Real estate sales in the Metaverse topped $500 million last year and could double this year, according to investors and analytics firms.

Real estate sales on the four major metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions. Sales in January topped $85 million, the metaverse data provider said. He predicts that at this rate, sales could reach nearly $1 billion this year.

The recent surge in sales was sparked by Facebook’s announcement on October 28 that it was changing its name to Meta to focus on the metaverse. Home sales jumped nearly nine-fold to $133 million in November, according to MetaMetric. Sales growth has faded since then, but total January sales will still be more than 10 times higher than January 2021 levels.

A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31% per year from 2022 to 2028.

“There are big risks, but potentially big rewards,” said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.

Republic Realm has paid a record $4.3 million for land in the biggest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and an associated boat and jet ski market. Ninety of the islands sold on day one for $15,000 each and some are now up for sale for over $100,000.

For investors, the big question is how to attribute value and risk to an asset whose scarcity is artificial and whose future is a blank slate. More than a dozen platforms now sell real estate in the metaverse, with new ones popping up almost every week. So far, real estate sales have focused on the “Big Four” – Sandbox, Decentraland, Cryptovoxels and Somnium. There are a total of 268,645 packages across the four platforms, all of them varying in size.

Sandbox dominates the market, with 62% of land available across all four platforms and three-quarters of all land sales in 2022, according to a report by Republic Realm. Sandbox has 166,464 packages, each 96 meters by 96 meters, and each sold for the Ether equivalent of $12,700 in December.

Decentraland has 90,600 plots, which measure 16 meters by 16 meters, and are being sold for the Ether equivalent of $14,440 each.

A rush of companies, big brands and investors are flocking in the new land craze, hoping to settle on the ground floor of the next Manhattan or digital Monaco. Yorio said the value of land in the metaverse will be determined by what owners do with a property — like designing an attraction, museum, or popular item — rather than location.

“You can teleport anywhere, so location isn’t as important,” she said.

Yet other investors say that, just like in the real world, location in the metaverse matters when it comes to real estate. Prices for packages near the planned partnership of Snoop Dog and the virtual world in Sandbox reach a premium, as well as packages near the development of Atari.

Andrew Kiguel, CEO of Toronto-based Tokens.com, recently raised a $16 million fund to invest in metaverse real estate, nearly all of which has been earmarked for land purchases and development. hiring staff. The company recently spent $2.4 million on land in the Decentraland fashion district, where the company plans to host fashion events and retail stores.

Kiguel said he’s set to announce deals with two North American clothing brands where he’s renting space on his property to develop storefronts or experiences. Kiguel said the real opportunity in the metaverse is commercial — renting space and hosting events for companies looking to advertise to younger digital audiences. He said he was in talks with accounting firms, investment banks, podcasts and mutual funds to establish a presence in the metaverse.

“We’re even talking to companies about setting up digital notice boards in virtual conference rooms where people can meet,” he said.

Tokens.com has purchased 12 waterfront properties in Somnium that it believes will increase in value due to their rarity and visual appeal, Kiguel said.

Yet others say the metaverse land is just the latest iteration of the crypto ponzi scheme, luring unwitting investors into projects that may eventually turn out to be worthless. While real earth has a natural scarcity – hence the old adage “They don’t make any more” – virtual earth is easily created with code. There is no limit to the number of new metaverse platforms that can be launched. Even large existing rigs can create more land, as Sandbox did when it decided to increase the size of its plots.

Many point out that previous versions of virtual land grabs, such as in “Second Life”, fell far short of what they promised.

“Metaverse land sales are generally a pyramid scheme and have been for more than 20 years,” said Edward Castronova, professor of media at Indiana University. “The Metaverse is El Dorado for internet startups. They hunt it in the jungle and die.”

While older investors may scoff at metaverse lands, Kiguel said, younger consumers and investors are instantly able to see the appeal.

“The problem that a lot of people have is that there are generations that struggle to place value on things that are digital, things that you can’t hold and don’t have weight,” Kiguel said. “The younger generation has no problem with that. As with NFTs, blockchain technology allows something to be digital, irreplaceable and rare. You can keep it, store it, display it and sell it.”