Art & Finance Newsletter #7
In a recent meeting with a European PE fund founder I briefly mentioned that I've received a huge increase in requests for assisting UHNW Chinese in establishing art funds that use portions of their existing collections. The proceeding eye-roll and deep dive into market cycles was absolutely brilliant.
Possibly he is correct and this increased interest in art funds is a signal that the current cycle is coming to an end.
On to the art market...
Understanding Appraisals & Value
Twice as many artworks get valued compared to being sold, so the art valuations and appraisals market is huge.
Behind every art work on the market is an individual, or perhaps several individuals, that has been tasked with valuing and appraising it. Valuation is an absolutely crucial aspect of the art market, yet the process of determining a financial value for works that are often referred to as “priceless” is a bit of a mystery for art world first-timers and industry experts alike. Knowing and understanding value is crucial in a market in which the financial credibility of an art object can be gained or lost in a single day.
One may associate appraisals with establishing the price of an object in order to sell it, but there more to appraisals than just sales. In addition to selling, valuations are necessary for insurance purposes, asset management purposes, and even for loaning against arts and collectible items. And while the valuation process has always been crucial for determining the worth of art and collectibles, new developments in the constantly evolving relationship between High Net Worth Individuals and the art market show that valuation practices are becoming more important than ever.
ArtTactic - The Art of Appraisals: What Drives Value?
Is there a market for North Korean Art?
In 2006, Pier Luigi Cecioni traveled from Florence to the People’s Republic of North Korea as a visiting musician. After his hosts showed him some North Korean art, he left with an entirely new mission: He planned to become an art dealer.
For more than a decade since then, Cecioni has served as an international gallerist for North Korea’s artists. He imports posters, embroidery, and paintings from the North Korean capital of Pyongyang to his small gallery in a town outside of Tuscany, in Italy. In the wake of Kim Jong-un’s historic summit with US President Donald Trump, global interest in North Korea has never been higher, he says.
This interest hasn’t had a major effect on his business, however—because technically, he is unable to sell new work being made in North Korea. Last year, Cecioni had to effectively shutter his import business after the United Nations slapped new sanctions on the country.
Artnet - Meet the Man Selling North Korean Art
Mega Dealer Cleared of Tax Evasion...Again
After one of the biggest tax fraud trials ever held in France, Guy Wildenstein, scion of the renowned Wildenstein art dealing dynasty, has for the second time been cleared of tax evasion by a criminal court of appeal in Paris.
The decision on Friday, 29 June, marks the second time a case brought by French prosecutors against the family has failed. The first collapsed in January 2017, when a court found evidence that Wildenstein had made a “clear attempt” to hide hundreds of millions of euros worth of art and other property from French authorities in tax declarations in 2002 and 2008. However, in 2017 the judge said he could not return a guilty verdict due to failings by French investigators and shortcomings in the country’s tax fraud legislation.
The Wildenstein acquittal will be a great relief for those in the art market who have for decades used offshore companies in tax havens to avoid charges in France. However, in future, that door is now closed.
The Art Newspaper - Wildenstein Cleared of Tax Evasion
Summer Slow-down is Around the Corner
Similar to many other markets around the globe, the art market will 'take a break' during summer time. How can you make the most of this period of time? I'd suggest that you start to plan client engagement opportunities at the fall art fairs, museum & gallery openings.
For those of you in the private client sector this is a great time to take a look at the various global art events that will begin in early fall and run through early winter and plot out which events you might be able to coordinate quality time with your UHNW client base.
Strengthen your client relationships while looking at great art, drinking great wine and broadening your aesthetic understanding. It doesn't even sound like work.
Until next time,
Blake