Who's Investing in Virtual Real Estate: Inside the Metaverse Property Market

In the metaverse, virtual land is for sale. But who's buying?

Tue Oct 04 2022

6 Minutes


Key takeaways

  • Decentraland and The Sandbox are two of the most popular virtual worlds to buy land, having maintained strong ownership and trading volume growth.
  • Virtual world preference depends on buyer persona, although The Sandbox ranks as the overall favorite.
  • There is a dip in the number of new buyers entering the virtual land market for the first time.
  • The average hold time for land owners varies between buyer personas, which are explored in the article.

Current popularity, players, and sales volume

The concept of virtual land ownership has been around since the inception of the blockchain-based metaverse. Two worlds displaying the most activity are Decentraland and The Sandbox.

Decentraland: unique land holders

Decentraland held its first land auction in December of 2017, selling 34,356 parcels to over 700 unique buyers and generating over $30 million (USD) in sales volume.

The Sandbox: unique land holders

The Sandbox followed with its own initial land presale, which began in December 2019, selling 3,096 parcels to over 180 unique buyers and generating over $1 million (USD) in sales volume. As of August ‘22, there are 5,000 owners of LAND in Decentraland and 19,000 owners of land in The Sandbox.

Decentraland Land: monthly sales volume ($USD)
The Sandbox Land: monthly sales volume ($USD)

While a growing number of new virtual worlds are entering the metaverse, Decentraland and The Sandbox have maintained strong growth in ownership and trading volume.

Buyer personas and objectives

Blockchain data is analyzed to reveal patterns in on-chain activity associated with digital wallets to understand who is buying virtual land and how these buyers compare to one another.

On-chain activity refers to the transactions on a blockchain (in this case, Ethereum) reflected on the distributed, public ledger. By analyzing the on-chain activity of individual digital wallets, one can begin to understand the buyer’s persona. This is similar to how credit card companies gather information about their customers based on their purchase history.

Using on-chain activity, Parcel has segmented virtual land buyers into the following buyer personas:

Metaverse land buyer persona segmentation

The following table shows which virtual worlds each buyer persona prefers based on the amount of virtual land they own in that world.

Preferred virtual worlds per buyer persona

According to Parcel’s findings, Sandbox is the most preferred virtual world for all buyer personas. Corporations and communities especially prefer Sandbox over other personas. In contrast, Decentraland attracts investors and platform partners more than corporations and communities.

A growing number of blockchain-based virtual worlds offer land ownership (over 30 as of Q2 2022). We see that individual collectors and developers tend to embrace these other new worlds more so than other buyer personas.

Individual wallets that own over 500 individual parcels of land are considered land whales. The following table shows the top five land whales for each virtual world. Metadata associated with these wallets comes from on-chain wallet data as data provided through OpenSea’s API.

The Sandbox’s top 5 land whales

The Sandbox’ top 5 land whales

Decentraland’s top 5 land whales

Decentraland’s top 5 land whales

Note that Decentraland Estates are counted separately from Lands and represent at least two individual land parcels. Because of this, it is important to note that collectors like WenMun actually own much more land (at least 1,703 land parcels) than the Lands column count suggests.
MetaKovan stands out as both a land whale in Decentraland as well as The Sandbox, owning over 2,722 parcels of virtual land!

Who’s the new wave of buyers?

Historically, there has almost always been a net positive increase in new or first-time land buyers to Decentraland and The Sandbox.

However, as of June 2022, The Sandbox is experiencing negative growth for the first time. This is a result of new land owners selling their land to existing land owners. In other words, land in The Sandbox is experiencing its first accumulation phase. This is somewhat expected because of the market sell-off in Q2 of 2022.

The Sandbox: new land owners

As we can see, this negative growth in the most recently depicted month, August, decreased back towards net zero.

Decentraland, on the other hand, did see a decrease in the number of new monthly owners but did not drop to negative growth during this time.

Decentraland: new land owners

The average price per land parcel in each virtual world experienced similar trends, although The Sandbox stands out as the more volatile asset.

Average land price over the last two years (Decentraland and The Sandbox)

Average hold time

Analyzing the average length of time that land is held before it is sold is another way to measure different buyer behavior. Most transactions fall into two buckets, long-term holders and short-term flippers. This is especially true for Decentraland land owners, where 42% of land has been held for longer than one year.

Decentraland land owners: average hold time

At the other end of the spectrum, 21% of Decentrland land owners hold their land for less than one week. Land owners in this category are typically short-term speculators looking to flip the land for a quick profit.
The distribution between long-term and short-term holders varies depending on the type of land and its attributes. The following chart shows the same analysis for the land owners of The Sandbox.

The Sandbox land owners: average hold time

The average hold time for The Sandbox land owners falls more into the medium-term holder category. This may result from the large wave of new buyers that entered the market in November of last year (10 months ago). As time passes, these medium-term holders may move into the long-term holder category.

Closing thoughts

The virtual land market is still in its infancy. Most virtual real estate (VRE) land sales are made by early adopters, web3 communities, and game studios looking to invest in an emerging industry.

As the market grows, we expect more traditional brands and corporations will start buying land, using it as a new form of e-commerce.

Blockchain data can be used to better understand buyer personas and how they interact with virtual worlds. For example, buyers who opt for rare digital land tend to hold longer than those who buy standard plots. This could point to a difference between someone looking for an investment versus someone interested in creating their own world from scratch – which could inform some interesting design decisions for developers looking to create VR experiences with longevity.

It’s clear that the virtual land market is still in its infancy, but it’s also clear that many people want to be a part of it. Whether they are looking to profit from their investment or want to own a piece of some cool new experiences and memories, this market will continue growing as more and more people enter it.

Visit www.parcel.so to explore VRE on our Marketplace.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as investment or financial advice.







Recommended Articles

Parcel Logo


Parcel © 2023