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    Few months ago, I read a post in the Cluster FO’s blog called “What is an Outpost Family Office?“. They emphasized the SMOs/MFOs needed to move from local to global, and sometimes that meant involving more wealth managers or advisors to broaden expertise. On the opposite direction, there are specialized wealth managers who need to align global mega trends to the local markets they work with. Both of them probably follow similar paths (local/specific-global-multi local).

    For SFOs/MFOs:
    * Local knowledge could be their first approach to create a traditional portfolio.
    * Global knowledge could send them to include a wide variety of add-on investments, such as natural resources, fine art, biomedics, or aging.
    * Multi local knowledge addresses deeply the previous investments to specific markets. Generic drugs, health care, hospitals, etc.

    For wealth managers and advisors:
    * Specific fields in which they possess in-depth knowledge: currencies, real estate, start-ups, fine art, etc.
    * Global trends: Old continents losing power in favour of emerging countries, currency wars…
    * Multi local approach comes from a second derivative after mixing up the previous global trends. I.e., one of the ways to invest in a closed-economy like China could be through its art market, as there are few chances of investing in its currency, and its government controls most Chinese companies.

    There are cost efficient ways of filling these gaps to offer the broader services to the Family Offices’s clients. In AXIFIA Fine Art Management we offer FOs privacy and control within a selection of bespoke investments on fine art, so SFOs/MFOs could focus on their main strategies.


    After the visit that we made  in May, and thanks the contact we have held during last months, we can proudly announce our commitment with British Fine Art and their promoters. Wish to come back Middle East with lots of good experiences to share with our sophisticated clients.


    To avoid paying taxes, the rich are emptying their bank accounts in Switzerland and investing in art. This has spawned a new business of storing such works tax- and duty-free in warehouses across the world.

    One of the world’s most valuable art treasures is being stored in an extremely ugly place, a six-story concrete building known as the Geneva free port. Instead of windows, much of the façade of this giant safe for the world’s wealthy is covered with gray panels.

    Anyone hoping to get into the walk-in lock boxes of this very special Swiss tax haven must first surmount a number of hurdles. At the first door, an employee has to type the right combination of numbers into a small screen. The next hurdle is a large steel barrier that has to be rotated counter-clockwise until it snaps into place, followed by a heavy steel door that resembles a submarine bulkhead. Behind it is a drab corridor with doors on both sides. Only the renters have keys to these doors.The employee of Geneva Free Ports & Warehouses Ltd. remains discreetly in the background while the owners of the locked-up treasures count their gold bars or examine their collection of paintings being stored in the warehouse.

    The Nahmad dynasty of art dealers reportedly has 300 Picassos in storage in Geneva. Countless Degas, Monets and Rothkos are also stored on the inhospitable premises. The estimated value of the works is in the billions. Hardly any museum can boast such a valuable collection.

    Those who use the warehouse are genuinely wealthy. According to the Capgemini World Wealth Report, there were 12 million millionaires in the world last year, with combined assets of $46.2 trillion (€35 trillion), or 10 percent more than in the previous year.

    But even if the world’s rich are getting richer, many of them are also worried. The financial crisis isn’t over yet, and tax havens worldwide are under pressure to disclose the identities of people whose assets are parked in their banks.

    Recently, even Swiss bankers have been sending letters to their clients, asking them to cooperate with tax authorities and consider turning themselves in. This only heightens fears of the tax authorities. “We assume that a total of hundreds of billions of francs will flow out of Switzerland,” said the head of the asset management division of UBS, a major Swiss bank, in late 2012.

    From Banks to Warehouses

    But not everything the banks are losing is actually leaving Switzerland. Customers are admittedly emptying out their accounts and safe deposit boxes. But partly as a result of the many uncertainties in the financial markets, a growing share of the money is being invested in tangible assets, such as art, wine and classic cars. A total of $4 trillion has reportedly been invested in “treasure assets,” a category including various kinds of precious objects.

    This requires warehouse space that satisfies the most stringent security requirements. Swiss military bunkers blasted deep into Alpine rock are in great demand. But the free ports in Geneva and Zurich are even more popular because they offer what Swiss banks used to: the freedoms of a tax haven and maximum discretion.

    “Scared customers are currently transferring their assets from the banks to the city’s warehouses,” says a pleasant woman at the Geneva free port. So far, she adds, only Swiss customs has shown an interest in the contents of the warehouses, while foreign tax authorities’ chances of gaining access to lists of stored property are slim. Tax evasion, she notes, is not a crime in Switzerland.

