Investing in art will be a natural byproduct to newly minted millionaires and ultra-high net worth individuals in 2018. It has become an increasingly popular asset class when it comes to designing an investment portfolio, but remains a fairly unchartered territory for many South African investors.
One-in-five of the wealthy collects fine art, according to a US Trust report. The wealthier one becomes the more they are inclined to invest in art and this trend is expected to continue as younger generations are handed the reigns and begin to form their own collections.
Over the past decade, the art industry has seen a growth rate of 212% and is quickly becoming an asset class to be reckoned with.
A report by Deloitte and Art Tactic estimates that $1.62trn in art and collectible wealth was held in 2016 by UHNW individuals and there will be an estimated $2.7trn by 2026. How these collections will be managed in tax and estate planning will have tremendous implications for collectors and their families as the greatest transfer of wealth takes place in history.
“With the search for higher returns on investments, and the need to diversify investment portfolios in times of market uncertainty, investors are considering alternative investment avenues, of which art is a class of growing interest. In addition, this is an investment that one can enjoy as it appreciates in value and attracts no taxes,” says Tim Mertens, chairman of Sovereign Trust SA.
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