Waterfront prices on the rise. Why?

In the last hour, nearly a full sim of our groups waterfront land was bought by a well known big player in the land market and immediately set for sale again with a markup of 30% to 100%. This resident has marked up all of her own waterfront land all over SL, too.

Fresh waterfront now goes for 15L$ to nearly 20L$ per sqm. Does anybody else have any ideas what is happening here?

Theories not in order of likelihood

1. A bid to monopolize the waterfront market.
2. An attempt to price mainland waterfront out of reach so people have to move to private islands to get what they want.
3. An attempt to create upwards momentum for a long term price hike on new waterfront without a monopoly
4. A response to "There are no auctions at this time."

An agent of the same group you mentioned has asked me if I would accept an "offer" on my waterfront land. I didn't reply, I'd already set the price (fairly high, but it comes with a beautiful villa and quay). Maybe I should take it off the market for a little while?

Note: I just went and increased the price to $L20 per square meter. Let's see what happens.

Those theories surely have some merit but sound a little bit too "machiavellian" to me.

Given that the land market in SL is dominated by the principle "sell fast", it is very hard to implement long (or even medium) term strategies.

The most realistic assumption is that this person sees profit in the move.

The only 3 ways it could be profitable is if the land is or will soon be undervalued at old prices, a move to create increased value in the the land, or an attempt to use this move as a loss leader for greater profit in another position. Not to be "machiavellian" but those theories reflect the ways I can think of the person in question would believe #1 is true or be attempting to act on the other 2 options.

1. The waterfront market is one of the smaller and more desired sections of the SL land market if any section could be effectively monopolized by a deep pocketed player it would be that one.

2. There is alot of money to be made in private islands it can be made continually from island sales as opposed to single time sale. If someone could somehow prevent most people from getting waterfront land in the mainland it would probably increase island rentals/purchases.

3. Pricing reflects two competing factors fast sales and max profit. If you boost the minimum price for waterfront to 15L/m your more likely to get that and there is the chance the next person to get waterfront land will price at 15 14.5 15.5 whatever and retain the momentum.

4. Reflects the first option a belief in undervalued land if the lack of auctions right now reflect a move by LL to reduce the speed new land is introduced at it could raise the value of waterfront land in particular.

"machiavellian"

5. This is a precursor to a hardcore attempt to crash the linden to 560 or less making the doubled prices cheap sell the land then hold the L's till the market recovers.

Before I start this post I will say I am not a computer programmer but....

Is there an ultimate limit to the size of the metaverse in Second Life, by that I mean all the connected sims, (rather than the private Islands not directly connected to the main Grid,) via normal walk through.

What I was thinking was each new connected sim has to have a defined relationship with all other connected sims, and as the number of sims increase the code used to define that relationship might increase by the square of the connected sims.

Therefore if I am right the computing power (servers) used to power the meterverse may increase by normal progression, but the complete code per new sim increases by the square of the proceeding one.

If this is even partially true this would indicate a theoretical limit to the meaverse defined by available computing power, therefore more desirable land has a limit with regard to new creation

I guess it is easy to aggree on that assumption.

That was the question I had in mind when I did this post. Did I miss a development or an announcement of a future development by LL that could lead to an increased demand or rareness of land or especially waterfront?


Of course ... this is one of the wonderful strategies possible in a completely deregulated market. It would cost a lot, though, to continously defend such a monopoly. You would have to buy up any new piece of waterfront that is coming onto the market, win every new waterfront sim that is coming onto the auction block.

Of course. A sqm costs you approx 1L$ in tier each month, so if you hould it four months longer but in the end sell it for 5L$ more you have made a nice profit. But we are talking about nearly doubling the prices. Cheapest for fresh waterfront is 15L$ now. But the really nice parcels go for nearly 20L$. I wonder how buyers will react to a price increase of 50% to 100% in one step.The lack of auctions might have to do more with the fact that a huge number of sims were auctioned off last week and weekend. There always were times where there were no sims on the block for a few days or only those where you never could dream of making a profit.

Originally Posted by Jon Rolland
The only 3 ways it could be profitable is if the land is or will soon be undervalued at old prices.

**

Dana:

That was the question I had in mind when I did this post. Did I miss a development or an announcement of a future development by LL that could lead to an increased demand or rareness of land or especially waterfront?

**

Me

...or has someone more inside info that others? ..is that what you suspect?

I think it might have something to to do with Gene Hackman and some nefarious plot of his.

Machiavellian business plans make money. Most people don't have the chutzpah to make huge sweeping moves like this. Most people are too gentle and polite, veiling their true intentions with politically correct gauze and friendly slogans.

If this person can sit on the land at that higher price long enough, the other waterfront land owners/sellers will see that if they jump on that high price band wagon they all win with a locked up market where anyone who wants water front land will have to pay through the nose to get it.

Successful business needs to think like this, pushing the limits of what is the norm. Finding a way to carve out their own destiny.

If you have financial backing, you have a certain security to play with ideas and take chances. Money doesn’t make itself, you have to take chances.

Ok, I am following your line of thought. I have just raised the price of my waterfront lots to 100 L/m! Come on, buy my lots and made PT Barnum proud! Perhaps it should be set at 1000 L/m....hmmm

1000 L/m?

I said through the nose not through massive hemorrhaging.

And there is a huge difference between a strong handed business move and plain old silly.

It's obviously all snapped up now, but essentially every parcel in my sim Caledon was roadside and waterfront. The bookseller's lot downtown is the only exception, but it's in a sweet spot anyway.

Every parcel in the entire sim 'sold' for $L 0.



Could I have charged people for the 'privilege to rent'? You bet I could have.

Why didn't I? It was just easier, I didn't feel like dealing with it, and I wanted a full, happy sim with an incredibly positive energy amongst the land holders.

