Metaverse mortgages are being issued to buy virtual land — and one of the first ever was just signed for a property in Decentraland

• TerraZero Technologies facilitated one of the first ever "metaverse mortgages" for a client buying virtual property in Decentraland.
• The Web 3.0 technology company said it provided the majority of the financing.
• Some experts remain skeptical about metaverse real estate, likening it more to a crypto asset than physical property.

TerraZero Technologies has facilitated one of the first ever "metaverse mortgages" for a client buying virtual property in the ethereum-based metaverse platform Decentraland.

The Web 3.0 company said it provided the majority of the financing, according to a statement released over the weekend. But financial terms nor the client's identity were disclosed. TerraZero did not immediately respond to a request for comment.

"Mortgages and financing availability will expedite the development and adoption of the metaverse," CEO Dan Reitzik said in the announcement. "We are excited to be at the forefront of this new and exciting economy."

Moving forward, prospective clients can use the TerraZero website to explore metaverse land listings, then finalize the brokerage process with the company. TerraZero holds the virtual land as the registered owner until the loan is paid back. Each transaction is collateralized with the underlying virtual real estate, which is represented as an NFT.

The metaverse mortgage comes as sales of virtual property exploded last year. By one estimate, sales exceeded $500 million in 2021, according to MetaMetric Solutions data cited by CNBC.

Among the biggest deals was a $2.43 million virtual land purchase. Top apparel and luxury brands are also developing metaverse property.

But some experts say virtual real estate is more similar to crypto assets than physical land. To them, digital land can be useful for brands to build experiences, but less so for investors looking for property appreciation.