Land auctions - $3900 for a sim?

How can people possibly make money at this? You'd have to sell the land at $16L per meter to break even.. Am I missing something?

Beats me. The more expensive 512 m² parcels currently retail in the 7k-8k bracket. Without a massive further hike in land prices I also can't see how the buyer could make a profit on it.

Or maybe the owner isn't looking to sell for a profit. People do want to own whole sims for other reasons the chopping it up and reselling it.

If it's waterfront, they can get 16 a meter easily. Otherwise it's sheer insanity.

I'll never pay 16L per square meter. It's a ripoff.

At that price, if you want to own an entire sim, wouldn't buying an island be more cost-effective? At the current difference in tier, it'd take 2 years to show savings over the costs involved in a private island. But we all know the current tier price difference won't last that long.

It's up to $4k with 18 minutes to go. Must be the new solid gold terra sim they've been talking about.

UPDATE: Annapurna (128,12 Mature 65536m Closed US$4,252.00

Man, for that you could have had an Island and 9 months of tier.

Is Annapurna a waterfront sim? I can't check it.

It is on a couple of nice looking lakes. It is a really nice looking plot of land. If I could, I might just have bought it!

So the question is why pay that much when islands are only a fraction of the cost??

I'm not the buyer, so I don't know the buyer's actual reasons. But I can imagine any number of reasons for paying US$4k for a mainland sim. First, many people can well afford to spend such money on entertainment. It's called "wealth." Second, they may want mainland rather than a private sim for some reason--perhaps because they're planning to stick around for a while, and the $100/month savings in tier comes into play. They may or may not want to sell off part of the sim; even if they do, they may not care if they take a bit of a loss.

Turn things around and imagine you wanted a beautiful 1/4 sim on the mainland waterfront (some individuals own entire sims for their own personal use). Now, go search land sales and tell me how many such parcels are available for sale, and how much they are going for per m2.

Land is plentiful in SL at L$12/m2...but more discriminating buyers have to pay more. Not everyone bases their purchase decisions solely on cost. Lag, proximity of clubs, view, roads, water, scripts--a discriminating buyer might be willing to pay a pretty premium to get exactly what she wants.

No one really knows how long the price differential in monthly tier will last between mainland and private islands. However, it may last longer than most people think. I strongly suspect that LL makes more revenue from mainland regions than it does from islands, despite the fact that island monthly fees are higher.

If every mainland landowner owned 65536 sq.m., LL would make less money from mainland because $195 is less than $295; likewise, if every mainland landowner owned only exactly 512 sq.m., LL would make less money from mainland (none in fact) because of the free 512 sq.m. allocation everyone gets. But in between, there's a sweet spot for LL, because small parcels have higher tier per square meter than larger parcels. For instance, 4096 sq.m. costs $25 a month, which works out to $400 per 65536 sq.m. region. We don't know what the average landholding is, but it's likely that LL makes more than $295 per mainland region, on average.

LL also benefits from the fact that all of those mainland landowners need premium memberships, and most people pay US$9.95 a month for that ($US 119.40 per year) instead of the more cost-effective US$72 year for an annual membership. So mainland regions drive growth in premium memberships, which brings revenue, albeit indirectly.

LL also benefits from unused mainland tier. Every time someone owns 1536 sq.m. but pays for 2048, it's pure profit. There is no equivalent for islands.

There is one downside: customer support costs are greater when you have a ton of unsophisticated small landowners than when you have a few large experienced landowners. However LL solves that problem by not providing customer support.

So overall, LL has little incentive to rock the boat and change the current mainland tier scheme. Doesn't mean they won't if they think they can get away with it. But some people buying and holding a mainland region may be making a rational calculation that the monthly fee differential will be sustained long enough for the $100 monthly difference to add up.

Other reasons to buy and hold entire mainland regions rather than buying an island:

-- Mainland always get a bit of free traffic, from people flying by and checking out the build or even people checking out the Map and seeing something interesting. Islands don't get that.

-- Mainland is more liquid than island land. If you ever want to sell everything and move on, you can do that easily with mainland. By contrast, there are relatively few buyers for islands, especially non-grandfathered islands, and those can often only be dumped at a substantial discount to the $1675 setup fee, in part because there is no escrow and buyers and sellers have to blindly trust that the other party won't rip them off.

Hey Something, there's at least one more way LL makes more off of mainland at $195 per month than private sims at $295 per month: The private sim owner always pays a flat $295 per month, while each and every account that owns land on a mainland sim for even one day pays tier as if they owned the land all month. So, consider the scenario where a new mainland sim is auctioned, bought by resellers, and perhaps even flipped a bit more. The auction winner pays $195 tier for one month; the resellers pay $195 tier for one month; let's say other land flippers generate an additional $75; then the ultimate buyers (assuming, say, 2/3 goes in that first month) pay about another $400 that first month (at an average parcel size of 1024m2). That's $865 in tier for the first month, on top of the perhaps $400 LL receives in premium membership fees from the players involved.