Land Value in SL- Will it Implode soon?

How can you place a $$ value on land when there is infinite land?

The way real estate works in first life is based on land value, and that value is based on the location, availability and quality of the land. Land on planet Earth is valuable because there is a finite amount of land. The land on planet earth in addition to being finite, not all of it is friendly to humans, even with modern inventions. There are also additional factors that makes some land more valuable to humans than others; access to trade routes, waterfront, ability to cultivate crops, views of nature, natural resources, etc. Prime land in NYC, Chicago, Toronto, London, Tokyo, LA, sells for millions (billions) due to location, access to major airport hubs, and financial centers, similar sized plots in smaller “metro” areas like Milwaukee, Omaha, Brighton, sell for less due to their lack of these desirables. Desert land (unless there is oil under it) sells cheaply over the whole planet due to its lack of natural resources and difficulty supporting human life.


Land is SL is infinite as proven by the mass purchases of private islands and the ability to sublet space on these private islands. If a resident purchased 10 sims, divided the land into plots and sublet them, creating homes, entertainment areas and shopping centers. This circumvents the Linden land roll out and brings 650,000 new meters of land into SL a one time. There currently as far as I know is a limit on how many Islands an individual or group could purchase. A group or individual could glut the land market. There are only so many new SL Residents per week that aren’t alts, that actually join SL, maybe about 100 players (that is a rough estimate), not all players are interesting in owning land or feel the need to.

What is the land value? There are massive amounts of land for sale on the main grid and almost all of the new continent is for sale. How can the private island sim sublet system sustain itself? There is more than enough land to go around. There are some lures and perfect to private sim living, but there are main grid perks that way just as heavily and at the end of the day, if you are just going to “live” on the land, the land is basically the same with a few exceptions. Waterfront/Water Access (ok we all know water view is a load of shit) is worth more because everyone wants to live on the water. If you are a retailer or entertainment provider then land in view of close access of a telehub (RL equivalent Trade Route) raises the land value (if you have a home, this can have the opposite result). The telehub ability of a private sim provides and advantage over a mainland sim, which can raise the rental value of a private sim if the private sim can draw enough residents to the sim since the sim loses the “fly by” factor of the main grid.


If you can create an infinite amount of land, which can be created in a desirable manner, what is the value of the land if the user base is limited?

Looking at the state of GOM and at the general state of land sales in the world, I'd say the bubble burst already.

Then again, I just tiered down to nothing, so I'm probably not the best judge when it comes to land right now.

I don't think we'll have to worry about this implosion soon *at all* Eboni as long as there are people like you willing to put really high prices on land -- for whatever reasons -- and there are people like me forced to pay it...or willing to pay it, depending on their circumstances.

While the Fortune 500 world has one set of values and ideals, SL is both larger and smaller.

Everyone knows how RL real estate works! Most people reading this have had something to do with a real estate purchase in their lives, or at least their parents' lives.

But SL works differently, and not as you say in your hypotheticals because it is still a game, and an experiment, and a thingie, on the way to maybe becoming some other kind of thingie.

SL land is not "infinite" -- the Lindens are only human, not gods, and have a finite number of servers, budgets, human labour, etc. They roll it out roughly according to how many subscriptions they have, but they seem to have other features of that formula, and are secretive about it -- though Philip delights in collecting economic statistics, he never tells us the number of newbs who buy first-land, who tier up, etc. and the number of oldbies tiering up and how the patterns work (I suspect they correlate directly with each new patch that comes in, and game performance).

Secondly, the number of private islands is not "infinite" either. It's not every body and his brother who can come along and pony up $1000 for an island and $195 for the tier. And Anshe is well aware that it is *her own* glutting of the island market (if she can ever manage to advertise them without all this harassment from players and ambivalence from Lindens) that in fact undercuts her own and others' property on the mainland.

