First of all – Art is not made
for speculation and short run profit, it is made for passion, but a smart assembled
art-collection enables a huge increase of the values of an asset portfolio.
Yes, collecting art is still one of the most reliable investment possibilities,
like everything made for passion. The estimated profit can be over average by
far and the speculation risk is less than in stock exchange or real estate,
because collectors have many chances to influence the development of artists
and works. Even, when we take a closer
look on art-market, we will discover that, in spite of all other assumptions
the art-market is very transparent. More
and more private Banks and Family Offices and their advisors are getting aware
of that.
Is the role of art in
asset-management the role of the sleeping princess?
Still there is something mystic on
collecting art, which in general makes the finance world to turn around. Romanian
artist Adrian Ghenie for example developed his quotation on the market in
approximately 10 years 16-fold. Works that had been 20.000 Euro a couple of
years before are now on the secondary market with more than 300.000 Euro. In
2018 the US auction market increased 18 %, in U.K. 15 % according to the Global
Art Report of 2019 by economist Clare McAndrew, published in March 2019 by Art
Basel and UBS Bank. Even in Corona-Crisis-Year 2020, leading auction houses as
Christie’s, Sotheby’s and Bonham’s are announcing increasing figures.
In the meantime investors in real
estate are satisfied with doubled revenue
in the same period of time. Risks that office-spaces, shops and even
apartments can remain empty for a certain period or tenants who cannot pay
anymore is all considered in the calculation. But in the same time they
consider art-investment as risky. This preference is not based on facts, but on
the experience of the most bankers. Last but not least, they have more
experience in financing and failing financing of apartment with 180.000 Euro
then with artworks of 180.000 Euro. Real estate market is larger, convenient
and offers simple concepts, with monthly income. And if you need to unblock the
investment, you can sell the apartment. What to do when you have to sell an
art-collection? This is where collectors and banks with their art-advisors
could jump in and control their risk by themselves.
Before we take a look on the
chances collectors have to influence the development of artists, and which
responsibility they have, we have to take a look on the deeper character of
buying art and on its history. As always in life, if you want to understand the
rules of the present, a look in the history can be helpful.
Buying art is not for everyone. Art Collectors are leaders, ready to create
their business surrounding, their lifestyle and ready to create the society
they are living in. Most art collectors nowadays – and now let’s look on the
upper middle class who buys art until ca. 500.000 Euro, are from families who
live in that tradition for many generations.
So, how does an art-collector
look like? Mature, experienced, with 60 more energetic than others with 30,
enjoying life, travelling, luxury, exceptional places, fine hotels, best food,
good whiskey, bespoke cloths, an everlasting version of Zeno Davidoff? Sitting in heavy leather armchairs and
enjoying life and celebrating art? And how we imagine a Count? Aren’t there
lots of similarities?
The History of collecting art
took different routes in the last 500 centuries. But they have surprising
similarities. Dukes and Counts of the 15th and 16th
Century, mainly influenced by the Italian Rennaissance and the ruling families
as Borghese and Medici in Florence and Barbarigo and Loredan in Venice,
supported artists and established huge art-collections as a symbol of status
and power.
The big seafare nations of 17th
Century as Netherlands and England continued this tradition, where mainly the
new upper middle class as merchants and ship owners copied the lifestyle and
the leadership of the nobility. The Dutch merchants of 17th Century
financed the Golden Age even in arts, as they financed amongst others artists
as Vermeer van Delft and Rembrandt van Rijn, who had been a ship owner and
spice trader by himself. The development of enlightenment, first in England,
afterwards in France, Germany, Austro-Hungary and more European regions caused
that the lower nobility and the new upper middle class came closer together.
And again, the upper middle class copied the lifestyle of the nobles, even when
they had been “snobs”, which meant “sans noblesse”, without noble titles. The
new class had maidens and drivers, silver cutleries and crystal chandeliers,
valuable porcelain and finest wines and food. And they bought artworks. In the
time of industrialization some of the upper middle class became nobles, and
some lower nobles became entrepreneurs. The situation had been perfect for
encounters and learning from each other. On that crossroad, the social levels
mingled, which became a blessing for art-dealers and artists until the 20th
century.
Following this theory, it might
not be surprising that the main hot-spots for art in contemporary Europe are London,
Paris, Netherlands, Berlin, Vienna and Venice. All this places have a history
of strong determining Imperial and Royal houses or in case of Venice, a
tradition of influential families. In this places we have around the former courts
many lower nobles and upcoming bourgeois ready to copy a life in nobility.
This contains not only to live in
luxury, this means to think and act in long term, to take responsibility for
decisions, for investments, for people, for artists and the progress in their
careers. “Noblesse oblige” means as well to take care of artists and to support
them, as well in benefit of the own collection. Latest now we can see, that
collecting art is not just a business, but a noble life-style, which requires
more a certain perception of life in dignity, then money, but it enables an
increase of the family fortune. It remain, collecting art is a profitable
passion.
***
Next week in part 2 of this essay,
we will take a look on the difference between investment in stock exchange,
real estate and art.
No comments:
Post a Comment