Darius Lehane did it, again. This time he wrote an article about the land bubble in Second Life. Quite an interesting read and he got some critical points absolutely right.

He’s right: land prices are out of control, taking off to unseen heights and are prone to crash sooner or later. Why? Well, what are you buying actually? Not really. Actually the partition of computation time of one server. One server normally hosts two sims and consists of a dual-core CPU. And servers can get added day by day, a fact unseen in the real world. So you theoretically can add as much land to the grid as you like.

Why is it going to burst? Because sooner or later the point of no return will be reached when most people are unwilling and/or unable to pay the prices. That’s why, and the fes are eating up he owners.

And if this point is reached most are going to sell their land – even with loss – just to get it away.

Another possibility, of course, would be when the Lindens are opening up the server side part of SL and you can host your region everywhere you want. This would also ruin the land prices immidiately.

So, investing into land is perhaps a short time investment in SL, but no long time investment nor a good investment at all.