Price Rises
The international market for art-investment funds was worth an estimated $960 million last year, up from $760 million in 2010, according to a report by Deloitte Luxembourg and the London-based research company ArtTactic published in December last year. The industry is relatively small compared stocks and hedge funds.
Institutional investors continue to be wary of art, citing the market's lack of liquidity and transparency, as well as its high transaction costs and volatility. Some wealthy individuals are more positive about the model after dramatic price rises for certain names since the low of 2009 after the collapse of Lehman Brothers Holdings Inc.
A private collector entered eight abstracts by Gerhard Richter for auction at Sotheby's New York in November 2011. All sold above their high estimates, with a 1997 "Abstraktes Bild" in purple, red and blue fetching a record $20.8 million. The buyer -- Lily Safra, widow of Brazilian banker Edmond Safra -- donated it to the Israel Museum.
Sales at Sotheby's and Christie's evening auctions of contemporary art surged to $1.7 billion in 2011, an increase of 35 percent on the previous year.
"The climate for funds is as favorable as it's been for some time," Anders Petterson, founder of ArtTactic, said. "The sense that art is an asset class is gaining momentum. The funds are now being tuned to be part of the ecosystem rather than a parasite. They give wealthy people the opportunity to be part of the lifestyle."
About 25 such investment vehicles, mostly based in China, came to market in the first half of 2011, according to the Deloitte report. These include the Brazil-based Golden Art Fund.
Luxembourg is an emerging hub of such investment. Gokelaere's Art Collection Fund will join similar vehicles devoted to wine, watches and jewelry run by Elite Advisers in the country's low-tax economy. Fine Art Transports Natural Le Coultre SA, a Swiss-based company specializing in the storage and shipping of artworks, is planning to open a Freeport there in 2014.
"This is the back office part of the art world," Gokelaere said. "It's something that Luxembourg consciously wants to develop. London and New York will remain the front."