How is the draw of artfairs in lucrative markets, such as in Asia, affecting smaller fairs? The announcement to cancel the Sculpture Objects & Functional Art Fair (SOFA) in Santa Fe suggests that the security of local arts culture may be at risk. Cancellation by European galleries, due to economic troubles in the EU, and the possibility that the fair may simply have run its course contribute to decreased participation in SOFA Santa Fe, but a shift in the function of art fairs may also be a factor. In the spectrum from art lovers to those seeking social advancement to investors the balance may be shifting to right, and smaller fairs that depended on enthusiasm for art per se may not be able to compete.
Rising art prices also have an effect on the insurance industry. The vulnerability of artworks in museums and private collections to damage and theft affects insurance premiums, and the risk of forgeries on the market challenges valuation of artworks. Art as an investment, it turns out, creates another, less obvious risk. In the extreme case, investors store artworks in free ports to minimize taxation. Major free ports in nations such as Switzerland and Singapore, reportedly, hold an average of $10 billion in artworks. While protected against theft, the facilities are vulnerable to destruction, such as a plane crash or even a terrorist attack. The resulting risk assessments will require new strategies, and potentially higher premiums, for insurers to remain effective.
The culture of collecting is changing. Does the threat to smaller art fairs have implications for the long-term viability of the art market, or will changes in art insurance affect the burgeoning art market?
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