It’s something we don’t talk about much but should probably talk about more. The Chinese domain name market is on fire and numeric domains are without a doubt hotter than they have ever been. While I get NN.com, NNN.com and NNNN.com’s holding real value over time there have been concerns about the prices of 5N and 6N .COMs and if these prices really reflect market value.
I think we’re entering into exciting, but also dangerous territory.
Here’s why it’s dangerous. The value of 5N, 6N, even 7N domain names is going up massively, in a way that I think signals competition amongst buyers a lot more than it does true increase in value. Don’t get me wrong, I think 2N, 3N and 4N domains have real potential, but at the same time, prices on these are their highest so they don’t make great flips, yet.
With all the buzz about activity from the Chinese domain market I think it’s easy for investors to go deep on trends that we haven’t seen sustain over time, trends that sadly could covert to major losses for some Domainers. Yes, 5N .COMs might be hot now, but if you buy tons of them you could be in for some sad times a few years from now.
In short, the train has left the station, it’s moving fast, and those that get on at the right time will cash in big-time. Just be careful, do your homework, and make sure that you’re not buying above fair market value and instead in a bidding war with people who have a very different investment strategy and risk profile than you.
There, it had to be said, and as you all know I’m usually nothing but positive, however I do think some fair warning should be given here. Still, to get back to my usual self, I do think there are great opportunities, the challenge is buying domains with long-term value vs. short term investor interest. At the end of the day we all know there are tons of end-user buyers for 2N and 3N .COMs but once you get into uncharted territory it’s all a calculated risk, the question is, how big of a risk?
What do you think? Comment and let your voice be heard!