Roxanne Andrijanov, director of Romax Solutions Concierge Services, investigates the recent interest in rare stringed instruments by high net worth investors
CONSUMERS
Rare Stringed Instruments: The Next Trend in Passion Investing?
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Over the last decade, collaborations between luxury brands and contemporary artists have gone beyond mere artistic partnerships towards a new kind of luxury branding.
PARIS – Art and fashion have always developed side by side, for fashion, like art, often gives visual expression to the cultural zeitgeist. During the 1920s, Salvador Dalí created dresses for Coco Chanel and Elsa Schiapparelli. In the 1930s, Ferragamo’s shoes commissioned designs for advertisements from Futurist painter Lucio Venna, while Gianni Versace commissioned works from artists such as Alighiero Boetti and Roy Lichtenstein for the launch of his collections. Yves Saint Laurent’s vast art collection, recently auctioned at Christie’s in Paris, testified to his great love of art and revealed the influence of a variety of artists on his own designs.
In the 1980s, relationships between luxury brands and artists were advanced when Alain Dominique Perrin created the Fondation Cartier. In the Fondation Cartier pour l’Art Contemporain, a book marking the foundation’s 20th anniversary, Perrin says he makes “a connection between all the different sorts of arts, and luxury goods are a kind of art. Luxury goods are handicrafts of art, applied art.”
The Fondation Cartier pour l’Art Contemparain building in Paris
Roxanne Andrijanov, director of Romax Solutions Concierge Services, investigates the recent interest in rare stringed instruments by high net worth investors
The “Lady Blunt” Stradivarius violin, sold for $16 million in 2011
It is no secret that since the 2008 financial crisis, the ultra-high net worth and high net worth alike are treading carefully with investment strategies. Recent findings from The Institute of Private Investors (IPI) reported that commodities, real estate and private equity are the top investment choices among the UHNW in 2012.
Statistics from the IPI show that 45% of respondents have increased allocations to commodities, 31% increased real estate investments and 22% increased holdings in private equity. In a forward-looking survey at the beginning of the year, nearly half of investors said they planned to increase their investments in commodities and increase real estate holdings.
Though the reports of the IPI indicate a rise in investment practices, for the wealthy, the unpredictable economy over the past four years has seen real estate, stocks, bonds and hedge funds lessen in appeal. No longer are they considered ‘no risk’ options. Instead, it is the allure of unique “objets d’art” that has piqued the interest of the high net worth, who actively seeks the best safe haven for their wealth.
“ The unpredictable economy over the past four years has seen real estate, stocks, bonds and hedge funds lessen in appeal ”
Though not widely recognised as assets deserving of investment consideration, rare stringed instruments – such as the Stradivari violin, and Guarnerius violins and cellos – are being placed in the spotlight by 17th – 18th century rare instrument experts, who claim they offer long term capital appreciation opportunities.
Like fine wine, these instruments appreciate with age, the wood of the instrument mellows and the tonal qualities mature. Also like art and wine, rare stringed instruments share certain characteristic traits, in that all three are by and large non-correlated to the equity markets and rise in value faster when compared to other asset classes.
The instruments market is both highly liquid and specialised, and though sales may seem low when compared to art and fine wine, prices for particular instruments have soared in recent years. The “Lady Blunt” Stradivarius violin originally sold for $200,000 in 1971, $10 million in 2007 and $16 million in 2011, more than four times the previous auction record for a Stradivari violin.
“ Though sales may seem low when compared to art and fine wine, prices for particular instruments have soared in recent years ”
Instruments also have the added benefit of being from a somewhat stable market, where valuations have not become excessive, with a notable demand over supply between collectors and players. Furthermore, rare stringed instruments are fully insured for their value, where insurance protection is similar to that provided on commercial and residential real estate.
Investment in rare stringed instruments is gaining traction from wealthy Chinese, Taiwanese, Russian and Korean investors alike and in most instances one will find that Europe is the seller of pieces of these instruments or pieces of art. There has not been a great deal of evidence of investors from Europe being involved in purchases when compared to the Asian market.
It was recently reported that China surpasses the UK as the second-largest auction house and gallery market and is becoming a very important purchasing power in making record sales. For the first time last year more art was sold in China than the USA and the UK. It has been argued that the unlimited power that Europe once held was based on an old tradition of art collection and collection of contemporary artists. This situation is a far cry from this in Asia as the interest in art is a fairly recent happening.
“ Instruments also have the added benefit of being from a somewhat stable market, where valuations have not become excessive ”
The global market for ‘high end fiddles’; a term often used by dealers to refer to these stringed instruments is beginning to earn its place for those seeking an alternative in modest returns. In the words of Stewart Pollen, former conservator of musical instruments at New York’s Metropolitan Museum of Art, ‘’Investment appetite is still generally derived for those with an interest in classical music or a specific ‘passion fund.’’
This particular market also lends itself to philanthropy, in that both private and institutional collectors often loan instruments to musicians and graduates for orchestra auditions. Foundations are being set up internationally to diversify fine instruments, with the end goal of providing access to musicians.
The Del Gesu Foundation (DFG) is one such foundation supporting promising and talented young musicians internationally by loaning exceptional instruments to assist them in developing their full potential as performers.
All in all large institutional buyers have not only created more competition but have placed pressure on the rare stringed instrument market by reducing their numbers, which undeniably accounts for the continued increase in prices on the international scene. It may take a while yet before we are able to discern what the market will be like in Europe. Investing in art be it contemporary art or stringed instruments in this volatile economic climate can only be described as an act of confidence.
To further investigate Wealth & Investment on Luxury Society, we invite your to explore the related materials as follows:
– Luxury Real Estate Prices Reach All New Heights
– High Net Worth Individuals Err on the Side of Caution
– The Treasure Trend and Passion Investing
