There are virtual markets — and then there are virtual markets. On Tuesday, developer Purna Securities sold 0.6416 square meters of virtual real estate in a new market on the popular online virtual world Second Life.
The transaction is the first in what participants say will be a wave of deals in a real estate market defined by the virtual, and profitable, possibility of creating a new kind of economy online — a “metaverse.”
In Second Life, the universe revolves around a person’s avatar and the image projected on a screen in front of him. That image can describe a place, making it instantly recognizable for a visitor. A cityscape for a user named Elliott can jump from Washington, D.C., to Staten Island, N.Y., and back again on his desktop and the screen in front of him. On Tuesday, Novell, an online systems vendor, unveiled a new site, Metaverse Real Estate, that is being branded as a virtual marketplace with robust opportunities for consumers to purchase and rent virtual real estate.
But even the most engaging virtual space can function only when people actually exist there. The “real” economy in Second Life represents the former. People own and make money from the products they buy and sell online — and the quality of products depends on the quality of the people who are working there. Metaverse Real Estate aims to represent the latter.
“The business model is based on people who like the new property, renting it and taking a cut,” said Scott Moody, a sales manager at Purna Securities. “If you like a property, you take a commission, and they’ll make a deal with a person if they don’t have the property on rent for the future. We can also move into an empty property if someone wants to buy it in Second Life — they can rent it to a friend.”
“This will be the first example of a virtual world that will become a real world,” Purna Securities’ chief executive and president, Seth Horowitz, said.
Virtual second home investments do not yet occupy the same monetary scope as other kinds of investments, but that is only because current technology is less advanced. In Second Life, residents can buy virtual homes that function just like the outside world’s, whether the outside world exists in reality or in an online world. Purna has not yet sold a home, but the pricing depends on the actual market outside Second Life.
“People can buy a home on Second Life for a lot less than they can buy an outside home in another country,” said Jeff Wolkove, the chief executive of the Commercial Real Estate Network, a real estate company that includes developers and brokers involved in sales, leasing and developments in Second Life.
Virtual investment is still new, and investors are focused on finding the precise right opportunity. Matthew Mukerjee, a manager at Xero Auctions, an online stock marketplace that is now used by many Second Life corporations, bought one virtual land purchase for two real-world dollars, and 1,200 virtual times for $190. His sales volume, however, is “infinitesimal” compared with the volume of trades going on in Second Life.