Can you make real profits in a virtual world?

With global property markets looking shaky, it seems there are few places left where investors can still make money. However, some are turning to the most obscure emerging market of all: the online world of Second Life.

With global property markets looking increasingly shaky, it seems there are few places left where investors can still make money. But the same desire to own bricks and mortar that took investors to the bleakest parts of eastern Europe is now driving them to another obscure emerging property market. Prices in this location are booming they rose by 24% last December alone yet even first-time buyers can still get on the ladder. The trouble is, none of it is real. This boom is happening in Second Life, a three-dimensional online world where people create avatars' virtual versions of themselves who lead lives within the world and trade using the in-game currency, Linden dollars, which are exchangeable for real world money. "After a player creates his or her avatar, he or she then talks with other avatars. One thing leads to another and, just like in real life, they buy houses," says Jim Rossignol of PC Gamer in The Daily Telegraph. Land costs anything from £10 for a plot to £2,500 for a private island, while renting starts at about £1 a week.

And just like the real world, there are plenty of people willing to speculate on property. Ailin Graef became the first Second Life millionaire last year when she made $1m buying virtual land, developing it, then selling the homes for a profit. On a smaller scale, British member Pauline Woolley has set up a monthly virtual homeowner magazine. "My husband said to me, Let me get this straight you have created a virtual magazine to give virtual people advice on virtual furniture to put in virtual homes and expect to make real money?'," says Woolley. Her husband's confusion is understandable, but enough users are turning a profit to cause the Inland Revenue to wade in. "The same tax rules apply to internet trading as to any other form of trading and our compliance approach remains the same," warned a spokesman in The Sunday Times recently.

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