Wholesale Land Sales Test

Wholesale Land Sales Test

Truthfully this doesn't bother me, but it is eyebrow raising.

I'm currious to hear from anyone thinking of taking LL up on this. Am I missing something as far as profitablity goes?

Figure there won't be much competition for people willing to put up 40,000 us on virtual land, and you get your 40 sims for not much over 40k us. Now figure it will take you an average of 4 months to sell off all that land (very rough estimate). That adds about 400us per region that you'll have to pay in tier (another 16k us), and take into account the fact that there will be NO Linden protected land, and that land bordered by protected land tends to increase the value of a parcel. Also no roads which also might increase a parcels value. You're either facing a permanent expendature in order to create these features on your own tier in perpetuity, or not having them all together.

So... we'll figure 1500us per sim total investment. to break even you would have to sell all the land in the region at an average of 6.18L per meter. to make a reasonable profit figure 8L per meter. That's not really a low price.

If it takes you longer than I've estimated to sell off the land, you'll pay more in tier. If there is more competition for those 40 sims than I think there would be, you'll pay more at auction. If you have to invest more then the price just goes up in order to make a profit. And for 10 and 20 there should be more competition meaning the fewer sims you buy the more you'll invest per meter of land and the more you'll have to charge to resell it at profit or to break even.

Please don't flame land barons here. I just want theories on how someone could make money off of this. I realize there might be someone out there who wants to have an estate this large for themselves, and therefore would purchase these blocks of sims without profit in mind, but I rather doubt it.

Will the owners have the ability to list parcels on the auction page? That seems a critical point to me.

Understanding that they won't have estate access to the land tools, I wonder if the owners will be able to submit (with Linden approal) ground textures with their raw files?

So far, our "land barons" have been a handful of entrepreneurial individuals who stumbled upon a way to make an attractive profit, but not enough to support hiring employees at real-world wages (>US$7/hour or more, which is nearly L$2000 per hour). With the ability to control 10, 20 or 40 sims at a time, the opportunity for "real" businesses in the entertainment field may rise. For a "real" business, a $40k - $50k initial investment with $8k per month is not large. That sounds like a sandwich franchise in rented space. That's for a 40 sim "world."

This opens the potential opportunity to support a viable entertainment business, if there is one lurking in the primordial soup of SL.

Think about Disneyworld. It was conceived and built in the middle of low-value land in central Florida, avoiding the expensive coastal real estate. They bought land outright and options on huge tracts surrounding the planned park, when the land was cheap. Once they began building, the land around the park property started appreciating in value as folks realized the stimulative effect of the park. As a result, Disney began making profit not just on the sales and revenues in the park and surrounding hotels and restaurants they operated, but from the appreciation of the value of the surrounding land which they (and other savvy or lucky investors) owned or had option rights to.

The point being that a big parcel of land is often more valuable than the sum of its separate parts uncombined, because of network effects and the ability to control "look and feel" as far as one can see. There may be revenue and profit opportunities in owning a 10, 20 or 40 sim block that do not exist in a one sim parcel.

For example, what if a developer made the whole "world" a "no fly zone" and restricted admission with a big entertainment draw in the center. They could then add interesting transportation infrastructure that supports surrounding retail exposure (replacing the appeal of the hub lands) and zoned residential space with various themes (e.g. Frontierland, Magic Kingdom, African Safari, Futurama, Sleeping Beauty's Castle, etc.).

I wouldn't have thought so. I would imagine that it would be no different to how it is once you have purchased a sim via auction now ie you would be able to list via in world land sale menu.

I would have thought that they would accept land textures, or maybe be able to choose from the Linden Library perhaps.

Looks like they can have linden protected land, or am I reading that wrong? I'll be interested to see how this goes, that's a lot of land and money moving.

I've never traded land before, but it really looks like these are the margins:

Statistics at this moment:
slland.com's average rate is L$6.6/m.
Current LindeX rate is L$267/USD, with a 3.5% commission.

So an estimate of the value of a sim is:
65536m * L$6.6/m / (L$267/USD) * 96.5% = USD 1563.29

So tiering a sim USD 195/month. Depending on how quickly you can move your land, this might be a reasonable profit margin. As far as I can tell, most sims are being sold at around US$1000-US$1200. (taking into account that some of the land is protected, and not sellable)

Makes sense, however I can't imagine an attraction in SL that would fit the disney world scenerio. Not to mention to build an attraction that good that I haven't thought of would require massive amounts of time and probably further financial investment. This is all in a medium not gauranteed to be around for an extended period of time.

However, if someone does have an idea for an attaction along these lines I'd like to apply for the head developer position at 27us an hour . I'm willing to sign real world paperwork and to provide itemized status reports on a schedule.

Yeh the way I read it, there is an extra stage to what we have currently. Right now we have the auction of a sim that is already terraformed, protected land decided etc. This new way will add a new stage. The sims will be first autioned as a blank canvas. Then for a period of a week after, the successful bidder shapes the sim how she/he likes, including selecting areas for protected land (up to a max 20%). Once the week is over, it is returned to a normal maingrid sim. The terraforming is set back to +-4m, and the owner takes control of non protected land, LL take control of protected land.

