Metaverse Real Estate Piles Up Record Sales

The latest hot real-estate market isn’t on the scenic coasts or in balmy Sunbelt cities. It’s in the metaverse, where gamers are flocking and digital property sales are setting new records.

A growing number of investment firms are acquiring digital land in worlds such as the Sandbox and Decentraland, where players simulate real-life pursuits, from shopping to attending a concert. They are betting that individuals and companies will spend money to use virtual homes and retail space and that the value of properties will increase as more people join the worlds.

Investors’ interest in virtual real estate got a boost last month after Facebook renamed itself Meta Platforms Inc. and said it would focus on online worlds, commonly called the metaverse.

That interest reached a new peak on Tuesday when Republic Realm, a firm that develops real estate in the metaverse, said it paid $4.3 million for land in the world Sandbox, the biggest virtual real-estate sale publicized to date, according to the company and to data from the website NonFungible.com, which tracks digital land sales.

Republic Realm bought the digital land from videogame company Atari SA and the two firms said they plan to partner on the development of some of the properties.

That acquisition broke a record set just last week by a subsidiary of Canadian investment firm Tokens.com Corp., which said it paid around $2.5 million for land in the world Decentraland’s Fashion District.

“This is like buying land in Manhattan 250 years ago as the city is being built,” said Andrew Kiguel, chief executive of Tokens.com.

These virtual worlds, often created by videogame developers, include cities where a user’s avatar can stroll and shops where they can buy a new winter coat or a painting to hang on the walls of their virtual homes. These digital worlds feature apartments or lounges where users can hang out with avatars of their real-life friends. Participants pay in cryptocurrencies to gamble in virtual casinos or to indulge in more extravagant pursuits such as virtual yachts.

Real-estate investors are looking to sell homes that are close to users’ friends and virtual attractions. They are also developing retail spaces, which they hope to lease to virtual retailers for rent priced in hard currency or cryptocurrency. Ownership of land is recorded through so-called nonfungible tokens, digital identifiers that act as de facto deeds. Property sales are usually done in a cryptocurrency unique to each metaverse.

The investments can be risky. Unlike actual real estate, which tends to retain some value even during a market downturn, the value of virtual properties could fall to zero if the world they are in goes out of fashion and people stop visiting it.

Prices can also be slammed by the volatility of cryptocurrencies, said Zach Aarons, general partner of the real-estate-focused venture-capital firm MetaProp. “If I buy a building for 40 ETH, and then ethereum goes from $4,000 to $100, that’s a fundamental risk that I’m not really taking when I’m buying a piece of physical real estate,” he said.

Republic Realm is trying to reduce the risk by buying land in a number of different virtual worlds, said co-founder Janine Yorio. The company says it runs two real-world investment vehicles focused on virtual real estate and owns about 2,500 plots of digital land across 19 worlds. Ms. Yorio said she spent a decade as a real-estate investment executive, first at NorthStar Realty Finance Corp. and then at the Standard Hotels, before switching to the financial-technology industry.

The company either buys land directly from a world’s creator, or from third parties through public listings or off-market deals, Ms. Yorio said. In some cases, it decides to just sit on the vacant land and wait for it to appreciate. In others, it pays an architect to design virtual homes or malls and a game developer to build them.

As in the physical world, zoning rules limit what and where a company can build in the metaverse and, in theory at least, too much development could lead to a market glut. But unlike in the real world, metaverse buildings can defy the laws of physics by appearing to hover above the ground.

“And then we charge rent, just like a regular landlord,” Ms. Yorio said. The company employs an asset manager to deal with tenants’ complaints and change requests. Its developments include a mall, which it leases to retailers selling fashion for avatars, and a master-planned community of around 100 villas on private islands that it sold to individuals.

Tokens.com, which is publicly traded, is currently developing an 18-story skyscraper in Decentraland that it hopes to lease to lawyers or cryptocurrency exchanges, which can use the building for events or advertising.

It is looking to develop properties on the land it bought in Decentraland’s Fashion District, which it wants to rent out to fashion companies as event and retail space.

