On November the 8th organized by Deloitte – one of the “Big Four” of the financial world, the 10th edition of the annual conference “Art and Finance” took place in Milan at Palazzo Mezzanotte – the heart of Borsa Italiana - Italy’s only stock exchange. The venue carried a symbolic importance as a crossing point between worlds of Finance and Art. The event brought together International and Italian art professionals for the panel discussions of the current trends and threats in the Global Art market. Held in collaboration with players of the Financial world like Borsa Italiana, Uni Credit, Credit Suisse, AXA ART and Clarity Life, the panels were well-balanced by the participants of the Art market such as Pinacoteca di Brera, Christie's, The Art Newspaper, Artnet, and MasterArt.
As a leading financial services company, a decade ago, Deloitte was one of the first firms to recognize Art as an asset class necessary for a well-diversified portfolio. Nowadays, Art and Finance Sector plays an essential role for private investors and financial companies with the forecast to see a further development in the nearest 10 years. Despite the current economic situation, the Art Market is said to be resistant to financial crises and is expected to grow further in the following 12 months. Together with Auction Sales rise of 18% for the first half of 2017 and increasing demand for luxury investments, the Global art market outlook seems rather optimistic. Yet, there are many challenges to be faced.
The central role of the discussions was dedicated to the issue of transparency in the market for Arts. The only clear publicly available price in the market is established by Auction houses while galleries, collectors, and artists prefer to keep their sales and purchases private. For this reason, the auction houses sale reports represent only the tip of the iceberg, with the most of the market operations hidden in shadow due to the trust agreements between artists and art-dealers. The lack of information inevitably entails price manipulations, practices of tax avoidance, and illicit trade of forged or stolen artworks. Although universally agreed that establishing market transparency is necessary to bring confidence to consumers and encourage investments, the prevailing view was that in favor of self-regulation rather than any government intervention. The solution requires collaboration among the major players in the market to ensure fair pricing and higher availability of information together with media interference and investigations. Alternatively, the usage of modern technology through the creation of the digital registry will benefit consumers and artists by establishing confidence and protecting the copyrights.
Hence, the technology might take the leading role in the development and improvement of the Art market. Being both the solution for transparency and regulation, the online market is facing increasing competition: in 2016 online art sales have reached 3.75 billion dollars - 15% increase against the previous year. The success of platforms like Artsy, Artnet or MasterArt demonstrates the convergence of the market towards online commerce. According to the AXA market study, the Internet is the main source of information for the research on Contemporary Art. Slowly but surely, the community of art professionals and institutions is being formed on Social Media. Collection of data from Social media and digitalization of art transactions with art-related data leads to the development of new analytical tools. Thus, the exploitation of "Big Data" becomes a priority as it offers lots of potential for businesses and institutions in terms of understanding the consumers and improving efficiency.
Lastly, good news for Art management professionals: Art and wealth management became a part of a long-term trend. Among the main tasks of a wealth manager are the preservation of the collection, handling tax applications arising from a transfer of a collection to further generations and risk management. The latter becomes progressively important as the Art-secured lending market is growing with only the US market valued at $17Bn to 20Bn in 2016. Since expertise in Arts involves high costs and great time investments, the Art advisory service is a great opportunity. Managing Arts requires competence that leads us to the next point emphasized during the panels: the necessity for an arrangement of educational activities for both professionals and clients. The revolution in the Art market is about to happen: Maecenas platform is the new online marketplace offering an opportunity to buy shares in famous artworks. This is the first Gallery ever to democratize Fine Art making it available to the general public. This should result in the growing demand for Art-related services and, consequently, the growing demand for cultural managers. The numbers suggest that Art Business is blooming, and Art managers will take the crucial role in its prosperity.
The highlight of the conference was the 5th edition of the Art&Finance report reflecting the current situation on the Global Art market and its major shifts. The report contains survey findings, interviews, and articles with the insights of Art professionals. Its online version is in a free access and can be downloaded from the Deloitte Luxemburg website. Taking time to analyze the key-findings of 2017, we are already looking forward to further discussions organized by Deloitte.
