UBS provides unique art collection consulting service

Patricia Amberg
Patricia Amberg

If you've $50 million to invest in art, then Patricia Amberg, Head of the UBS Art Competence Center, is the person to go to.

"Every art collection is unique, you can't cut-paste it. It depends on the collector's character and vision and, of course, on the categories and types of art acquired. A corporate collection is also unique; its uniqueness stems, for example, from the purpose of the collection - whether it is for promotional or marketing purposes or philanthropy. Each collection has its own uniqueness," explains Patricia Amberg, head of UBS Art Competence Center, who was in Tel Aviv recently for the Fresh Paint Exhibition. The Bank was one of the main sponsors of the exhibition and has one the world's largest art collections.

It turns out that banking services can be much more comprehensive than we think. UBS, for example, helps its higher-net worth clientele to create their own art collections. Amberg, who has managed the department for the past six years says, "It is really an art consulting department. In other words, we advise our higher-end clients, those for which we manage assets of at least $50 million and are interested in art. We advise them, for example, on how to set up an art collection - either private or corporate. Our clients are looking for our support, because the art market is not at all transparent and conducted without any regulation, so there are quite a few traps you can fall into. There are risks and we raise our clients' awareness to these risks and, in fact, guide them through this jungle, which is not at all like the financial market, in terms of its lack of regulation and lack of transparency."

Discretion above all else

Although art can be very outgoing, Amberg is loyal to the Swiss banking tradition and maintains the necessary confidentiality. She will not discuss clients and will maintain their anonymity in the art market. "We are discreet in representing our clients in the art market. We try to protect them. Because of the non-regulated nature and complexity of the art market, there is a lot of gossip going on. People are not always discreet."

Moreover, Amberg will not discuss the artists she recommends to collectors. "I will not say anything about the artists. Nor can I discuss trends, as a representative of UBS. If I give a name, it will affect the market." Moreover, the bank itself, which holds a collection of about 30,000 pieces, conducts significant activity in the global art market through its branches around the world. "There is a Chinese Wall between the bank's collection and my work. We do not want information on the bank's purchases, since we need to give good advice to the client's benefit," she explains.

- Do you advise which pieces to buy?

"Our advice does not concern only the art work itself, but also the process of buying or selling artwork. We find the right channels for each type of transaction. For example, does a client wish to buy or sell a single piece or an entire collection? We will arrange a private sale of a single collector to another single collector, or set up a sale through a gallery or auction house. If we sell a work at auction, we also negotiate the auction house's commission.

"We will assist in determining how to market the piece, for example - what media outlet or art magazine in which to announce the sale of a specific work of art. That's marketing. It comes down to finding a client for an art work, and that depends on the quality of the work itself. Sometimes this is a historic work or a work that is so 'fresh', unlike anything seen before in the art market. In that case, it makes sense, for example, to write an article about the piece and bring it to the attention of the public. "

Having an art collection is not a simple thing and involves great responsibility. For example, how does one bequeath an art collection? After all, we are not dealing with cash or stocks, for which you could set an immediate value and divide among the your heirs, says Amberg, adding that "we have clients who have an art collection or a few collections and some have no idea how to bequeath these collections to the next generation. There are several strategies on how to address such an inheritance. Some collectors prefer to split the collection among their heirs, but it is not clear how this should be done. Some will want to build a museum. This is a very complex process and we advise them.

"Sometimes consultancy work can boil down to small details, such as assistance in transferring a work of art from one place to another. Or storing the work itself. These are things collectors may find very complex."

- There are also collectors who look at art as an investment.

"We do not give any advice on art as an investment, since we cannot predict the value of an artwork. It's too dangerous for the bank - as well as from the collector's point of view - to look at art as you view a stock. Therefore we hesitate to say that this is a worthwhile investment. At the end of the day, you have to like the piece. It will give you an emotional return. Of course, this also has to do with motivation and incentives to build the collection. It can come from a passion for art or because of a collection you inherited and which you now wish to expand. The motivation can be to enhance your reputation or for reasons of philanthropy or out of appreciation for a particular artist. There are many reasons to build a collection - but investment may not be one of them.

"Art also has a liquidity problem. A stock has a price each day, a value. You know the company whose stock you want to buy, you know its strategy and you can try to predict where it is going. But in art, you have limited information about prices. We only have prices that are paid on auctions, but this only accounts for one-third of the global art market. The other two-thirds of the transactions are carried out by private galleries or by private collectors, where we have no information about the prices. In addition, you can sell stock the same day, but it takes time to find a buyer for an artwork."