The Lindens are conscious of it too -- now, if they weren't before. They've taken steps to cut down Tringo, cut down events listings, cut down Anshe (with the island deeds issue), cut down telehub expectations to the New Continent, and other measures that basically just depress the landmarket. Whether they do this deliberately, or as a game of playing catch-up, it's hard to know. THAT they take actions to depress the land market is a *fact*. And it is a fact that is heartily applauded by at least a small but influential sector, mainly of the tekki wiki type, that hates the whole land business and can't wait until they can figure out how to grab SL code in open-source, and then get ahold of the land-making machine themselves, so they can be the new Lords of the Internet under the guise of making land "free" (we'll find that it's not so free, and we'll likely find them hogging the waterfront parcels forcing others to fan out behind them lol).

People can disagree about whether the Lindens should do this -- it would be interesting if they had the guts to see how their servers are really valued, and how they really would sell or not sell on the basis of a genuine market. They are too afraid of the hatred of the anti-land and anti-capitalism class they count among some of their chief in-game or extra-game intellectual supporters, however, to allow this to happen.

What really gives value to SL land, like anything else in life, is people. While prices are dropping all over, including post-bubble in the New Continent, and on the old, as Anshe slashes telehub land prices in her exodus to Ansheland, there are still plenty of parcels that go for 9.5 or 10 or even 12 if they are prime waterfront mature flat, etc. locations with really good and secured views, i.e. with Linden land backing or siding them and Linden sea to look out at. And land always goes for a good price in your own sim, when you are the one who wants to buy it. A lot of sales get made to people who are in a sim and want to expand their lots, and get more prims or more building footprint area. People tend to buy a smaller parcel, then wait to tier up when they see how it goes. And people are still coming out of the newbie phase into the midbie phase and finding they want a parcel of 1024 or 2048 or 4096 with the relatively small amounts of tier that goes with it, and they will pay 9.5 or above to get exactly the right thing they need with the mix of features, whether near or far from telehub, waterfront or mountainview, M or PG, etc.

Waterview is not a load of shit. Try the waterview just behind the lots in Moraine, for example -- if the waterfront is secure and the view corridor into the next sim looks fairly secure (i.e. the person has a claim date of more than 60 days ago and seems to be content to stay there and has a nice build -- which is as good as it gets in SL) -- then waterview is a perfectly legit thing.

Private islands have their pluses and minuses. They might be attractive to some, but others find them buggy and lacking in customer service, or not having enough fly-bys to get chance sales. People who set up a store when they are new for a cheap price can have the thrill of getting chance fly-bys as their customers and then start to build a customer base. Someone setting up on a private island usually already has a customer base.

People argue a lot about whether customer bases can be established only through boutique type operations and spam lists and privileged discounting, custom servic,e etc. or built by mass fly-ins to busy telehubs, but the truth is, many retailers have a mixture of these types of merchandising, telehub and boutique.

Right now, anyone trying to come in and use a private island to create a lot of sales of deeded land in a special zoned scheme -- which some declare aren't sales -- will find themselves in a hugely hostile climate spawned here on the forums by a few self-appointed net nannies. One hopes that's all they are, and not shills of some kind, it's impossible to know.

Just because a private sim has its own telehub, doesn't mean it can significantly rise over the chance fly-by traffic of regular telehubs. This is especially true for the newbie stream. Teleports to private islands are usually how most people get introduced to a private island. That means they need a friend to TP me. While they could just hunt around and click on an island, that can be hard to find in the sea of stuff in SL, and quite a few islands have private security rigged so that it deflects chance fly-bys. There is an intricate system of club and escort service retailing as well mainly on private islands and that market can only be reached by friending and friending some more and doing a lot more than just friending LOL.

For whatever reason, God Bless them, probably almost by accident, the Lindens decided to value land like RL, put a RL dollar price on it, put it on an auction, and keep it in enough short supply that the value holds. They adjust their supply now and then if they think speculators are too rampant.

I'm glad they do this. Ownership is the key to a civilized world; when people get things for free, they tend to behave irresponsibly with them.

