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Stagnant Unsold Land Everywhere...

katykiwi Moonflower
Esquirette
Join date: 5 Dec 2003
Posts: 1,489
12-08-2005 16:28
At rare times in SL, a features or content change will be introduced by LL that dramatically impacts on the state and price of land in SL. Past decisions that had such immediate and dramatic inpact include the introduction of prim limitations on land; the introduction of monthly land tier charges; and the introduction of the land auction system. Now with the elimination of hubs, once again a Linden decision has dramatically and impacted the value of land overnight.

With the mere announcement that hubs are to be eliminated all hub land suffered a dramatic loss in value causing the members who invested literally hundreds, and perhaps thousands of dollars in that land to take a financial hit without any prior notice. Well, rumor has it some with insider information did have advance notice of this decision and were able to avoid taking this financial hit by selling off their hub land this past summer when LL began developing the P2P code.

But, back to the issue of the value of land as it stands now. Have you seen all the dollar signs on the map? Land is stagnating unsold at current prices, hub and remote land alike. P2P and the elimination of hubs is an interesting step for LL. The impact of this decision will be to cause land prices to bottom, perhaps back to low public land prices. This results in more members having the incentive to buy land, become premium members with tier payments, all of which inures to the financial benefit of LL.

Where does that leave the thousands of us who have invested so much money in land, and now cant sell it. My guess is many will and have suffered a significant financial loss as a result of this decision. I know I have.

Was there a different way that LL could have handled this decision? Well the land situation was in bad shape. All that land drive to incredible high purchase prices by land barons, a system permitted by LL when land auctions were allowed to exist without the existance of rules that would have curtailed land baron participation and activity. We blame land barons for the problems that resulted but acutally the system allowed every action, every step taken by land barons, who merely played by the rules set in place.

Now, with all this unsold land on the grid set at high prices, and members turning with greater number to the purchase of private island sims beccause of the lack of zoning and controls on the main grid, LL had a dilemma. No one was buying the land. All those new sims coming online, and all that land stagnating unsold on the main grid, and no one was buying.

All those new free memberships created and no land tier fees resulting.

Its easy to see how the decision to eliminate hubs is directly related to these financial issues LL faces. But, will this decision elimiate the problem? How low will the price of land have to fall before the hundreds of new members with free memberships decide to bite the bullet and take on land tier fees.

Elimination of hubs will help equalize land but unless and until members have better ways to advertise and get the word out about businesses, what will happen instead will be that land located next to very busy builds such as a busy club, will increase in value and land in the middle of nowhere will bottom out.

Perhaps if LL would stop grinding out all those new sims in the new continent then the land stagnating unsold on the main grid might start selling again. But, I think SL is facing a land crisis that impacts the whole SL economy and it will be very interesting to see how the elimination of hubs and the introduction of P2P impacts these problems.

What do you think the impact will be...will the introduction of P2P and elimination of hubs help or hurt the overall value of land and what is the best strategy for fixing the stagnant land problem?
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Nolan Nash
Frischer Frosch
Join date: 15 May 2003
Posts: 7,141
12-08-2005 16:53
Now that the last chunk of the northern continent has been added, I think demand will slowly catch up.

Also, current prices aren't that high. It's not at all uncommon currently that you can frequently find mature land for under 5$L per m2, and PG green for about a point less. When you contrast that with prices just a few months ago, they're actually a bit lower across the board, and have been since well before the announcement of hub removal.

As far as what you outlined above being the reason for LL's shift away from hubs, it may be part of it.

If it is part of the reason, I can't really blame them. As you said, they need people to pay tier. We all need people to pay tier. If a large amount of SLers interested in having land shift to private island renting or "buying", LL stands to lose a considerable amount of revenue, both in tier and premium acct. fees. That will hurt all of us, especially with their admission that they are still in the red, albeit not terribly so.

I think that in the short term, hub removal may "hurt" prices a bit, but that when all is said and done, and demand catches up with supply (assuming LL doesn't start building another continent soon, or start adding to the original continent again), it will help.

As far as the "best strategy" - I think LL simply needs to let the demand catch up to the supply. P2P is not going to affect pricing in a profound way, IMHO. I am sure they're fully aware that they can't just keep plunking out 30 sims at a time. If end users don't buy, all they get is that highly discounted 195 a month from barons. If the barons can't move land for any decent period of time, they will stop buying, and LL will then be cutting their own throat.

Bottom line: if the main grid wastes away, LL will not be financially viable nor sustainable in the long run.
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Schwanson Schlegel
SL's Tokin' Villain
Join date: 15 Nov 2003
Posts: 2,721
12-08-2005 17:01
LL stated when they went to the new auction system that they would keep an unlimited amount of land on the auction blocks. As long as people are buying the auction land, I see no reason for them to stop creating more land.
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Forseti Svarog
ESC
Join date: 2 Nov 2004
Posts: 1,730
12-08-2005 17:03
I've looked at selling and buying land at periodic points over the last year and I don't think this is a new problem or just related to the hub situation. Look at the sheer amount of land available -- look at the number of islands out there renting plots.

