Partial ownership of art is growing in popularity in a rapid fashion. Whilst the idea of selling shares in art has been around for over a decade, a range of cutting-edge platforms have been making waves in the market. For example, Artex Stock Exchange out of Liechtenstein.
This initiative invests in art (its first acquisition is Francis Bacon’s Three Studies for a Portrait of George Dyer, 1963) purchased for $52m in 2017 at Christie’s and now valued at $55m. Investors can buy shares for as little as $100 in the Bacon which can be traded on an alternative platform, namely the Liechtenstein MTF.
These new platforms and investors are desperate to get their hands on some of the $3.3tn worth of artwork out there. Included in the list of these new entrants is the Rat, out of Ras Al-Khaimah, one of the smaller emirates in the UAE. Its parent company will launch, “Rare Age Technologies towards new heights in digital experiences using tokens like the Rare Antiquities Token and the FND Token.” They could be on to something as Spear’s reports that more than 80 per cent of UAE art investors have invested in fractional ownership.
Now the Arabian RAT project may sound hairbrained in terms of the art market, but things get stranger. A start-up, called Artrium will encourage collectors to buy shares in artworks in museums, with no gain but the pleasure of being involved.
Of course this is not being targeted toward investors but for fans of art that simply want to own it. Seems perfectly sane when positioned like that but in my humble opinion you would surely want the piece in your home or one of your private properties. Otherwise there is not really much distinction between you and the ordinary onlooker.
An April report on online art buying by ArtTactic shows that only 9 per cent of art collectors surveyed had bought fractional shares, but that 61 per cent said they likely would in the next 12 months. Nearly half of those surveyed have collected art for more than 10 years.
Delaware-based Freeport, is appealing to crypto enthusiasts by distributing its shares via tokens on the Ethereum blockchain, while investors in London’s new Ikon Exchange can buy shares in artworks owned by institutions and others who want to get liquidity out of their holdings.
So that stats have spoken. This after all is where things are going. But Art? What about the issues that come with fractional ownership? How is due diligence conducted, how do you deal with the insurance premiums, what if some want to sell and some want to hold ?
It turns out that my initial reservations weren’t as ridiculous as I feared. American art dealer, Inigo Philbrik was jailed for seven years for fraud that included reselling fractional shares in an expensive modern artwork that equated to over 100 per cent.
In an earlier report I wrote, called: A Critical Review of The Last 12 Months’ Significant Events in The Art Market, I detailed the recent NFT art market collapse. I fear this new initiative may follow suit. Only time will tell.
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