Wealthy move to protect art as values soar
Wealthy individuals and families have increased insurance cover for high end art assets, and are spending more time actively managing their collections, as works at the high end of the market have soared in value over the past two years, according to the Stonehage Group.
The European multi-family office is currently administering close to $1bn in insured art assets, which accounts for around 30% of the value of all assets it insures on behalf of clients. The number of clients with insured art assets managed by Stonehage has more than doubled in the last two years.
According to Stonehage, long-term returns on art, particularly at the high end of the market, continue to perform well relative to many other asset classes. Three recent sales coordinated by Stonehage on behalf of clients from high end collections generated the following annualised returns 18% over 21 years, 8% over 14 years and 23% over 13 years
Stonehage points out, however, that despite fierce competition for high end pieces, which is driving up prices, the middle and low segments of the market are less buoyant.
Steven Kettle, executive director at Stonehage, said the long-term performance of the art market, particularly at the high end, has delivered impressive returns, so collectors increasingly need to ensure they have the right cover in place.
“Demand for high end art is increasingly being driven by overseas and non-domiciled investors, including Asian, European, and Russian buyers, who are prepared to outbid each other for trophy works,” he added.
“In the past, the vast bulk of art buyers would be highly knowledgeable about the market, but we are seeing a newer type of client who is often younger than the traditional art buyer, and who may not have such in-depth knowledge. These younger buyers often don’t have very established collections and are looking for guidance.”
Some collections managed by Stonehage are kept in storage with a view to sell when the market has an appetite for such works, or when an appropriate bid is made for the entire collection. The firm is spending more time undertaking due diligence for clients looking to acquire art.
Georgina Scott, responsible for Stonehage’s Art Management division says buyers are becoming much more aware of the need to manage art assets properly to protect and increase their value. “This can involve ensuring the art is hung and lit properly, with comprehensive insurance and regular condition checks. Increasingly, we are also advising buyers when to loan work out to museums and galleries, which can be useful in terms of raising its profile.”
Stonehage, an independent business with over 400 staff in 14 offices around the world, works with over 1,000 families across a range of investment, business and lifestyle assets, sectors and geographies.