Very simply, art has value. And the numbers are staggering.
Paul Gauguin’s “When Will You Marry?” sold for $300 million in February of this year, the highest price ever paid for a work of art. Picasso’s “Women of Algiers” sold for $179 million in May, the highest price ever paid for an auctioned work of art. And hold onto your hat: “Balloon Dog (Orange)”, a sculpture by 60-year-old American artist Jeff Koons, sold for $58.6 million in November of 2013, the highest price ever paid for a work by a living artist.
This is but the tip of the iceberg; the global art market reached a total of just over $56.4 billion in 2014. Auction houses are breaking records each month. Blue chip artists and their not-so-blue-chip but well-promoted brethren are consistently fetching their highest prices. But this phenomena is nothing new—it’s been going on for decades, even centuries. The surprising thing is that many people are still surprised.
But what separates art from the investment pack is that beyond having simple monetary value, art has so many other alluring features. Art has substance, it has weight, colour, texture, even smell. It is a material entity—not an abstract idea floating in cyberspace, or a characterless spreadsheet on a computer screen. It has, literally and figuratively, the fingerprints of humanity all over it. This is art’s uniquely seductive quality. This is why so people want to be in its presence, to buy it, to own it. 90% of art buyers surveyed by ArtTactic in 2014 said they bought art simply because they loved it. There is an intellectual and emotional attachment to it, which cannot be said of many other investment class. Art is sexy.
Art as an Investment Asset Class
Many art and financial experts believe that art should be an asset class due to the sheer size, growth and diversity of the industry. There are also certain tax advantages, big returns on wise investments, an increasing number of funds which invest in art, and developments in art investment related technology. An increasing number of asset managers, banks and insurance companies are therefore providing more extensive art management services for their clients. And the future looks promising.
Where does Farjao fit in?
"If only I'd bought it ten years ago, I'd have made a million," is the all too often stated lament by the many who have missed out on what turned out to be high-return investments, whether they be in the real estate or art markets. It's usually a case of not having the necessary funds to buy the big-ticket item when the investment opportunity arises, or if the money is available, the risk factor is perceived to be prohibitive.
Farjao, with its fractional shares and investor matchmaking platfom, makes investing in art a group exercise, thus providing opportunity while mitigating risk. For as large or small an investment as a user wishes to make, he/she can be a part and proud owner of an original work of art, complete with the bragging rights and the potential for returns on an investment. Fractional shares are nothing new, but in the context of the art market, they are revolutionary. Viva la revolucion!