| Item type: | Article | ||||
|---|---|---|---|---|---|
| Journal or Publication Title: | Journal of European Real Estate Research | ||||
| Publisher: | Emerald | ||||
| Date: | 30 January 2025 | ||||
| Institutions: | Business, Economics and Information Systems > Institut für Immobilienenwirtschaft / IRE|BS > Lehrstuhl für Immobilienmanagement (Prof. Dr. Wolfgang Schäfers) Business, Economics and Information Systems > Institut für Betriebswirtschaftslehre > Lehrstuhl für Statistik und Risikomanagement (Prof. Dr. Rösch) | ||||
| Identification Number: |
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| Keywords: | Digital assets, Blockchain, Metaverse, Virtual land, Real estate, Wavelets | ||||
| Dewey Decimal Classification: | 300 Social sciences > 330 Economics | ||||
| Status: | Published | ||||
| Refereed: | Yes, this version has been refereed | ||||
| Created at the University of Regensburg: | Yes | ||||
| Item ID: | 76516 |
Abstract
Purpose – As blockchain-based virtual worlds gain prominence within the emerging metaverse and Web3, numerous global companies and investors are buying purely virtual land to explore new business potentials and capitalize on digital assets. Given the similaritiesto physical real estate, thisstudy examinesthe dynamics of the secondary market for virtual land and relates its returns to those of ...
Abstract
Purpose – As blockchain-based virtual worlds gain prominence within the emerging metaverse and Web3, numerous global companies and investors are buying purely virtual land to explore new business potentials and
capitalize on digital assets. Given the similaritiesto physical real estate, thisstudy examinesthe dynamics of the secondary market for virtual land and relates its returns to those of physical real estate.
Design/methodology/approach – Using transaction-level data from a prominent virtual land platform, the authors construct a virtual land market index based on repeat sales index methodology from traditional real estate studies. Wavelet coherence analysisis employed to examine the dynamic correlation between virtual land and various physical real estate marketreturns. The determinants of this correlation are estimated using stepwise regression analysis. A portfolio analysis explores the implications of adding virtual land to traditional asset portfolios.
Findings – The correlation between virtual and physical real estate market returns is generally low, reaching its lowest during the Covid-19 lockdowns from 2020 to 2022. It spikes during acute economic turmoil such as the initial Covid-19 outbreak or interest rate change announcements. The correlation is primarily driven by consumer and economic climate, the price ofthe virtual economy token and investor attention. Portfolio analysis indicates that virtual land can enhance risk-adjusted returns within a traditional portfolio, particularly when added to a commercial real estate portfolio.
Research limitations/implications – This study examines a single virtual land market, despite it being the oldest and one of the largest. Given the rapidly evolving nature of virtual worlds, it is crucial to further test the results and include new virtual land platforms as they emerge.
Practical implications – The findings provide actionable insights on portfolio implications for investors seeking alternative real-estate-like assets in the digital space. Additionally, this study offers strategic guidance for entering the metaverse, including a comprehensive overview of established virtual presences.
Originality/value – With the advancing digitization of real estate markets, this study is the first to explore the correlation between market returns of virtual land in the metaverse and traditional physical real estate. The findings provide valuable empirical insights for investors, policymakers, entrepreneurs and companies interested in the intersection of digital and traditional property markets.
Metadata last modified: 09 Apr 2025 05:02
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