One way in which the Lindens make sure that their new roll-outs can ever compete and get lots of new bids is by not doing anything about griefing. This isn't a conscious plan, of course, but it's a plan by default nonetheless. It's one of those things that I characterize as very SL-specific to this very hybrid form of a land market of "virtual estate".

It works this way: by not policing really ugly and bad builds designed to obstruct and grief and harass (it skirts the TOS and they can't find a handle most times), and by hewing to a First Amendment type of free speech code (as long as there is no incitement to ethnic, etc. hatred) LL can ensure that each week droves of people are driven from their homes in search of new land. They flee the old crapped up sims in search of new land. The same is achieved by lag. By insuring that the older a sim gets, the worse its server gets, the Lindens can also ensure that the steady stream to the new lands continues because FPS is always richer there. They claim never to do this deliberately and to be always striving to make all sims equal on better servers, but everyone knows that sims on servers wear down after their birth, and not only because avs come on them and lag them.

I'm thinking the Lindens can keep this parlour trick going indefinitely -- seemingly a limitless supply that undercuts value, yet value that holds because of people's desire to have a second life and at least the illusion of being king of their castle.

Now that the user base is increasing, the Lindens are rolling out the new continent (where sales haven't done too well due to lack of telehubs and an overconfidence in the vocal tree-hugging minority). I'm thinking that in 90 days -- it will take longer than the usual sims and even longer than 90 -- the New Continent will have a lot of estates of wealthy players looking for quiet lives away from telehubs, and various offices of the new "virtual office" type of patron of SL, and various other themed or high-end architecture sort of lots. This will happen because some determined and wealthier players, especially some newer ones, will methodically buy up the land and save the sims. There will be pockets of blight and newbie bad builds, of course, but these will ebb. The policy of taking out telehubs which enraged a lot of new business and home owners in the NC will eventually result in more gated-type communities but still on the open grid that hopefully SL will be able to point to as a showcase of how their own competition with Ansheland is more "high brow".

The value of land should have nothing to do with the amount you can resell it for. What you're willing to pay should be determined by what you feel it's worth to you to use the land for the amount of time you plan to be there. The only people who spend any time worrying about land value are those looking to make some kind of profit when they sell. I like to think of it more like leasing server space from an ISP with an added fee to get it away from whoever was using it last. If I wasn't willing to lose that added fee I probably wouldn't buy land. Chances are you'll get at least half of it back, but who cares?

Land barons should be making their money for providing a service... helping someone find land that meets specific requirements, selling developed land, putting together zoned communites, and so on... things that genuinely add some sort of value for the buyer. If all people are doing is moving land around to try and play the margins then they're engaging in something more akin to a shell game than an investment opportunity.

The value of land in SL will not be based on quanity but by quality. You mentioned a few geographical aspects that raise the quality of the land, but there are just as many negative geographical qualities affecting the quality of land also.

The biggest benefit to private island living is the ability to create and maintain a controlled community with local government enforcing the "laws". Mainland has no such thing... you buy a peice of land today that has a good view, decent lag, and no malls... it could be turned to crap the next day by some supermall, club, or neighbor that has decided his land should display everysingle script he has ever ran into, built, or given. The lindens have made it crystal clear they will not be the goveners, they will not be the content providers, they will not get involved. They are basically only giving us the tools to make the world ourselves.

So the land value is going to be greatly influenced on the quality of the land. For comcerial aspects that would be close proximity to Telehubs, next to already known and established business, and the ability to attrack fly-bys. The same aspects are almost completely the opposite for residential dwelling.

For the most part, mainland sims are laggy, there are a few here and there that are decent but they also do not have malls yet, but there is nothing from keeping a mall from popping up over night.

So to answer your question how a private sim "sublet" system can contain itself.. it is by making that land have more value (better quality) then the main land sim. Lagg free, themed sims, strong community, great neighbors, no malls, closer telehubs, local government to keep the peace and sim stability. None of those can you find in the mainland that I have found.

Exactly what Chip said That is what I was trying to get across.

Personally, I can't wait to see what will happen to this market once server software is released.