    “Unfortunately, I can’t offer you a bigger safe. We are fully booked,” she says. All she has left is a 10-square-meter (108-square-foot) room, one of the smallest lock boxes at the facility, at an annual rent of 22,000 Swiss francs (€17,800 or $23,500).

    For renters, the real challenge is getting adequate insurance coverage for the riches being stored in the warehouse, with its 140,000 square meters (1.5 million square feet) of storage space. “We have no additional insurance capacity for the warehouse. It’s a huge problem for our customers,” says Ulrich Guntram, chairman of Axa Art Insurance Corporation, the leading art insurer. Other Swiss insurance companies are also declining to offer coverage.

    No one knows the exact value of the property being stored in the warehouses. A fire in Geneva is seen as the greatest potential loss scenario in the art world. Partly in response to pressure from insurers, an additional six-story building that will be reserved exclusively for art is now being built in the Geneva free port.

    The warehouse company, of which the Canton of Geneva owns 86 percent, offers a special Swiss service: The country’s customs agency, which has an office in the warehouse, doesn’t charge import duties, export duties or even value-added tax. The valuable objects are brought to the warehouse directly from Geneva’s airport. Later, they can be sold and sent abroad discreetly and without additional costs at any time.

    In fact, the facility offers a solution for every problem. Classic car aficionados can rent special garages, while wine lovers are offered storage space with controlled temperature and humidity. Providers like Stockbridge, a British asset management company, advertise that gold is completely safe in Switzerland, even when a country can confiscate other types of assets held there. Switzerland is the world’s largest importer of gold, bringing in even more than huge countries, such as India. Four of the world’s major refineries for the precious metal are in Switzerland.

    Partly as a result of its duty-free warehouses, Switzerland has developed into a commercial hub for anything that glitters and is expensive. This has not escaped the attention of big- or small-time criminals. On February 18, heavily armed thieves disguised as police officers held up an armored security truck parked in front of a Helvetic Airways plane at the Brussels airport. They carried off $50 million in diamonds en route from Antwerp, the Belgian gem center, to Zurich.

    Insiders refer to the planes that travel between Belgium and Switzerland as “diamond bombers.” The police have managed to arrest most of the Brussels airport thieves, and a portion — albeit a tiny one — of the loot was located in Geneva.

    Massive amounts of money are involved. German citizens reportedly have up to €200 billion in undeclared earnings in Swiss bank accounts. “Withdraw the money in cash and put it into a private box,” bankers advise their customers. In fact, Swiss National Bank, the country’s central bank, can hardly keep up with the demand for new 1,000-franc bills, the most popular currency denomination among tax evaders.

    But the truly wealthy prefer to invest in art.

    Art as Investment

    Now that the Chinese have discovered the art market as a way to invest their money, the global art business has grown exponentially, reaching estimated sales of €43 billion in 2012. “In the top price segment, art functions as an investment. The rich want to protect their assets,” American collector and author Ethan Wagner (“Collecting Art for Love, Money and More”) said in an interview with the German weekly newspaperDie Zeit.

    There is no better place to do this than in Switzerland, where, unlike in Germany, exported art is exempt from value-add tax. This is one of the reasons Art Basel has become a global hub for art and home to its most important fair.

    Every year, in mid-June, up to 300 private jets touch down at the Basel-Mulhouse-Freiburg Airport for the first day of the fair, when galleries invite customers to their exclusive previews. This year, many of the billionaires interested in art, such as Russian business tycoon Roman Abramovich, had to make a detour to a nearby airport because French air traffic controllers were striking.

    But even that didn’t hurt business. The works of artists who have become global brands in their own right are especially successful at art fairs known for attracting large amounts of money. On the preview day, a mobile by Alexander Calder sold for $12 million. Each of the five copies of “Not Yet Titled (Kleine Marokkanerin),” the new sculpture by German artist Georg Baselitz, sold for just under €1 million.New York gallerist David Zwirner asked $3.5 million for an early painting by Gerhard Richter — and it sold immediately. “We are undoubtedly in a high-price period,” Zwirner says, “and yet the market seems absolutely healthy and sound.”

    Sam Keller, director of Fondation Beyeler, a Basel museum, is also stunned by the development. “Artists now attract the same attention as rock stars used to get,” says Keller, who headed Art Basel for a long time. But he also sees nothing wrong with the global elite’s choosing to spend their money on art.



