In our opinion, it pays to be weary of mob mentality in most activities. We try to observe, evaluate, and act based on a proven formula for success, rather than following blindly into the latest trends. These statements could be true for many areas of interest, but they certainly ring true in real estate endeavors.
Being mindful of shifting market demand has always been and will likely always be good process for a savvy real estate operator. When we hear about burgeoning markets we are delighted to do our homework and see where an opening may be possible for profit. That said, we follow a proven formula. When we see people jump into something solely because other people are doing it, we tend to wince. Perhaps there hasn’t been a better example in real estate in the last 24 months than sales in the Metaverse.
It has been argued by some that many people and businesses rushed to acquire real estate in the Metaverse because they wanted to join a new economy, while others are purported to desire the advantages related to marketing opportunities. Clearly, some bought real estate for the bragging rights of claiming they own next to a celebrity. Whatever the reason, unlike real world land or real property, the Metaverse is all digital. The Metaverse is all about confidence in perceived value. Arguably, so is anything, but the distinct difference is tangibility. Gold is tangible. Real property is tangible. Digital assets can be lost in a blink of an eye, literally.
Since the height of recent demand and enthusiasm for Metaverse real estate, the values have dropped by a reported 85%. Sales of real estate in the Metaverse appear to be getting longer and longer. Clearly, there is a lack of confidence. It would be prudent to recognize that any commodity goes through cycles and it is very possible Metaverse real estate may experience a huge rebound in demand, but it is not likely in our opinion until some other developments occur which bring added value to enthusiasts spending more time and treasure in the Metaverse.
We do believe that long-term, the Metaverse will blossom and grow, but like any new product or opportunity, there needs to be a wider use and adoption which hasn’t been fulfilled yet. Yes, there is demand, but like in real world real estate, you don’t just build a community of homes without amenities. The amenities are growing in the Metaverse and as they continue to become more attractive, there is likely going to be increasing stability in Metaverse opportunities. In the meantime, if it were us, we would continue to explore opportunities, but following a proven formula of risk vs reward evaluation before proceeding.
So are investments in the Metaverse a mistake? That depends on your reasoning and risk appetite. It is certainly more risky now than it will likely be in the future. Mistakes normally arise when you are acting on emotion and not a well-conceived plan. We hope this helps, but as always, we can not and do NOT provide tax, accounting, legal, financial, nor investment advice.