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Early in Web 2.0, people were selling pixels on websites and trying to figure out how to monetize digital spaces. The answer turned out to be banner ads. Now, as we move into the next evolution of digital spaces, we’re doing it again—this time (for now) as digital real estate. Land in the digital world is being zoned, sold, and developed as people settle into their virtual lives. Though the metaverse is arguably infinite, shared spaces within it can have more defined boundaries, and many emulate traditional cities and towns. Some of these spaces are becoming popular hubs for virtual communities, gaming, commerce, and culture, giving rise to a digital currency to rent and own virtual property. In an episode of HBO’s “How To With John Wilson,” the titular documentarian interviews a man who works as a “land baron”—essentially a virtual real estate agent—in the metaverse platform Second Life. The man explains how his avatar helps users tour and select properties in the platform’s virtual world, collects monthly rents, and even evicts delinquent tenants. As metaverse platforms attract more users (recreational ones as well as those with business interests) and integrate more functionality, new “neighborhoods” are taking shape around the same criteria that define their real-world counterparts: like-minded communities, property values, zoning codes, gentrification, strategic retail locations, and locally accessible services and cultural resources. Digital real estate saw a boom as the concept of the metaverse rose in popularity: In 2021, a new record was set when digital real estate investors and developers Republic Realm purchased a plot in metaverse platform The Sandbox for $4.3 million. Soon after, an anonymous user reportedly paid $450,000 to purchase a plot of virtual land in The Sandbox next to Snoop Dogg’s virtual residence, “Snoopverse.” The market has since cooled, showing that real estate in the nascent metaverse is subject to the same opportunities and pitfalls of any real estate rush. Savvy buyers may be able to snap up affordable properties now that eventually skyrocket in value, but this volatile market is best suited to investors with a high risk tolerance. For now, investors may just be buying empty lots on the Vegas Strip in the middle of a digital desert.

Digital real estate and the new “neighborhood”