Professional Documents
Culture Documents
speaks
ection a thousand
a sensible investor
or pleasure words
said andPatel
Mehul
, but," because they makes
see a 27b-
,money
So what bydothe
that motivated You
funSay
and ?enjo
Alternativ
Art as an
e
Investment Option
Members
Group 2
Flow of Presentation…
• Facts & Acts
• Art Industry
• Why Invest in Art
• Costs in Art Investment
• Risks in Art Investment
• Participants
• Art Valuation and Appraisal
• Art Indices and Funds
• Taxes and Insurance
• Tips for Art Investment
World Wealth Report 2010
- By Merrill Lynch and Cap Gemini
• T h e tw o c a te g o rie s th a t w e re m o s t
a ttra c tiv e to “ in v e s to r -
c o lle c to rs ” ( H N W I) w e re A rt a n d
O th e r C o lle c tib le s ( coins ,
a n tiq u e s , w in e s , e tc . )
• L u x u r y C o l l e c t i b l e s ( e . g . , luxury
automobiles, yachts, jets, etc.)
continued to account for the
largest portion of HNWIs’
investments of passion – 30%
• Overall, 22% of HNWIs’ investments
of passion were held in Art at
the end of 2009, However, interest
in Art is clearly picking up
again in 2010.
• Art primarily as a financial
World Wealth Report 2010
- By Merrill Lynch and Cap Gemini
CAGR of 25 . 4 %
Wealth Allocation 2009-
10
India Vs Global
•
ET Art Index
• ET and Osian’s – Connoisseurs of Art
– world’s premier Archive on the Indian
contemporary fine and popular arts
• For the fund managers and insurance
companies, but also for investors (HNIs)
• Uses the transactions of artworks
belonging to India’s leading 51
contemporary artists
– M.F. Husain, F.N..Souza, Tyeb Mehta,
Akbar Padamsee, Ganesh Pyne, J.
Swaminathan, J. Sultan Ali, 3 Tagores
– transaction value of these 51 artists
comprise 88% of the total organized
Indian art market
• Calculated on the basis of the average
Square Inch Rate (S.I.R) of works
• The Liquidity and Historical Significance
weights have been considered so as to
ET Art Index
Tax on Sale
• If held for 3 years or more
– LTCG Tax @20%
– Benefit of Indexation
– Base year April 1988
–
• If held for Less than 3 years,
– STCG Tax @ relevant tax slab
–
• Cost of Improvement, Cost of
restoration allowed as
deductions. But Cost of
storage is not allowed for
Art vs. Capital Market
Art Insurance
What is insured
• Collection of:
– drawings
– paintings
– Sculptures
– any work of art
Insurance
• Title Insurance
– Defective or lack of title
• Property Insurance
– Loss
– Fire damage
– Water damage
– Restoration cost on damage
– Theft
–
Title Insurance
• Need: lack of transparency
– Confidentiality of buyers and
sellers
– No central registry for art
transactions
–
Real Life Case
Steven Spielberg, the movie
producer and art collector,
wanted a Norman Rockwell painting.
He called the
gallery he usually purchased art from
Co
Legal u rt
charges: ca
se
$50,000
Cost vs. Benefits
• Cost
– Premium: 3%-7% of value of
work
– One time cost
• Benefit
– Insured for defending against
defective title in courtroom
– Insured the value of the work
Cost Vs Benefits
• Had Mr. Spielberg taken the
insurance
• Cost: 7% of $700,000=
$49,000