    Abu Dhabi & Art

    Some people think that after Dubai´s exaggerations, holding the largest Guggenheim museum and a new Louvre in Saadiyat island (Abu Dhabi) is again a way of showing off the oil wealth. We don´t think so. Suppose for one minute that we are the ones in charge of investing the huge amount of cash flow that comes from Abu Dhabi´s wells. What should we do? The world is changing fast and owning US treasuries is not safe any more after a possible dollar debacle. Probably, we would buy some physical assets like gold, companies, real estate…, but more diversification would be needed.

    One of the best options according to famous financial analyst and writer Jim Rickards could be to add a good percentage of our portfolio in fine arts. Historically, it has been really profitable, and, even now, the art houses with good management keep on making good money. This type of investment has steadily beaten inflation. Investing in art has 3 main hurdles: we need expertise, a safe place to deposit the pieces, and to make sure we follow the trend in terms of valuation.

    Abu Dhabi´s genius plan deals with the 3 at the same time plus it gets prestige and tourism. They can hire the best experts to buy what almost nobody can, they create a beautiful “deposit box” that the rest of the world can admire, and, being so big, they will become a major partner in most of the World´s important art transactions which somehow could open a path for higher valuations.

    It is not showing off, it is the perfect investment. Should retail investors copy it?

    via SimplyNoRisk: Abu Dhabi & Art.


    Axifia visited the last edition of Dubai Art Fair that took place from 20th to 23rd March 2013. In this edition 75 galleries from 32 countries gathered at Madinat Jumeirah. Those are our conclusions we reached after leaving Dubai:

    – Art Dubai is working hard to become a reference in the international art fair circuit. It was great to see how accurate was the development of art forums, conferences and other venues.

    – Art Dubai is still working on educating collectors and art investors from MENASA region. It is still an issue for them understanding why prices are what they are.

    – UAE is making a huge effort to bring cultural businesses to its country. As they have already showed, they are probably the most qualified people in Middle East to organize blockbuster venues like Art Dubai, Art Abu Dhabi and Sharjah Biennial, accomplishing the efforts of reaching tons of people interested on culture and arts, and highlighting MENASA artists among the international art markets.

    Galerie Nathalie Obadia. Art Dubai 2013
    Galerie Nathalie Obadia. Art Dubai 2013

    Axifia visited London last week. From May 7 to 12 we had the opportunity to meet more than one hundred people related to Fine Art such as artists, gallery workers and owners, public institutions, private collectors and art fair managers. It was a pleasure for us to have a lot of inspiring conversations with all of them. We are looking forward to see them back next October.

    Talking about businesses, it was also a great week for us too. More than thirty galleries joined our gallery sponsorship programme. We can’t wait next month to travel to the East and share with our Middle Eastern collectors the artworks we have seen there.


    Joaquín Sorolla’s Strolling along the seashore is one of the masterpieces that can be found at Google Art Project.

    The Google Art Project, a website that hosts works of art and makes them accessible to anyone, anywhere and any time, came into being two years ago. Out of the 200 international museums and institutions included on the website, 18 of them are Spanish, with 12 of them having been included just a few days ago. These 12 museums have contributed a total of 731 artworks, representing a wide range of collections that excellently showcase Spain’s culture and artistic heritage to the world.

    The latest Spanish museums with works that can be seen on the site are the Mapfre Foundation, the National Museum of Romanticism,National Museum of Decorative Arts, the Cerralbo Museum, the National Sculpture Museum of Valladolid, the Costume Museum, the National Museum of Anthropology, the El Greco Museum, the Sorolla Museum, the Santa Cruz Museum, the National Museum of Roman Art, the Altamira National Museum and Research Centre, the Archaeological Museum of Alicante, the Lázaro Galdiano Museum, the National Art Museum of Catalonia, the Thyssen-Bornemisza Museum, the Valencian Institute of Modern Art and the Santander Bank Foundation.

    Some of the most interesting artworks recently published by the Google Art Project, include The Ecstasy of Saint Francis of Assisi, by El Greco (Cerralbo Museum in Madrid), A walk on the beach, by Joaquín Sorolla (Sorolla Museum in Madrid), San Sebastián Altarpiece of San Benito by Alonso Berruguete (National Sculpture Museum of Valladolid) and the sculpture of the emperor Augustus (National Museum of Roman Art in Mérida).

    People who love culture and art will be able to use the Google Art Project platform – which has over 3.5 million users on Google Plus – to search artists by their names, works or type of art, take a guided tour, comment on each artwork, zoom into each picture to focus on little details in high resolution, and share their favourite works.

    This will enable art lovers all over the world to enjoy Spain’s artistic heritage without leaving the comfort of their own homes, and will also encourage many tourists to choose Spain as a cultural destination.

    via Google brings Spanish art to millions of Internet users.