Just a guess, Rick, but anyone investing US$50k plus $8k/month probably is a well-off developer or has one under contract, plus has a plan for such an attraction. I would not be surprised to find that some such folks have approached Lindens for the opportunity to buy a big block at one time, and they decided to try an auction to get a "market price."

hehe, well it's just in case the offer gave anyone not a well off developer, or anyone not already retaining one, any ideas .

Oops, I'd missed the linden protected land bit. That helps a little then.

This is really fascinating to me.

I'd like to pretend that landowners would "release" 20% of the land in each sim over for green space/infrastructure (roads, plazas, etc.) but I can't see that happening much, sadly. For one, almost nobody is going to put in roads, which is going to bite landowners in the ass if/when truly fun, drivable vehicles come around. For another, giving this land over to the Lindens will bite into their profit margins, which no discerning land capitalist could possibly stand for.

It'll be interesting to see some of the "terraforming" over such a large scale. I bet it'll pale in comparison to the Lindens.

LF

Well, almost nobody, unless they've got one of those grand Disney World-esque projects in mind.

If I read this right, the auction winner will get the lands as flat with no water, and then must terraform the land to their liking, after which the sims are locked down to regular terrain edit abilty for resale... sounds great so far.

My question is, is this a 'real' sale? Is control of the land passed to the buyer just like other mainland sims? Will the new buyer be able to sell the parcel in turn, without relying upon a landbaron as an intermediary? I.e. Are the resulting sims 'reallyreally' mainland sims, or are they like ansheland where the baron retains ultimate rights?

-Ghoti

I read it as a real sale. I just see it as another stage added to the current main grid auctions.

Things I've heard with regards to mainland zoning:

- some people would like the option provided by private islands but are unwilling to pay anyone other than LL.

- it would be impossible to zone the mainland retroactively

- find people of like mind, be patient, and if you wait a really long time you might be able to buy out the sim and settle in together.

Sounds like these sims will be attached in a similar fashion as the Atoll continent. The setup could work for communities maybe?

They are not estates, they are mainland sims and nobody retains ultimate rights. The buyer can brake it into parcels or not and sell it (actually sell it) if they want.

Lordfly brings up a good point. Is it possible to increase the value of 4/5ths of a sim by 20%, essentially by giving away (after improving) 1/5th of the sim?

And given how well the grid has been performing lately, such a bargain! Isn't LL's motto Caveat Emptor?

It is a great idea. I am very excited to see what some of my fellow residents might create with something like this.

A rough guess is that it will be a massive archipelago, but there might be a different vision if the purchaser is a leader of some community.

Timing wise, though, I find it a bit puzzling that they would release this program with the Impeach Bush problem hanging over our heads.

Let us say someone did purchase the land, a few well placed Impeach Bush signs would push the value of much of their newly purchased asset to below a profitable price.

Certainly, they can terraform and make it look nice - but others can drop content down and ruin the attractiveness of their land.

They would be forced, as far as I can see, to either buy up the land from Impeach Bush or do this whole exercise at a loss.

That being said it is possible that LL has people waiting in the wings to purchase something like this.

I would be extremely surprised if they didn't.

I know nothing, but expect that anyone investing the real dollars to buy 10+ sims would also retain enough control over the land to prevent that. I suspect that buyers of these blocks are not going to simply chop them like onions and sell them piecemeal.

This block opportunity is ideal for community planners and folks who need continuing control over 10+ contiguous sims in order to create and hold onto something new that will make the resulting product worth more as a whole than the parts would be if they were diced up and sold retail. They can then operate the resulting build as an ongoing business, not a "shrinking asset" that is just a source of non-recurring revenues.

We may be seeing the evolution of "capital goods." In this case they are multi-sims that can be the basis for business models that cannot be easily copied because they are out of the economic reach of 95% of the current users.

That would be my read on it as well, unfortunately I think LL is stating otherwise:



It's possible that someone might try to rent them out, however because of the way mainland works, you lose access to critical features which puts you at a severe competitive disadvantage to island landlords.

I'm interested in developing a region, but I'm going to be doing it one sim at a time.

10 sims at a time - ten thousand USD and then approx. 1950 USD per month...

...the startup loss simply does not seem 'necessary' to someone merely renting sims.



I'll need to see if people like my flavour of sim countryside anyway. Much in the works here, even now... but it will start with one sim and grow as the business grows.

It's just SL once again catering to the players with money. It's another effort to appease the big money landbarons. The rank and file player can't afford to buy wholesale land like this, only the big players. As such, they get to further control land sales, prices, etc.

I'm sure this is just another move towards LL totally abandoning any direct sale to individual players, and letting the fatcats reap all the financial benefits. They need to remember, just because someone has money to throw into SL doesn't mean they're the ones that make it an interesting, unique place so that others enjoy being here.

Let the rich players buy their private sim islands, but leave mainland land sales directed towards the average player.

Chrystin Hathor
People's Front of SL, bitter
enemies of the SL People's Front

Okay, I really like this idea then. I like it even better than standard mainland sims, since I really really enjoy terraforming and would love the chance to shape the mainland world. ... notthat I can afford even one sim, much less ten.

-Ghoti