+6113002454901300 245 490
SuburbaniteProperty Advisory+611300245490

A new real estate record has been broken with a $2.43 Million (USD) sale of a virtual property in the ‘metaverse’…but what does this mean for Aussies?

With real estate prices sky rocketing right across Australia, first time buyers and seasoned investors are turning their attention to virtual real estate.

Like the Bitcoin trend that swept the globe over the past decade, virtual real estate is the next online investment that is getting some real traction, with real money.

So what is a metaverse and how does it all work?

According to Anna Porter, Principal of Suburbanite, Market Commentator and Author, users create digital worlds with some of the most cutting edge technology and then sell virtual plots of land.

“The buyer trades through a platform such as Sandbox or Decentraland and then sets up a crypto wallet, where they exchange ’real’ currency for crypto currency and purchase the virtual real estate with their digital currency,” she shares.

“Both the money and the ownership transfers are built on the blockchain network and once you own a piece of virtual land, you can then build on it, rent it or even continue to trade it – exactly like real property.”

Japanese video game maker, Atari, recently purchased 20 parcels of digital land in Decentraland and created its very own Crypto Casino where gamblers can place bets and receive winnings in crypto, tax-free. Atari has also announced plans to launch its own virtual hotel complex this year.

Some investment firms and tech giants are likening this to the early days of Crypto and Facebook and are getting behind it with their own money.

Coming back to the real property market, with the likes of 20% growth across most capitals and regional hubs in Australia over 2021 many buyers and investors are completely priced out of the areas they live in.

“People are actively looking for alternative investment strategies to get in to the property market or build their portfolio,” reveals Porter.

“This allows buyers to invest in a virtual property and start to build their capital as values increase in a similar way to that of real property”

However, Porter warns, it comes with some cautions as this model is in its infancy, is unregulated and high risk.

“Any investors considering this need to really weigh up the risks – the virtual world is not like trading real property where there is a huge amount of regulation to ensure that people act within the rules.

“To a great extent, in the real property world, your money is protected from fraudulent behaviour and due diligence measures are tried and tested,” cautions Anna.

“In the virtual world of real estate, it is all new, there are no regulator bodies over-sighting it and you don’t really know what you are buying and if it will retain its value,”

“The fundamentals are not there like in real property and it’s certainly not like you can live in it and enjoy the lifestyle it offers,”

“You don’t sit on your veranda and look at an ocean view, these are just some of the things that drive pricing in the real world, so the virtual real estate drivers are still a bit of a mystery.”

Having said that, Porter suggests it could be the next crypto and now is the time to be an early adopter, albeit risky.