Virtual landlords have found a way to leverage their investments, but with unintended consequences.
For an average price of 10,000 MANA tokens (or $7,000) per day, anyone can rent a 27.87-acre plot in Decentraland, a 3D virtual world that runs on the Ethereum blockchain. Renting the plot will give the tenant the right to build anything they want – a store, an event space, an art installation, or anything else to welcome friendly passersby. But the real winner would be their landlord, whose name is Beatrix#7239;s virtual pockets bulge with money.
Not every property is as expensive as Parcel 27.87, which sits at the center of the world map, near where people first settled in Decentraland. No one has yet taken up the offer to rent on those terms. However, a rental market for virtual real estate is beginning to take shape, creating a new source of income for virtual landowners who buy up attractive spaces in the metaverse.
Over the past nine months, brands such as Mastercard and Heineken have rented plots for one-off events or product demonstrations, and in December Decentraland launched tools that allow anyone to rent virtual land. This is what Wired wrote on the subject.
“The goal was to democratize access to the virtual world”
explains Nico Raico, who led the development of the rental feature for Decentraland.
According to him, everyone benefits because renting gives new users an ideal “starting point” and landowners can earn a passive income.
One virtual landlord, Chris Bell, who owns one of the largest land portfolios in the Somnium Space, says he earned $18,000 in rental fees in 2021. After cutting his teeth renting out apartments in the physical world, he’s created something of a virtual real estate empire, amassing 100 parcels.
Although virtual property rental is extremely niche, an entire industry has already been created around the concept. Not only are there virtual landlords, but there are property managers and real estate agents helping them, and developers helping them design and build the buildings they want to rent out. There are even investment firms that specialize exclusively in virtual property.
Either way, so far these experiments are taking place on a small scale. Although Decentraland attracts tens of thousands of people during events such as Metaverse Fashion Week, on average fewer than 1,000 people visit the world each day – and the same is true of its competitors.
The secret to Second Life’s enduring success and stable social equilibrium – two decades later, the platform still attracts 40,000 regular users – is the relentlessness with which it mimics reality, Rosedale argues, right down to the taxation system.