International Art sales realised more than $64bn (£40bn; 49bn euros) last year with analysts predicting that this area of the market will continue to grow. The art market has again consistently outperformed the equities market this year with a trend of stable growth in the years between 2001 and 2011.
Fine Art Fund Groups are a popular way of hands off investing in art. The London based Fine Art Fund is a leading art investment house with over $150m in assets under management. The Group also represents some leading banks in their art advisory relationship, FAIR (Fine Art Investment & Research).
The Group was founded in 2001 by Philip Hoffman, to develop and manage investment vehicles that invest in fine art, and offers a rare opportunity to invest in art with the added benefits of diverse professional expertise. The Fine Art Fund Group was the first fund of its type to invest in art as a worldwide asset class, and continues to be the only one to do so on this scale.The objectives of the funds are, to capitalise on its art market expertise, build long-term capital growth for Investors and provide diversification to a client’s investment portfolio. Enjoyment of the art itself is not compromised, as Investors are given the opportunity to borrow works of art held by The Group. The Group’s team consists of 40 art and financial professionals with representatives in Europe, Asia, the Middle East and Latin America.
The growth in the art market has also led to the rise of institutions known as “free ports” which are actually Swiss bonded warehouses. These are places where commodities, from coffee, to gold, to paintings and sculpture are stockpiled, exempt from taxes and customs duties until they are sold.
The Geneva free port is one such warehouse located on a faceless industrial estate. From the exterior, it looks like a rather subduded warehouse in an industrial area of the city, but Inside, it houses one of the largest collection of fine art, including work by Picasso, Matisse, Warhol and Koons. The current art boom has seen free ports as a growth area and new extensions are planned for Geneva, while due to open next year, new free ports in Luxembourg, and in Singapore, of course.
Simon Studer who specialises in Modern, Impressionist and Swiss Art sees this a a growth area and a new phenomenon. After graduating with a double Masters in Political Science and Art History from the Universities of Lausanne and Geneva, Simon Studer received a diploma from Sotheby’s Works of Art course. For five years he worked in the Jan Krugier Gallery, in Geneva, where he was charged with managing the Marina Picasso Collection. He has an office and showroom locked inside the security conscience free port complex for his specialised modern and contemporary art business.
Whether or not this cringable side to the art world is acceptable to aesthetes, it has become a reality to the general workings behind the scenes of large corporate galleries like Gagosian and Pace. It only affects the upper end of the art market and acts as an alternative to the tradition of loaning works to museums for extended periods. It also raises questions about just how safe our museums are for works worth tens of millions. Lets hope we don’t see a repeat of the Momart disaster where on the evening of 24 May 2004 fire broke out in a Momart storage warehouse in Leyton, east London. Tracey Emins bed, The Chapman’s ‘Hell’ and 50 Patrick Herons went up in flames.
Photo: Composite photocollage showing Momart storage warehouse fire 2004 with Tulips by Jeff Koons which sold for $33.6m in 2012