundering.
According to Mr. Man, the wisdom that applies to real estate investing in real life is also very much applied in the virtual world. The biggest factor that determines the value of a parcel of land is “location”. There are two factors that determine the location value: its distance to the center of the metaverse and the influence of the neighborhood. “Someone just paid $450,000 for a small piece of land to be the neighbor of Snoop Dogg in The Sandbox. One of my plots is next to a huge piece of unsold land. I hope it will eventually be adopted by Disney or a similar company later on,” Man said.
Jason Au, the director of the Nasdaq-listed investment company Troops (USA), is also a fan of buying digital land. It is known that Mr. Au used to be the owner of a real estate brokerage company in the Mid-Levels district of Hong Kong. In August 2021, Mr. Au and some friends who are passionate about NFT bought some large plots of land in Decentraland, a popular metaverse platform similar to The Sandbox. Mr. Au believes a virtual land plot is worth nearly 10 million Hong Kong dollars (about 1.28 million USD).
Last month, a parcel of land in Decentraland sold for a record $2.43 million. “I see the world of NFT and crypto as going back to the early days of the internet when people registered domain names. Everything is like history repeating itself and that’s an opportunity for us,” Au said.
