2016/05/29: As the price of art has skyrocketed, perhaps nothing illustrates the art-as-bullion approach to contemporary collecting habits more than the proliferation of warehouses like this one, where masterpieces are increasingly being tucked away by owners more interested in seeing them appreciate than hanging on walls.
With their controlled climates, confidential record keeping and enormous potential for tax savings, free ports have become the parking lot of choice for high-net-worth buyers looking to round out investment portfolios with art.
“For some collectors, art is being treated as a capital asset in their portfolio,” said Evan Beard, who advises clients on art and finance at U.S. Trust. “They are becoming more financially savvy, and free ports have become a pillar of all of this.”
From left, a Etruscan sarcophagus that was locked in a free port for decades under a shell company’s name and returned to Italy earlier this year along with other antiquities stolen from burial sites; Picasso’s “Petit Pierrot aux Fleurs,” a portrait of his son Paolo in a harlequin costume, one of about 4,500 works the Nahmad family of London art dealers is said to have tucked away in the Geneva Free Port; and Leonardo da Vinci’s oil-on-panel “Christ as Salvator Mundi,” which emerged publicly for the first time in 2004 and was consigned to a free port when it was purchased in 2013.Credit2016 Estate of Pablo Picasso/Artists Rights Society (ARS), New York
The trend is prompting concerns about the use of these storage spaces for illegal activities. It is also causing worries within the art world about the effect such wholesale storage has on art itself. “Treating art as a commodity and just hiding it in storage is something that to me is not really moral,” said Eli Broad, a major contemporary art collector who last year opened his own Los Angeles museum.
Free ports originated in the 19th century for the temporary storage of goods like grain, tea and industrial goods. In the last few decades, however, a handful of them — including Geneva’s — have increasingly come to operate as storage lockers for the superrich. Located in tax-friendly countries and cities, free ports offer savings and security that collectors and dealers find almost irresistible. (Someone who buys a $50 million painting at auction in New York, for example, is staring at a $4.4 million sales tax bill. Ship it to a free port, and the bill disappears, at least until you decide to bring it back to New York.)
At least four major free ports in Switzerland specialize in storing art and other luxury goods like wine and jewelry, and there are four more — most newly minted — around the world: Singapore (2010); Monaco (2012); Luxembourg (2014); and Newark, Del., (2015).