An invitation to the exclusive world of art. A peek into freeports — the modern day treasure vaults of the ultra-wealthy.
Here at Maecenas we are all about helping people achieve the thrill of investing in pieces of famous paintings. That’s why we have started a token crowdsale for our decentralised gallery to democratise fine art investment. That’s also why we love the fact that freeports are improving access to some of the best art viewing experiences and making huge headway in the art industry.
Stepping into Le Freeport is like entering a scene from Mission Impossible, with its state-of-the-art technology, precise climate control and 24-hour armed guards. A giant, modernist metal sculpture ripples through the lobby — La Cage sans Frontière — or cage without borders. Unbounded by jurisdiction and import duties, that’s exactly what a freeport is — a truly global, über vault. Located a convenient, direct limousine transfer away from major airports, they exist in a fiscal no man’s land; it’s tax-free nature puts the free in freeport.
Home to hundreds of billions of dollars’ worth of fine art, vintage wines, precious gems, and a multitude of other luxury goods. These high-end collectibles are often delivered via private jet, going straight from runway to warehouse on the dedicated road from the airport terminal. In the words of Picasso, within these walls, everything you can imagine is real.
Private Viewing Suites
But art is meant to be enjoyed, not covered in bubble wrap, squirrelled away behind vaulted doors, and forgotten. These modern day treasure chests, are dotted with private viewing suites — bespoke ultra-luxe showrooms for transaction or enjoyment purposes. The perfect venue for a private viewing party, as partial owner of your newly acquired art.
The idea is to turn freeports into “places the end-customer wants to be seen in, the best alternative to owning your own museum,” says David Arendt, managing director of the Luxembourg freeport.
Public Viewing
Multiple schemes allow the art piece to be leased or loaned out to museums or galleries as well, while still maintaining the tax advantages. This not only enables the art to be enjoyed by a wider audience, there are also significant financial benefits. The museum may be willing to perform restoration or research work gratis, bolstering the intrinsic value. An artwork’s appearance in a prominent exhibition can also directly impact its market value. This is hard to quantify, but could be 20–30% depending on the exhibition or the piece.
Freeport Facilities
The entire integrated process from shipping, to storage to display and trade is carried out with finesse. It’s no surprise that the operations run like a well-oiled machine… they’ve only been doing this since 1859.
As the world’s wealthy grow, so has the demand for such services. It’s clients include art collectors and dealers, auction houses, banks and museums. Around the world, freeports have already opened in Geneva, Zurich, New York, Monaco, Singapore, Hong Kong, and Beijing, all operating close to capacity.
Besides the controlled and secure environment freeports offer, the suspension of tax and customs duty allows art to be traded without attracting extra costs with each transaction. According to the Deloitte Art and Finance report, 76% of buyers are now acquiring art and collectibles with an investment view. If they keep their investment in a freeport, they could save “pre-financing” upwards of 25% in VAT and customs taxes, depending on where the piece is bought.
Collectibles Outperform Stocks
Another factor that has contributed to the growing interest in fine art is market sentiment.
Repeated crises in financial markets has led to an increasing distrust of traditional financial assets. Collectibles have outperformed stocks over the past decade, with some doing a lot better, according to The Economist’s valuables index.
Investors are now actively incorporating art into their wealth portfolios. According to the 2014 Art & Finance report, around half of family offices are buying art as a diversification strategy. “Some families are buying art, not as an investment per se, but to diversify their assets, so it’s a store of value.” says Deloitte Art & Finance Director, Adriano Picinati di Torcello.
Evolution of Freeports
The concept of freeports is not new, but over the centuries it has evolved from dusty grain warehouses, to sophisticated conservation treasure troves, offering all major art services and exclusive showcasing facilities. Storage fees vary, but are typically around $1,000 a year for a medium-sized painting and $5,000–12,000 to fill a small room.
As an investment, there’s often no incentive to move the art outside of a freeport because the art is often more secure inside a freeport than at any other location. Any future sales can take place at the warehouse where the art is located and if the art requires any kind of servicing, specialty companies are at an owner’s disposal.
If you want to help make fine art accessible to everyone, tell your friends who are art enthusiasts about Maecenas, and contribute to Maecenas now to help bring the best fine art masterpieces to the blockchain community.
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