The Financial Market Authority recently granted ARTEX AG final approval to establish an art exchange with a trading centre in Liechtenstein.
Below we explain how the art market will change significantly as a result of the ARTEX Art Exchange from this spring.
- For those interested in art, it is interesting to inform themselves early and understand what these changes mean for art collectors.
- It may be interesting for investors to utilise the associated opportunities.
Important oil paintings by outstanding artists such as Picasso, Monet, Modigliani, Degas and Leonardo da Vinci are traded at auction for at least EUR 100 million, often far more. These works of art not only have a high emotional value, but were also an excellent investment. Prices have been more stable and have performed better than share prices, for example.
One example is the Knight Frank Luxury Investment Index (KFLII), which had a successful year in 2022 with its ten "passion investments" increasing in value by 16%.
KFLII is an index that tracks the performance and value of ten passion investments, including classic cars, fine wines, rare coins and works of art. It is designed to provide an insight into the performance of these luxury assets and is weighted to reflect the collectability of each of its constituents. The KFLII is widely recognised as a benchmark for the performance of luxury investments and is closely followed by investors, collectors and enthusiasts.
KFLII outperformed inflation and many mainstream asset classes, including equities and gold. The index is weighted to reflect the collectability of each asset, with half of the assets showing double-digit growth in 2022.
Art was the frontrunner with an increase of 29%. This increase in value was primarily due to the high prices paid by very wealthy collectors for museum-quality artworks. Several collections from individual owners achieved sales of over USD 2.5 billion, more than doubling collection sales in 2021. Blue-chip works with provenance from a high-profile collector regularly break auction records, and five works realised over $100 million last year alone.
This art market is ARTEX's core business. Until now, only a small group of billionaires has been able to acquire such works of art. Over the next two years, ARTEX will purchase up to 50 works of art from private individuals, including works by the aforementioned artists, for a total of EUR 3 billion. Each painting will be transferred to a separate public limited company based in Luxembourg. The shares of these companies will be traded on the ARTEX stock exchange. This gives investors the opportunity to become part-owners of an outstanding work of art and benefit from its appreciation in value. Leading banks in Europe, and later also in Asia and the USA, co-operate with ARTEX. They offer their customers the opportunity to buy these shares and keep them in their bank custody account.
Owners of outstanding works of art can sell them via the ARTEX exchange. While sellers and buyers each have to pay a commission of 15% at an auction, i.e. a total of 30%, ARTEX only receives a fee of 3%, i.e. 90% less. In addition, ARTEX agrees a fixed purchase price and takes the risk of how the auction goes away from the seller. You can imagine the disruptive effect this new offer will have. ARTEX already has numerous offers to sell outstanding works of art on this exchange.
In addition to the financial gain, philanthropic goals are also to be achieved. The art is taken from private collections and lent to important museums free of charge so that it can be seen again in public spaces. The broad transfer of knowledge and enjoyment of art is a high priority.
The Supervisory Board of ARTEX AG includes H.S.H. Prince Philipp of Liechtenstein (brother of the Prince), his son Prince Wenceslas and Dr Philipp Duke of Württemberg (former Chairman of Sotheby's Europe). ARTEX works closely with the Swiss stock exchange SIX, Bloomberg and other renowned institutional partners.
Guest article by Alain Mestat, Chief Marketing & Communication Officer, ARTEX Luxembourg. For further information on ARTEX Investments please contact Jan Hartmann (jan.hartmann@artex.io). Your TAXGATE team is at your disposal for all legal and tax issues in connection with capital and tangible assets.