Jeff, I'm curious to see whether the release of the server software to open source is actually going to end or complexify the land market. Even if people have landmaking machines, they will still need servers to hold that land on and workers, and they'll need income even for their free thingie to have a home in. So they'll have to have server farms and tekkies and those tekkies are likely to create a land auction sooner or later even if it is abhorrent to them. In fact, an inter-server land market will develop with people entering the world in old laggy grief-infested beaten down Second Life...but tiering up...leveling up...beating the bosses...finding the objects on the quest (all metaphorically speaking of course LOL)...and arriving at the biggest, most beautiful, most to-die-for plots of land on the Fifth Life servers far away from the hoi polloi..

Chip, your view is a conservative one that is more on the social democracy side of things than the liberal capitalist side -- I'm not sure why. You want controls and regulations by the state on a natural human activity like buying and selling land. You feel a prudish desire to control what people do in this natural human activity. You want it to have "social use" as *you* define it. You don't want them to get *too greedy* to to turn over land *too much* -- all elements only you define subjectively -- because that feels "bad" and even "evil" to you for various reaons of an emotional and political nature.

Obviously when you buy and sell your own land, you never worry about yourself or that land dealer as being "too greedy" or "not useful enough" so perhaps you could extend that same courtesy to the rest of the people in the game?

Land flippers and speculators are necessary and vital in any land market. They create the conveyor belt of liquidity. They enable newbies who want to get out quick to get out quick --mobility. They enable oldbies who have a RL emergency to get out quick -- flexibility. The exist to serve even if they "get too rich" and are "too greedy" by the very bottom-feeding function they appear to perform to you. If these bottom feeders who crunch threw a lot of Purina land on the old continent can also offset their losses with some choice flips to sustain their willingness to keep doing this thankless service, more power to them?

I personally don't engage in this kind of land dealing because it is time-consuming and you need to watch lists and have scanners and be in the game a lot and be willing to be quick and have the capital to make the deals and hold the stuff until you can resell it hopefully at a better price. I don't think you've ever had to sit with a lemon like Lemon or snow in the aptly-named Ohno on your tier for very long or you'd understand exactly what I mean.

The freedom for people to play that shell game, flipping land, gouging on water, liquidating poor people in dire circumstances for a song, undervaluing newbie land, etc. -- that freedom is necessary to keep the liquidity and mobility in the game. Otherwise many of us sit there with land unsold even at bargain prices. The willingness of people to have thin margins on resales makes it possible for us to have the flexibility to get out of sim when we want to, to consolidate, to take new opportunities, etc.

That behaviour that seems like a shell game to you is in fact *the substrate of freedom*.

You want less freedom. You want to harness land dealing to some prudish prescription of what is "useful" and "adds value" as you see it. But others find value in being able to buy and sell land when they want.

Who is to decide what the value-add is? Certainly not just you and your friends. And the best land barons *do* make service and value-add a hallmark of their activities, so you cannot find fault there.

You are missing the point. This isn't necessarily about the price of land but the GLUT of land available. If there are 250 nice waterfront plots available instead of 5, the value is less. The value of land is typically based on its limited quanites, this applies to RL and to SL. If you have have an infinate amount of land, the land will have no value. Why pay $10L m2 for mature land when there is a glut of mature land? A buyers market is being created here, not a sellers market. Take a good long look at the land for sale map. You can not continue to make more land than there are players coming into word to purchase it. Who is going to buy all this land? Don't say new players, because there is a very limited numebr of new players. Also, older sims will be at bargain prices, and not everyone goes for the shiny new penny, some people will take the tarnished one on the ground and shine it up themselves.





That is nice in theory, but we need to see how it works in practice. We have all experienced crazy sim owners, and sims with unstable ownership. It will be interesting to see what happens to this Private Island Sublet market when the first private island sublet collapses and the fallout that happens later. Its only a matter of time before someone can't afford the tier payments or their spouse yanks their SL because they are prim bumping with someone else *snort*.


