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Art = Asset: The Revelations of the Deloitte Report

  • Art = Asset: The Revelations of the Deloitte Report
October 4, 2014
Bojan Marić was born in 1986. He had studied at the University of Belgrade – Faculty of Political Sciences (Department for International Studies and Department for Cultural Studies). He is a teaching assistant on the courses Cultural Studies and Culture and Social Structure. He takes part in activities within the Center for Cultural Studies in Belgrade, such as project management, organization of cultural events and academic conferences. Currently, he is working on his Master thesis within the field of Philosophy of Culture. His favourite urban artists are Vhils, Saber, My Dog Sighs and MadC. Contact Bojan Maric via bojan.maric@widewalls.ch

It is becoming increasingly more important to understand the tendencies and transformations of the vast field of the global art market. It can be argued that the art market is a contemporary art bubble. Whether this is true or not, it is certain that the significant raise in sales can be detected through observing the trends in the past decade (for more, read our post Contemporary Art Always Sells). However, the story which is before us today, apart from the nature of art market, concerns the comprehension of art as an asset class, the particular correlations between wealth management and investments in art, the nature of art investment funds, as well as the perspectives of the online art industry. Widewalls brings you the rundown of some of the key findings from the Deloitte Art & Finance Report 2014. Hopefully, it will help you understand the Art & Finance industry better and provide you with an introduction to the valuable tools for entering the vast field of the art market…

Art = Asset: The Revelations of the Deloitte Report
Art = Asset: The Revelations of the Deloitte Report

The Deloitte Report – Initial Information

The Deloitte Report has found a significant relation between wealth management industry and the art market. Namely, it has noticed that the wealth management industry is taking a more strategic view on art as an asset class, making it a powerful tool for building and deepening the relationships with clients. The report has shown that collectors and art buyers have been acquiring art from an investment view point. The research for the report lasted between April and June 2014 and it included 35 private banks, as well as important stakeholders in the Art & Finance industry, such as collectors, art advisors, galleries and auction houses. This includes a total of 122 art professionals and 90 major art collectors from Asia, United States, Latin America, Europe and the Middle East. Most of the data for creating a survey context was collected from Sotheby’s and Christie’s, as they cover the majority of the modern and contemporary art-collecting categories. An important addition to this year’s report is reflected in the publishing several interviews of key figures in Art & Finance industry. The report is divided in sections and it is a comprehensive research in the field of Art & Finance. Continue to read some of the aspects which we have found to be interesting and explanatory…

Next page: Art Market and Wealth Management

Art = Asset: The Revelations of the Deloitte Report
Art = Asset: The Revelations of the Deloitte Report
  • Art = Asset: The Revelations of the Deloitte Report

Art Market and Wealth Management

The report has shown that the growth of the art market is fueled by the process of globalization and the proliferation of new types of relations within the art market. Another important aspect is reflected in the increase of wealth within the new markets of Latin America, Middle East and Asia. Certainly, we are always faced with the significance of the stability of the art market. It is also certain, however, that there is much to discuss and deliberate on the topic of the nature of the art market. You can read about the future of the art market here. Let us return to the matter at hand. The report has also shown that there is an increase of UHNWIs (Ultra High Net Worth Individuals) which decide to invest in art and collectables. Perhaps, one of the most interesting aspects of the changing nature of the art market is reflected in the changes in art auction market. Namely, half of the 2014 auction figures are accounting for 88% of the 2013 total! Also, there is a positive art market outlook for 2015, since the majority of the art markets is going to be neutral to positive for the next twelve months. Interestingly enough, apart form the positive outlook for the art markets in United States and Europe, there is significant development concerning other parts of the world. For example, there is a growth of UHNWIs in Middle East, as well as Africa, rendering a situation of a new generation of collectors who have an interest in art as an asset class. In addition, the Art & Finance industry in China is likely to grow and the Latin American art market will be the second most attractive one to buy art, according to the experts. As for the awareness of art as an asset class in general, there is a positive outlook. Wealth managers are monitoring developments which are linked to art as an asset class and focusing on such financial services as art and estate planning, art and philanthropy and art secured lending. The report has shown, interestingly, that 76% of art professionals and 62% of art collectors think that art and collectables should be integrated into the wealth management offering. Whit this in mind, it is no surprise that there is an increase in demands for the art-related services to wealth managers by their clients. Finally, there is the issue of the lack of regulation within the art market. It is the unregulated aspects of the art market which represent challenges for the growth of the Art & Finance industry. This includes the lack of transparency, as well as difficulties in finding the right expertise. There are, of course, more issues concerning this topic. Read more about the art market in Examining Art Market.

Next page: To Invest and To Be Online

Art = Asset: The Revelations of the Deloitte Report
Sotheby’s Paddles

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  • Art = Asset: The Revelations of the Deloitte Report

To Invest and To Be Online

Just like in any other venture and, thus within the world of art market, investment funds present an opportunity to achieve those goals which could unattainable through other platforms. There is an opinion of the majority of art professionals that art fund industry might expand in the years to come. However, the wealth managers still seem to be very cautious when it comes to art investment funds, primarily due to the mentioned situation of an unregulated art market, as well as other negative effects. The Deloitte report mentions, in this regard, that the China’s art fund investment trust market has been rapidly slowing down during 2013, since the boom of the previous year. Although this example shows that there is much to be discussed and reevaluated in this field, art funds show a lot of potential. Namely, asserts the report, art funds could become service platforms for the wealth management industry, by providing expertise as well as the much needed regulatory framework. Secondly, art funds might represent a way for collectors to gain a wider access to the art market. Basically, art funds are seen as “door openers” for art professionals…

Art = Asset: The Revelations of the Deloitte Report
Art = Asset: The Revelations of the Deloitte Report

Perspectives of the Online Art Industry

The significance of the digital space when it comes to contemporary art has at least two important aspects. One concerns the virtual reality as a field of creative work, both as a source of inspiration for artists, but also as an object and space for creative work. On the other hand, this is a plane for the online art industry. In this regard, the Deloitte report has shown several important findings. Firstly, there are numerous opportunities for data analysis and research. Secondly, larger online art marketplaces are likely to increase liquidity. Thirdly, online auctions are expected to see rapid growth (read our article which addresses this topic – Winklevoss Twins Invest In Paddle8). In addition, the report has shown the significance of eBay and Sotheby’s partnership (read more about this grand collaboration here). Finally, the online art industry can benefit through the development of online brands, which can play a key role in establishing trust between online players…

Art = Asset: The Revelations of the Deloitte Report
Art = Asset: The Revelations of the Deloitte Report

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