You obviously see the same issues I do -- but I'm not sure how the hub/p2p is really that big a factor when the supply issue is the gorilla in the room. The hub change may redistribute pricing levels across different types of land -- it will cause some land to go up even as it takes hub land down (although because an enforced traffic generator is disappearing, the value lost will be more than that gained).

i really haven't been surprised that I've had to sell land at a loss when I've needed to move during the past year.
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
12-08-2005 17:07
Yeah, the glut of land is because people have been overbidding on the auction, not so much telehub.
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Hank Ramos
Lifetime Scripter
Join date: 15 Nov 2003
Posts: 2,328
12-08-2005 17:10
Remember that stagnant, for sale land is still paid-for land. It's generating revenue for Linden Labs. They could care-less if the land is just sitting there doing something, or is filled with engaging content. They are receiving USD$ to run the servers that run that lot of land so who cares?

Why do you care? What's so wrong with empty land being paid for by someone who likes to trade virtual land?
Nolan Nash
Frischer Frosch
Join date: 15 May 2003
Posts: 7,141
12-08-2005 17:10
From: blaze Spinnaker
Yeah, the glut of land is because people have been overbidding on the auction, not so much telehub.

That, and LL's rush to fill in the northern continent. Hopefully they take a breather now.
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Nolan Nash
Frischer Frosch
Join date: 15 May 2003
Posts: 7,141
12-08-2005 17:12
From: Hank Ramos
Remember that stagnant, for sale land is still paid-for land. It's generating revenue for Linden Labs. They could care-less if the land is just sitting there doing something, or is filled with engaging content. They are receiving USD$ to run the servers that run that lot of land so who cares?

Why do you care? What's so wrong with empty land being paid for by someone who likes to trade virtual land?

If there are 20 or 30 people living in a sim, paying tier and premium acct. fees, that LL makes considerably more money than if just one person holds the entire sim, paying one premium account fee, with a highly discounted tier.
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Hank Ramos
Lifetime Scripter
Join date: 15 Nov 2003
Posts: 2,328
12-08-2005 17:14
From: Nolan Nash
If there are 20 or 30 people living in a sim, paying tier and premium acct. fees, that LL makes considerably more money than if just one person holds the entire sim, paying one premium account fee, with a highly discounted tier.


Sounds like a good point, really. But, honestly, look at the map and LL. They push private Islands big-time. I don't think they mind that people are getting a discount for holding more than a full sim's worth of land.
Nolan Nash
Frischer Frosch
Join date: 15 May 2003
Posts: 7,141
12-08-2005 17:26
From: Hank Ramos
Sounds like a good point, really. But, honestly, look at the map and LL. They push private Islands big-time. I don't think they mind that people are getting a discount for holding more than a full sim's worth of land.

I don't think they mind per se, I just think they would prefer more people with smaller tier, which generate more fees, to be holding any given sim.

I also think that they know this is vital to their survival. If 1000s of folks tier down to basic, and move to private island rentals, they stand to lose 10s of 1000s of dollars.
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Lisse Livingston
Mentor/Instructor/Greeter
Join date: 16 May 2004
Posts: 1,130
12-08-2005 20:50
From: katykiwi Moonflower
All those new sims coming online, and all that land stagnating unsold on the main grid, and no one was buying.


No one was forced to bid on all those new Sims at auction. If they'd just all sat there awaiting the first bid, instead of being bought by those hoping the demand would be there, then the Sim rollout would have been far slower.

LL are not to blame for the situation - the blame lies squarely in the hands of those who buy at auction for resale purposes.
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Maxx Monde
Registered User
Join date: 14 Nov 2003
Posts: 1,848
12-09-2005 05:06
I think you'll see "Landflation" (SL Land combined with inflation - woo, new term!) when the population that would potentially buy land doesn't grow with the same rate of the supply, basically. Other than big operational changes that ripple through the system, I would guess that you'll see this oscillate as the buying population changes through time.

Just a long-winded way of saying "this could be normal, we'll see".

:)
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FlipperPA Peregrine
Magically Delicious!
Join date: 14 Nov 2003
Posts: 3,703
12-09-2005 06:19
I find it hard to believe some of that - mainly because of the statements about the Lindens telling someone to sell off "when the code was being developed in the summer."

You're forgetting - there was no code to develop! We had P2P in the past, and Lindens have had the ability to P2P teleport ever since. The option to turn off teleport for a plot wasn't added until AFTER 1.8 Preview launched - thus, I highly doubt there was a significant develop effort dating back to the summer.

Regards,

-Flip
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Candide LeMay
Registered User
Join date: 30 Dec 2004
Posts: 538
12-09-2005 06:35
Waterfront property prices will skyrocket once 1.8 is deployed :)

<- happy to have 240m of beach