Private sims are not lag free, they are only lag free for the first few weeks, then the sim gets moved to a new server, someone creates a new laggy product, or SL gets an update, someone has more than 5 friends over, etc. A lag free Sim in SL is only temporary. Plus the tactics used to create "lag free" sims usually only piss people off in the end.


A "strong" community can be the downfall of a sim. The more avies on a sim the more lag. The more avies on a sim, the more drama. Plus good local government that can be a plus or stiffle creativity, "government" is always a double edged sword.

To chop this down into a one-sentence response, "Yes, I feel the sales of 'servers' will take on its own form of land market like it is now."

The interesting thing is what that'll do to perceptions of land and the actual cost of hardware to run this stuff. All we have is conjecture at this point.

Added link: Here's some interesting conjecture on what future prices may look like.

All I can say is from my own personal experience with the sim owners I know and the private sims I have enjoyed being on.. I have not noticed any of the above negative aspects.

I have had my land on a provate sim for just a tad over two weeks now, on a sim t hat was pre-existing and I still experience zero lag, great neighbors, awesome views, no malls and the local government is swift and fair. The other day couple of AV's were seen "flaming" (putting fire to) some land in the sim, I contacted my repersentative and they were dispatched.

So while I suppose you do have negative sims and negative sim owners, it all just goes back to enforcing what I was saying... Quality and not quanity is going to drive the prices. The better the quality the more the price. This quality is not just the sim itself, but the local government, the established community, the "laws", and of course the land itself.

Maybe I am just having a "better-then-average" experience in SL.

I own land on public sims, and I don't have all these issues people seem to have with public sims. If you are constantly being greifed (that is a general you) then maybe the problem is with you, not the sims.


I don't have negative views of private sims, but it's all good till it turns on its ass. If the owner of the private sim you rent on took the sim down tomorrow, how would you feel?


I think some people are blinded to simple human nature and economics. Most people will buy some cheap land on a mainland sim where they can do whatever they want than rent some land on a private sim with limitations. Most people in SL dont want government or laws. They like sweet freedom

I get what you're saying. I just happen to disagree. My idea of "value" has little to do with L$ when it comes to land. Scarcity of land is only important for one of two reasons... you either can't find land that you want, or you're trying to make a buck playing the margins. For people who want to buy land to live and build on, plentiful quality plots available can only be a good thing. The ability of people to profit from their land isn't something LL considers when they decide to add new land to the grid. They're only interested in meeting demand and keeping a relatively stable price.



Yep, but those kinds of issues are true for any kind of in world venture, not just land barony.



You're right. It'll be interesting to see how these kinds of ventures pan out. If they're providing a good atmosphere and a genuine value to the people living there where fluctuating land price isn't an issue, I suspect they may do very well Or not. We'll have to wait and see.

I do believe that there is a surgical procedure that can cure this "rectal cranial insertion" problem you seem to have, Prok.

- Ace

Um, would this surgical procedure also have the beneficial side-effect of getting the Linden stifling hand off the land market? Then I'd be happy to undergo it>

I'm adding nuance and description and colour to this point, and going on your condensation of it, precisely to give a nod in that direction: that people will bother to go into the server farm business if they feel it will "sell".

In the other thread about open source, Adam Zaius has talked about the need to make open source profitable, which has gotten him slammed by the usual anti-capitalists but he has a point.

Ok, we agree here. The ability to profit from land via resale is not a interest of LL (or maybe it is, its an important part of the economy, and they do care about the economy). The ability for LL to sell land in auction and make money is a concern. Private Sims change the balance of all of this, creating massive amounts of new land. Again, a buyers market, not a sellers.

my 2 cents worth:

I think Prok made some very lucid points and might I add, gave plenty of examples and used deductive reasoning to back those points up.

Well done Prok, I read all your posts on this and while I don't agree with everything I do agree with the vast majority of what you have said so far.

I have noticed that in my brand new sim Sand, there have been slow sales of the lovely forest land and Anshe bought virtually all of it (so it is not being re-sold at high rates)....

