There are number of ways one can invest their money, but people are known not to be as creative in these situations and stick to traditional investment strategies – investing into a business or into real estate. People see traditional investment as a well-known, safe place for their money, expecting earnings such as dividends, rents or interest. However, outside the traditional investment choices, alternative investments offer a broad range of unconventional opportunities, which may be gold mine for potential investors, such as art market.
Every year, global art market breaks sale records from the last year. Total art sales in 2016 were 45 billion USD, up 1,7% more than in 2015. This number may be even higher in 2017, since some of the greatest pieces of art were sold during this year. Less than a month ago, ‘Salvador Mundi’, Da Vinci’s painting was sold for 450 million USD, smashing the previous record for art purchase. Until now, the record was held by Picasso’s ‘Women of Algiers (Version O)’ which was sold for 179.4 million USD in May 2015.
However, it seems that these statistics do not reflect situation on Serbian art market. If you are a person with a medium-range income in Serbia, investing into art pieces rarely comes to mind. Art market in Serbia does exist, but it is largely under-developed and in the ‘grey zone’. There are not any firm indicators which may determine the price of an art piece, nor the adequate legislation which would serve as a backbone for the art market development.
Besides from objective issues surrounding the art market in Serbia, the other question is, are there enough potential buyers (besides the collectors who collect and sell art for a living) willing to invest in buying an expensive art piece instead of, let’s say, a middle-range apartment? In our opinion – not so many. Of course, investing into art doesn’t have to mean spending a fortune, but, for instance, having a knowledge on art market trends and investing some money now, in hopes that the profit might be generated in future, given that the value of an art piece usually increases with time.
Art investment stopped being a privilege of rich art-lovers a long time ago – it is a legitimate investment strategy of individuals, companies and various investment funds all over the world. Independent of the geographical criteria, art markets have one thing in common – there are no objective indicators which may form a price of an art piece. The price is largely subjective and often relies on current trends – for instance, which contemporary author is more ‘in vogue’ at the time.
In Serbia for instance, the market price is often determined ad hoc, by the artist himself. Young and unknown contemporary artists tend to sell their pieces at extremely low prices, which has a subsequent negative overall effect on the forming of the market prices and the market development. One of the issues surrounding art investment is also tax evasion and plenty of room for money laundering and similar crimes.
There are numerous ways to make art investments more appealing, thus, help the art market develop further. One of the obvious ones is introducing legislation which would provide a tax shelter for the corporate investors, which is not the case in Serbia currently – Serbian Corporate Profit Tax Act does not provide tax shelter for entities buying art. If, for instance, a company is relieved from paying taxes for an art investment, it would be more inclined and stimulated to buy it. The other side of the spectrum would be decreasing the tax rate for the income generated by selling art (which is currently 20%), stimulating artists to sell their art legally, and not ‘under the radar’.
When it comes to importing and exporting art in and out of Serbia, there are no import customs payable, but only when it comes to an artist importing his own piece into Serbia. There is also no customs for museums and art galleries importing collections or parts of collections. Exporting of an art piece requires a complicated procedure involving the issuance of a permit by the Institute for Protection of Cultural monuments. In order to increase the fluctuation of the art into and out of Serbia, which, again, generates positive effect on the art market, customs legislation also needs to be less restrictive and prescribe either lower, or no customs rates in these cases.