That's exactly what I got, too. Even more surprising: unlike a lot of sims, these folks are congregating in town, knowing their neighbours, and so forth. Absolute magic, and I'm sure the 'good deal' helped greatly.


Yes, I might start charging for parcels in the future when I have some; I don't know really. I've got plans drawn up for new sims and time will tell.

I'm full up now and with a waiting list, but I wasn't the only one offering 'zero buy-in' land.

There are good deals out there. People really need to shop around.



Incidentally - I made sure to put into my sim rules a clause against someone buying me out and flipping all the lots.

I don't mind an individual 'flipping' a parcel or two to someone else for cash. Good for them. But having a private sim ensured that vast tracts of quality land wouldn't become someone else's speculative land market.

Ripply water.

True however a failed defense could lead into a long term price hike for everyone.

Of course. A sqm costs you approx 1L$ in tier each month, so if you hould it four months longer but in the end sell it for 5L$ more you have made a nice profit. But we are talking about nearly doubling the prices. Cheapest for fresh waterfront is 15L$ now. But the really nice parcels go for nearly 20L$. I wonder how buyers will react to a price increase of 50% to 100% in one step.[/QUOTE]

$195 at 282 on the market would cost roughly 57kL/month that supports 72km(.8L/m/mo) with a 10L/m hike you could hold the land for a year and still show a profit. If you can play defense or get an across the board price hike to that in a year the potential profit on plots that you didn't pay 10L/m for is huge. So you'd have a year to try to manipulate prices on the mainland and in the meantime negative buyer reaction could drive them to cheaper waterfront plots in private sims a double win play. And it doesn't matter if you maintain a monopoly or if you get other sellers to meet your price. If you keep your pockets deep enough you can either keep snapping up their waterfront and marking it up or force them into pricing in the same range to avoid it getting grabbed and marked up either move keeps the market high.



Agreed but it's also the simplest suggestion I could think of that doesn't require any large market manipulating plan.

The auction block is full again. 21 sims on auction.

The bidding process for all of them has been started; by two residents over the course of a few minutes. All the bidding will end before monday.

No throttling for the stream of new land.

yep which means someone is either gonna take a hit or has another plan.

Jon, if the group we are talking about here wants to corner "just" the market for waterfront (and this is not a fact just an assumption until now), the stream of new land coming from the Lindens is nearly irrelevant for such a strategy.

There is never enough waterfront. And making sure that all of the waterfront gets into your hands is not terribly expensive. It could become downright cheap if you succeed in intimidating your competition into a "let's wait and see" attitude.

Wait-and-see will result in better margins at the auctions. You can use the rising profits from the sales of non-waterfront land for the additional cashflow needed to finance the cornering strategy.

It all depends on the reactions by the Baby Barons to this strategy.

Agreed thats basicly what I just posted in Shaun's thread. However the fresh supply of land does show this to either be a short sighted and failing plan or a long term sighted plan at market/competitor manipulation.

ps. why do I not believe the short sighted option? :-/

I would say the simple answer to why is just like in RL. In RL nice waterfront land is high price and when the availiblity of the land is limited the prices rise. Since most people operate under real estate models based on RL, then it goes to figure that waterfront property is going to be pricy.

The other thing is as long as the market can bear the high prices people will keep on trying to push it higher.

Looks like we see some more waterfront happening in south korean continent there.

Can anshe buy them all? Stay tuned..

Is far as I can see, there are only 5 or 6 new waterfront sims down there. Where should be the problem, to buy them?

And there is no need for Anshe to buy them. As long as the winning bidder in these auctions puts the waterfront on the market according to the new pricing, her strategy works.

Greetings, I will take the "blame" for this one, since I adviced Anshe on the price move. Let me try to explain what let to our new assessment of the market.

Our old pricing was based on two assumptions:

1) supply of terraformable bulk auction sims
2) the "korean" area is an archipelagoe with lots of islands like the one that was first added to the map

This assumption ultimately fell through, as you can see by the way the Linden continent expands and by the lack of bulk sims.

At some stage Anshe asked me to provide another market analysis. The result was that we came across a serious supply problem for waterfront land. While other land was moving slowly, the waterfront we had left, especially in Islandia, at 10-12 L$ per sqm, was selling so fast that we were about to run out of stock within 10 days.

We then went on a tour and checked what land was left on the map. Our discovery was two-fold:

1) There hardly wasn't any good waterfront land left for sale. Most land that was sitting there was non-waterfront
2) A lot of waterfront was already priced by sellers at around 15-20 L$

We talked for a while and tried to determine what pricing would lead to waterfront and non-waterfront land move at about the same speed. As a result we increased our waterfront rates and lowered our rates for a couple of other land types.

After that we went shopping. There wasn't a lot to buy though. Anshe visited the sims of her friends Dana and Shaun, one of our agents swooped up a few lonely pieces in the north and that was about it.

The new price level seems to have balanced things. The tons of non-waterfront land that we have been sitting on, they move now, while waterfront is selling at a reasonable rate that is much more in line with the speed of supply from the auctions. Others on the market seem to agree. Just take a look at the last batch of sim auctions. Even bidding on the new price level, we were outbid on most sims.

If you want cheap waterfront, then tell Ryan to add a couple of 10, 20, 40 sim bulk blocks to the auctions. I had a blast with the Islandia project and all the positive reactions from buyers. And believe me, it is so much more fun to be able to be creative and make new waterfront sims, than to be forced to mark up the scarce left overs on the market.

In the creative field, all we can do at the moment is to expand Dreamland. There, people can still buy waterfront for 5-6 L$ per sqm, or they can rent without any upfront costs. As for the mainland, I hope the Lindens will ultimately fix the supply side.