A new market of mutual interest for art investors and owners
By Jérôme Croisier — Chief Art Officer, Maecenas
Fine art is an increasingly attractive investment proposition, but there are too many barriers stopping people from entering the market. Over the years, I have seen many first-time investors set out to buy an artwork with great enthusiasm only to watch their interest cool as they face the cumbersome sales processes and prohibitive costs.
But it does not have to be this way. Investing in art can be and should be simple, transparent and efficient.
I love art. I want everybody to share my passion and enjoy the art world’s investment opportunities. That is why I am Chief Art Officer at Maecenas, the world’s first decentralised art gallery that democratises access to fine art investment. Maecenas — named after a Roman patron of the arts — uses blockchain technology so that investors can buy a fractional share of a masterpiece. You do not have to be super-rich to buy a famous painting outright.
Instead, anyone can now trade shares in artworks in a liquid market just the way people buy and sell shares in companies. Who wouldn’t want to buy a piece of a Picasso?
Compare that to the current state of affairs.
“Auction houses charge fees up to 30 percent in opaque procedures where transactions can take weeks to settle.”
Many private transactions involve a middleman and the identities of the buyer and seller can remain concealed for years, making it difficult to even find out the price. There is no central database detailing the provenance of works of art, so uncovering information that is taken for granted in many other markets can be a time-consuming task.
When I worked as project manager for an art fund in Luxembourg, I dealt with many institutional investors, family offices, High Net Worth individuals and asset management companies who were genuinely interested in the fine art market, but ultimately could not see how they would secure a return on their capital.
“Managing risk in a non-liquid market was a challenge they could not overcome.”
Maecenas will soon hold a token crowdsale to raise funds to launch the platform. The impact on the fine art market will be transformational for both investors and collectors. Investors will have access to very high-quality art without experiencing all the complications they currently experience: due diligence will be done for them, with guarantees the art is authentic, in good condition and stored safely. The investment will be transparent, with regular benchmarking to compare its performance against other sectors of the market. All transactions will be securely stored in digital ledgers.
Through Maecenas, Individual owners, museums or galleries are being given a new way to raise finance from their assets without selling them. This is currently very difficult because banks are reluctant to lend against them.
There is a huge market here, particularly amongst owners who need money quickly but don’t want to sell in a hurry; typically it would take at least six months to sell a Matisse through an auction house, plus another 40 days after the auction for the funds to be received.
We will list artworks of various kinds, but with a minimal value of $500,000 and up to several million. We will mainly focus on Fine Art (paintings, sculptures, drawings) from the period 1840–1990.
As for artists’ names, works by Rubens, Goya, Picasso, Pissarro, Braque, Chu Teh Chun, etc. already have been proposed to us.
And of course we will ensure this high-value artwork is kept safe. Generally, insurance companies, such as Lloyds, judge whether a location is both secure for an artwork and maintains the appropriate conditions. This allows the art owner (private collector, art dealer, gallery, museum) to keep the artwork where it is and continue to enjoy it, or exhibit it, showing it to clients, etc.
Maecenas will also only accept authenticated works. As part of our due diligence, we arrange for provenance checks to be conducted by reputable and trusted third-parties, including art loss registry checks and physical inspection of the property. The documents produced during the due diligence process are stored securely and protected by cryptography to ensure that they are impossible to falsify once they’re on the platform.
Maecenas investors will be able to trust valuations of the artworks, too. Prior to the listing of the artwork, we will ask the art owner to provide Maecenas with a recent, credible auction estimate which will be double checked and documented by us. The fair market value of each listed artwork will be assessed and, if needed, modified, by us, as part of a quarterly report on each listed artwork.
For a long time, the prices of Old Masters have remained stable, offering little opportunity for a return on investment. However, recently that trend has shifted and the Old Masters are back in favour with big collectors. Peter Paul Rubens’ Lot and his Daughters was sold by Christie’s London for £40m, the second most expensive work ever to sell by the artist. At Christie’s Old Masters auction in New York last April, An old man at a casement by the seventeenth century Dutch artist Govaert Fink sold for $10.3m,
“…more than double the price when it was sold by Christie’s in London in 2011.”
A community of mutual interest between investors and owners has never existed before. But issuing bond-like certificates which bring liquidity into the fine art market for the first time is a way of doing that. It will democratise the market, bringing a new generation of investors to art and creating new opportunities for owners.
The fine art market is massive — $65 billion traded annually and about $3 trillion of value in storage. It deserves to be modernised. It deserves Maecenas.
Jérôme Croisier is an art advisor and art historian.
Visit maecenas.co to find out more about the project.
To find more about Cofound.it and the Token sale, visit Cofound.it
If you wish to talk to the team directly, join our slack channel, join here.
