(un)Real Estate: Exploring the Value of Virtual Real Estate

Online games have become a dominant cultural form, social space, and market for millions of people. There are over 2.2 billion gamers in the world and a subset of them are buying and selling goods and real estate online. What is the value of virtual land, and how did it come to be? How does the economic thinking related to the built environment apply to the virtual terrain? Our research project tackles these and many other questions, combining urban studies, game studies and finance. We're kicking off this project as a series of essays and a podcast series, exploring the economy of virtual worlds, the value and norms of virtual space, land and goods, and a real life made of bits.

The scope and scale of the virtual environment eclipses the other forms of cultural production and design. Epic Games’ Fortnite has over 250 million registered users: a number which exceeds the population of most of the countries around the world. It has also hosted the most attended live concert in the world’s history.  League of Legends, which was launched in 2009, (long enough ago to become a digital relic) has 115 million monthly players , and is the most prominent e-sports battlefield. Microsoft purchased Minecraft in 2015, and it is currently has around 112 million monthly users and has recently launched Minecraft Earth — Augmented Reality Platform to play Minecraft, so users can start building with voxels everywhere. 


The subject of our study is virtual worlds. Before we jump into the question of value of the virtual space, we need to define what we mean by a virtual world. To give a general definition, a virtual world is a persistent, graphic, interactive, internet enabled social environment.The users interact with the world and each other in real time using avatars: their three-dimensional in-world representations. The interplay between avatar representation, persistence of the space and sociality — as everyone who participates is repeatedly exposed to the same objects and contexts, performs or witnesses collective activity, builds a reputation and observes the other’s action — gives to the worlds their ‘worldliness’ and makes them places.

Conceptual Framework

We approach virtual worlds as social spaces: spaces in which social relationships emerge, the spaces which affect these relationships and are affected by them. 

We also define virtual worlds as representational systems. As their three-dimensional environments use familiar spatial and representational tropes and archetypes from the physical environments we experience and imagine: from urban spaces and buildings to ecological landscapes. Thus, the users of virtual worlds are able to comprehend and interpret the space in the same way as it happens in the physical environment. 

Third, we situate virtual worlds as computational systems, where every object and artifact is intentionally designed to perform a certain set of actions. The action and the environment are inseparable in virtual worlds: each object has  ( or does not have) a pre-programmed interactive feature. 

Virtual worlds are therefore becoming complex representational, computational and social systems. Ultimately, the spaces of virtual worlds blend visual culture and aesthetics and computer science into a spatial system that operates with the tropes and affordances inherited from both spatial and ‘computer-mediated’ interaction. From this perspective, they are not unlike urban systems. 

Research Questions and Objectives.

The general objective of this research is to understand the value of virtual space, land and the built environment. Additionally, we aim to project economic thinking related to built environment in physical cities to virtual worlds and draw the connection between economy and geography in the virtual. 

*What factors affect the valuation of virtual real estate?

* What is the relationship between the markets of virtual goods and the geography in the selected virtual worlds?

*How the design of three-dimensional, spatial environments and computational structures is projected into the economic systems of virtual worlds?

* How the basic economic phenomena play out in the context of virtual worlds?

The Initial Findings.

  • In virtual worlds, location is crucial.

In virtual worlds, there is a connection between the economic exchange between the users and the geography of virtual world: the users congregate for economic exchange in convenient locations: for example at the transportation routes between important destinations, even if these gathering spaces were not designed as such with the game developer company. 

The valuation of the real estate sometimes is connected to the relative location of the land. For instance, in Decentraland, the land parcel, adjacent to the public roads and plazas are valued more than those which are on the outskirts’ of the city. 

  • environmental design and spatial archetypes matter for virtual real estate

In Second Life, waterfront parcels are valued more than those inland. Besides, certain design choices, high quality content used to design the space increase the value of the land, as they increase the quality of the experience. 

  • Scarcity is a fundamental feature of virtual worlds

Scarcity serves as a familiar means to organize society in the virtual world, so users collaborate or compete for scarce items.  This turns play into work and channels the exchange value for virtual goods. Manipulating scarcity, corporations control social dynamics and the economy of virtual worlds: they can release more copies of valuable items, introduce new ones, or alter the narrative–or even the environment. 

This is an ongoing research project that was started in September 2019. We are very excited to continue working on it and will be sharing our findings in Medium blog series and in our podcasts!

For more please see our Medium Publications and tune in for the podcast series!