- Still, it is impossible to ignore the economics of art

"We perform pricing studies and market research and we publish research on various market categories twice a year. It gives an insider's view on what is happening in the art market by category. For example, last year we had a review on paintings. And not only about prices, but also about the history of art, and we explain the structure of the art market and the risks involved. Again, we must remember that there are so many pitfalls in this market. In light of these risks, we created a due diligence procedure before each transaction. Before spending any money on art, a due diligence procedure should be performed. That is - to check the quality and authenticity of the work. You check the artwork's condition, its history - for example, if it was included in past exhibitions."

According to Amberg, "Half of our activity is art consulting and half is risk management, for example - beware of fraud. Suppose a client sees an interesting work in the gallery, which later turns out to be a forgery. We check the authenticity of the work with experts and review the documents that verify its authenticity. In addition, sometimes there are cases of third-party claims regarding an artwork. For example, works looted during the Holocaust. At times, someone will sell a work of which he is not the sole owner - he may have partners, such as siblings with whom he has inherited it. We examine these issues. There are art archives around the world who keep a record of stolen and problematic works. We check each work we are involved in."

Discovering the Chinese market

What are the world's leading art markets?

"In 2015 the leader was the American market, of course, followed by the British and Chinese markets. In 2014, the Chinese were in second place, now it has changed following the economic crisis in China. There were problems in the Chinese art market following several cases concerning the authenticity of works, some of which were Chinese and others from western countries.

"China is a relatively new market and in some regions it is utterly new, but interesting to discover. For example, a few weeks ago I was at the Art Basel Hong Kong exhibition, and you could clearly see that the Chinese collectors were interested in local art and Chinese antiquities. However, they are also interested in Western art.

"When we say that Britain is the second largest market, it doesn't necessarily mean that the buyers are British. [We mean it only as a place] which generates income - the auction houses and galleries are in this market - they are local, while the buyers are from all over the world. Neither does it say anything about the origin of the artists - the US, UK and China are only the markets where there is commercial activity. Artists can come from anywhere."

What areas of art do you focus on?

"We cover almost every field of art - from Greek or Roman antiquities, to ceramics, decorative arts - such as silverware or furniture - as well as sculptures, video art, and photography. All except stamps, which is a very targeted market, and antique automobiles. If someone, for example, wants a overview of a specific art market, such as Israel, we prepare an overview of the domestic market and its main players. Since we do not have information on all the world markets, we work in collaboration with a local expert."

Is there any room for middle-class people in the art market?

"Of course. Collecting art is independent of cost. For example, Fresh Paint is an amazing platform for young artists to display their works, but it is also an opportunity for people to start a collection. Meeting the artist can be very rewarding and informative. We read in the newspapers about all these sales in tens of millions of dollars, but a look behind the scenes reveals that [these types of sales] constitute less than one percent of the global art market. The entire segment of works valued at more than $1 million is less than one percent of the global market. Anyone can start a collection. At the end of the day, you have to like what you buy. That's the most important thing. "

Art review- The art market in 2015: 90% of the works are sold for less than $50,000

2015 was a very good year for the art market. The economic crisis in countries such as China, Russia and Brazil took its toll and the market volume decreased by 7% to $63.8 billion, compared with $68.2 billion in 2014. The number of transactions declined by 2%, to $38.1 million. Last March, the European Fine Art Foundation - which holds one of the world's largest art exhibitions in Maastricht in the Netherlands - published its annual report on the [art] market, indicating where the winds are blowing in the industry. The report's authors note that the decline in 2015 may indeed mark a cooling of the art market, but they also mention that the market has reached such high levels over the past decade that it finds it difficult to continue growing.

According to the report, the economic crisis in China cut the volume of the domestic art market by 23% to $11.8 billion dollars a year. The Chinese's market share shrunk from 22% to 19%, turning the UK into the world's second largest market, with a 21% share - even though it has declined by 9% to $13.5 billion. Thus, last year's art leader was the US market, which - despite the general trend - actually grew by 4% and continues to be the world's largest market with a share of 43% - $27.3 billion.

According to the data, 90% of the works sold are priced under $50,000, but they constitute only 12% of total sales. Works sold for more than $1 million represent 57% of revenues and works sold for more than $10 million represent 28% of total sales, even though they constitute only 0.1% in terms of deal count.

In terms of art trends, the largest market share (46%) is of contemporary art and post-World War II art. After several years of double-digit annual growth, this market share has decreased by 14% in sales and 20% in the number of transactions, while modern art - which represents 30% of the market - has kept relatively stable and only decreased by 1%.

The report also addresses the fastest growing field in the art market - online sales. In 2015, this market reached $4.7 billion, a 7% year-on-year increase. Online sales account for 7% of the art market.

Published by Globes [online], Israel business news - www.globes-online.com - on May 4, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Patricia Amberg
Patricia Amberg
Twitter Facebook Linkedin RSS Newsletters âìåáñ Israel Business Conference 2018