As the metaverse land grab continues, prices for the cheapest available parcels of land on two popular platforms are retailing for more than $13,000, pricing out many would-be landowners.
The metaverse refers to different platforms on the internet that are creating an interactive world, complete with virtual entertainment and businesses. As of Wednesday, the cheapest price for a parcel of digital land in the Sandbox platform was 3.7 Ether, the equivalent of $14,099, and on Decentraland it was 3.46 Ether, the equivalent of $13,211, according to Meta Metric Solutions, a company that tracks digital real estate prices. A 1×1 parcel of land, the smallest size available, is equivalent to what the user’s avatar would experience as 96-by-96 “meters” in the Sandbox, and 16-by-16 “meters” in Decentraland.
It wasn’t always like this. The price of a 1×1 plot in the metaverse skyrocketed in the latter half of 2021 due to Facebook’s rebrand to Meta, artificial scarcity, and institutional investors entering the market, according to experts.
The smallest and cheapest plot in the Sandbox in March 2021 was between 0.3 ETH and 0.5 ETH, or about $600 to $1,000 based on Ether’s price at the time, said Camilo Echeverri, cofounder of the MetaGameHub DAO, a 760-member organization that invests in digital real estate.
That means that prices have increased more than 10-fold in less than a year.
The price increase is due to a number of factors, but Facebook’s rebranding as Meta, along with the company’s promise to invest $50 million over the next two years in the metaverse, was a big part of why prices skyrocketed in late 2021, according to Echeverri.
“Everybody was like, ‘Oh, Facebook is changing their name. What is there that we can leverage right now to take advantage of this price increase?’” he said.
But not all of the hype can be attributed to Meta. Both Decentraland and Sandbox have said they will release only a limited number of digital parcels—ever. Only 166,464 parcels of land will be available in the Sandbox and only 90,601 will be available in Decentraland. In short, the platforms have intentionally (and artificially) made land scarce.
Because of that scarcity, some investors were eager to get in early before prices went up, especially for the smaller parcels, which are most affordable. Real estate companies like Republic Realm and the Metaverse Group bought up large portions of land in the Sandbox and Decentraland in 2021, investing millions.
Yet, as deep-pocketed investors continue to snatch up land in the metaverse, Echeverri said he is concerned that the Sandbox and Decentraland could become populated more by large companies, edging out individual (human) buyers.
But even with digital land selling for thousands, there’s always room to go higher.
“Relative to where it was six months ago, land is not cheap,” said Ryan Baue, cofounder of MetaMetric Solutions. “It’s expensive, but that does not mean we can’t go higher from here.”
Fortune’s upcoming Brainstorm Design conference is going to dive into how businesses are building experiences in the metaverse. Apply to attend the event on May 23-24 in New York.