I purchase my private land on sim for less then it would of cost on mainland, pay the same teir cost and have my "sweet freedom" from rotating sex toy signs, bright ugly tall malls, and neighbors that seem to think they need a script in ever single prim they make that have listeners. So while I respect your sweet freedom, all I ask is for the same respect for mine

Respect can come with question and opposing opinions. And I am not questioning you and your private sim lifestyle. I am question what massive amounts of land will do to the land economy. Your opinions seem very limited and based on a limited view of the world as a whole. Thats not a dis, its just how I see it.


I still really dont see all these issues with mainland sims, but to each his own.

My view is as big as SL, land mass in the mainlands are over populated as is. It is easy to tell if you are lagging or your sim is lagging. Hit Shift+Ctrl+1. It will bring up a tool to view FPS, Packet loss, Ping SIM, Time Dilation, Sim FPS, Agents, Scripts, Objects, Sim CPU, etc. All those stats relate to lag or lack of lag. Each SIM I goto I check those stats, mostly out of curiousity more then anything else. While there have been some awesome mainland sims, on the majority the sims inland have fewer FPS (this is how you visiually see the lag) with much greater Agents, Objects, and especially Scripts.

What this relates to is a drop in your FPS. For a smooth visual aspect of the game enviroment you need around 30FPS.... alot of the inland sims fall well below 15FPS and I have seen some lower then 10FPS. Sim CPU, Objects, and Scripts all effect lag in how long it takes to change yoru clothes, rez an object, update your character, and movement. Sim's with malls are easy to see with the amount of scripts running and cpu usage being used.

The reason I bring this up is because this all effects the value of the land. Land that is over populated in respects of Sim usage and not necesarly AV usage is lowered as the quality of the sim degrades.

Like I said earlier, everyone sees "value" of land differently. Some are just happy to have water front, without thought to the stability of the sim. Others much rather have stability over view. I happen to have both... great view and very stable sim.

As I am writing this and looking at my screen I have 40.1 FPS with Sim FPS at 1537. No lag, smooth view, quick AV update and even a small bit of water on one of my corners That to me makes this land much more valued then any of the land I have owned inland.

Private sims can lag also, sometimes worse than mainland sims. Wait until more private sims roll out and the sim you are on gets an old server. Have a fast sim, just wait, it will be slow soon enough. Or invite over 30 people and watch that sim tank. Its easy to have a fast sim when no one is on it

If you think about it, it is in Linden Labs interest to have as much land out and owned as possible. The price of that land doesn't matter to them, nor should it.

Linden Lab makes the lion's share of their revenue with recurring monthly land tier, and every m2 of land that is owned, is more money coming in to them.

Plan your land speculation business with this concept in mind.

- Ace

It's not in there interest to have that land be too expensive and sit there on one person's tier, or one group tier, and not fan out to other people, enabling ever growing numbers of people to buy in, then tier up.

So they can't go TOO far in devaluing land, because then the barons have too much tier to hold, they aren't making sales, and they have no incentive to go on the auction. This happens to medium-sized barons in particular.

LL has stopped switching server class's on sims, posted and stated by the lindens. While your sim can, and does, switch from hardware to hardware it will no longer change actual class of server.

Sim overcrowding is not just a private sim experience but also public. Much less chance on private sims that are not allowed to have clubs, malls, and hosted events.

You seem to be pretty pestimistic about private sims, although you state you do not have ill regard towards them. In the past older hardware was substituted at times and the owners complained and it was fixed. Local governments, "laws", and a tight community goes along ways toward not getting overcrowding on the sim.

I am sure there are going to be times where someone throws a block party with 30+ players. There are going to be times when LL is down also, but those are few and far between. I have lived on both private sims and public land. I am not trying to convince you to change your opinion, only stating for fact in my experience I have not rran into a single one of the problems you have stated on a private sim but have many many (had to sell three sepeate land parcels now in public land due to it) times on the mainland. Not always lag related but for various reasons.