Investing in works of art has traditionally been the domain of the rich, while the rest of us can be content to be spectators at auctions. However, all that is changing. With the rapid development of technological investment, that privilege is now open to people of all income levels. If it is possible to invest in stocks or funds, it is now possible to invest in works of art.
One of the important facilities now available in the art world is the possibility of collective investment. This is a way of investing where several or dozens of key investors come together and buy a single object together. In this case, ownership of the object must be created for each investor.
Let’s take a look at why collective investment and partial ownership can be interesting for art lovers:
Low minimum investment amount
One of the biggest advantages of collective investment is the minimum investment amount. For some co-ownership platforms, the minimum investment amount is only €1. Imagine owning a share of Pablo Picasso’s work for that amount!
For many years, investing in art has been eliticized and covered by a veil of mysticism. Few people could afford buying a work of art for more than €100,000, but certainly most could buy a share of such a piece for only €100. Collective investment and fractional ownership provide an opportunity for everyone to participate in the art market. The market suddenly becomes bigger, and inaccessible works of art become accessible. Art can convey an important message to the wider public, preserve historical memory, and be an aesthetic object – so why can’t art be accessible and enjoyed by everyone?
And this is where collective platforms come in. Collective investment platforms employ art professionals who, based on their expertise and third-party analysis, select potentially lucrative works of art for purchase and help increase their value, advise on buying and selling issues, and periodically provide estimates of price changes.
No need to worry about storage and maintenance
After buying a work for €100,000, the question arises about possession of such an object. How can several joint owners possess the work? In the case of collective investment, it is the platform that will take care of the storage of the work and everything else related to it: insurance, and the specific storage conditions that the work of art may require. Most importantly, the platform will attend to the creation of value to make the investment pay off in the future.
Easy to transfer rights
For the individual buyer, reselling an expensive work of art is a long and financially demanding process. Liquidity is generally low, so the timing must be right. However, reselling rights to a part of a work will always have a ready market. It is easier to find someone to buy a share in a work of art for €100 than a whole work of art for €100,000. Moreover, the online transaction is easy – it’s as simple as clicking a few buttons.
Could collective investment and partial ownership be a starting point for new buyers looking to invest in works of art?
Statistics from the “Hiscox online art trade report 2019” shows that 51% of art buyers surveyed under the age of 30 said they would consider partial ownership of works of art as a form of investment. 43% of new art buyers (individuals who have been collecting for less than three years) have also shown interest in collective investment and partial ownership. And for novice art collectors, partial art ownership can be a great way to get to know the market without major financial investment or risk. For advanced art investors, this is an opportunity to diversify their investment portfolio without the management burden.
Ornela Ramašauskaitė, Head of artXchange Global, the platform for collective investment in works of art, points out that such investment has a stable growth rate and is not directly dependent on negative changes in currency values. In fact, the value of the Contemporary Art Index is rising fast, with a growth rate of 7.5% annually, outperforming the profitability of commodities and cash markets. Although there was a slight dip in 2019, when sales fell by 5% to €57 billion in value but increased by 2% to 40.5 million transactions, the trend is on the up-and-up.
“I would like to draw attention to the additional values provided by this area: emotional and intellectual,” Ramašauskaitė comments. “Works of art can tell detective stories of origin, provide aesthetic satisfaction, and catalyze intuition. Combining all this with the opportunity to earn, even investing small amounts is what P2P platforms allow; so, we get a gourmet innovation (turning a work of art into a financial instrument) with huge potential for the masses.”