The next hot housing market is out of this world. It’s in the metaverse

In March, Gabe Sierra, a contractor whose family has been in the construction business for more than 30 years, will take offers for his latest creation: an 11,000-square-foot mansion with seven bedrooms and a pool in Miami’s Pinecrest.

To sweeten the deal, he’s throwing in the exact same house and a King Kong-size, bright-green gorilla that scales downtown skyscrapers and stalks the streets of South Florida.

The twin home is in the metaverse — a catchall phrase for the growing conglomerate of immersive digital worlds where avatars work, play and purchase goods. Pixelated parcels of land are being bought, sold and built upon in a market now worth $1.4 billion, making the metaverse a new frontier for real estate builders and investors.

Sierra, an avid gamer who uses a purple gorilla as one of his own avatars, paid $10,000 for a digital parcel in an online world called the Sandbox and then partnered with Voxel Architects, an architecture firm specializing in virtual 3D properties, to build the digital home to pair with the real thing. It all hits the auction block in March, and he’s hoping for a sale price of about $10 million.

“It’s a project that blends the line between physical and digital to the furthest extent that I could on a residential home,” Sierra said of the house, called Meta Residence One. “It pairs a real-world build and expands on it in the digital space. As these technologies get more immersive, it’s going to make a lot more sense.”

Much like real-world real estate, where pricing fluctuates according to the principle of supply and demand, metaverse real estate also operates on a fixed scale. The internet itself may be boundless, but most virtual gaming universes have already been sliced and diced into a set number of parcels, meaning as the number of buyers increases, prices go up as well.

Financial transactions in the metaverse are handled in cryptocurrency and powered by the blockchain — a digitally distributed public ledger that eliminates the need for a third party such as a bank. Despite the implosion of FTX and projections of a crypto winter, the metaverse real estate market is expected to grow by $5.37 billion by 2026.

In the Sandbox, one of the most popular metaverse worlds and where Sierra made his $10,000 purchase, much of the virtual land rush has been at the hands of global corporations such as Adidas, Atari and Warner Music Group, which have bought spaces to create entertainment, sell goods, launch virtual headquarters and host immersive gatherings for employees and fans.

Last year, the total value of land in the Sandbox, which is sold via a non-fungible token, or NFT, was estimated to be $167 million. And while land purchased directly from the Sandbox goes for about $400 a parcel, there’s an active secondary market where prices can be many times that. Proximity to land owned by celebrities and big-name brands drives up prices, too: After Snoop Dogg purchased parcels in the Sandbox and christened them “Snoopverse,” one buyer paid $450,000 just to become his neighbor.

“Land is becoming the infrastructure of the metaverse,” said Sandbox co-founder Sebastien Borget. “In this ecosystem, there are actors that are developing and offering services for people to find the right land, buy the right land and understand the value of that land.”

The metaverse has been around since 2003, when Second Life, a 3D virtual world platform, came onto the scene. But virtual real estate didn’t truly take off until late 2021, when Mark Zuckerberg announced that the social media platform formerly known as Facebook would now be called Meta, placing a hyperpublic bet on the future of the next digital frontier.

Since then, land sales in the metaverse have climbed into the seven figures, including a virtual estate purchased for $2.4 million in November 2021 in Decentraland and another for $1.65 million in Otherside in May.

And now, in addition to billboards and burger joints for avatars, homes are being constructed on these parcels of land. They don’t offer shelter or a place to sleep. But they do offer our increasingly online selves a place to gather — and show off.

“Buying a piece of real estate for a residential purpose in the metaverse is a kind of prestige,” said Kristi Waterworth, a journalist and contributing analyst for The Motley Fool who writes regularly on metaverse real estate.

It’s also a chance to bend the rules of physics. Everyrealm, a metaverse technology and infrastructure company, partnered with artists including Misha Khan and Daniel Arsham to create the Row, a futuristic collection of digital homes marked by melting, Salvador Dali-esque angles and dreamlike floating spheres. The homes premiered at Art Basel in an immersive exhibit and are not yet for sale, but Everyrealm CEO Janine Yorio says she anticipates each will sell for about $75,000.

Buyers will receive a certificate of authenticity as well as 3D models of their home, and then be able to place it on a plot of land in the online gaming world of their choice.