“We can create something that’s the equivalent of a Rodeo Drive or Fifth Avenue, where the Guccis and Adidases will come,” Mr. Kiguel, the CEO, said.

OTTAWA–The nascent recovery in Canada’s housing market has become a casualty of the trade dispute with the U.S.

The latest national home-resale data are due out Tuesday, but early indications from several big regional real-estate boards suggest March was overall another down month as many prospective buyers exercised caution.

The recent weakness in home sales has dimmed the previously brighter outlook for the property market coming into 2025, when buyers were encouraged by the Bank of Canada’s aggressive interest-rate cuts.

“The chills the U.S. trade war has sent through participants in the housing market are getting frostier,” said Robert Hogue , assistant chief economist at Royal Bank of Canada.

Hogue said resales are down materially in a number of markets two months running, and home prices in several markets are coming under pressure as inventories rise. And although Canada was spared additional levies when President Trump unveiled so-called reciprocal tariffs on dozens of countries earlier this month, no meaningful rebound is likely so long as trade uncertainty lingers, he said.

Home buyers in Toronto, Canada’s most populous city and the country’s financial hub, aren’t turning up for the usual spring pickup in property-market activity.

Sales in the Greater Toronto Area slumped 23.1% in March from a year earlier, as new listings for the region jumped close to 29%, according to the Toronto Regional Real Estate Board. That marked the worst month of resales since 1998.

The board’s chief information officer, Jason Mercer , said many potential home buyers were likely taking a wait-and-see approach given the economic worries as well as a pending federal election. “Homebuyers need to feel their employment situation is solid before committing to monthly mortgage payments over the long term,” he said, adding that ownership has become more affordable and prices in the area fell about 3.8% year on year in March.

Uncertainty is also weighing on the housing market in Calgary, the biggest city in oil-rich Alberta. The city’s real-estate board said realtors reported a 19% drop in sales of existing homes from last year, with a similar trend of improving supply and a sharp increase in the average number of days that homes were on the market.

On the West Coast, home sales registered in the metro Vancouver area of British Columbia were the lowest for March since 2019, falling 13.4% on a year earlier and coming in close to 37% below the 10-year seasonal average, while active listings continued to rise.

There are some areas of resilience. The Quebec Professional Association of Real Estate Brokers said total sales in the province were up 9% year on year in March. Still, RBC’s Hogue estimated Montreal sales in March were down about 15% from December seasonally adjusted, effectively rolling back the advance since the end of last summer.

The most recent national data for the country, from the Canadian Real Estate Association, showed resales dropped 9.8% month over month in February, when homebuyers may also have been put off by harsh winter storms in parts of the country. That marked the sharpest fall since May 2022 and brought the level of sales to their lowest level since November 2023, snapping signs that activity had been picking up in recent months.

Rishi Sondhi , an economist at Toronto-Dominion Bank, in a recent report estimated the country was tracking toward a double-digit quarterly decline in Canadian home sales and a mid-single-digit drop in Canadian average home prices for the first three months of 2025. That is much weaker than a pre-Trump inauguration forecast made in December that projected a loosening in federal mortgage rules, lower interest rates and continued economic growth would fuel a modest gain in sales and prices.

Central-bank officials are set to decide Wednesday on monetary policy, but they have signaled a cautious approach to rates as they balance the prospect of tariffs stoking price pressures against the likelihood that they will dampen demand and weigh on the economy. That could mean the Bank of Canada will pause after seven straight cuts to its policy rate.

Housing is a hot topic for party leaders campaigning ahead of the April 28 election, with both the incumbent Liberal Party and opposition Conservatives proposing tax cuts and incentives to encourage buyers and builders.

The outlook for new homes has also dimmed with the tariff threat. The value of residential-building permits issued in February fell 2.9% from a month prior, adding to a retreat in January that took back some of the surge in intentions in the final month of last year, Statistics Canada data last week showed.

Metaverse Real Estate Piles Up Record Sales

Firms’ purchases of digital land in online worlds are bets that property values will rise as more people join in.

Early indications from several big regional real-estate boards suggest March was overall another down month.