The New York Times recently featured an interesting article on the rapid growth of free ports around the world used by collectors and dealers for the temporary storage of art works. Many would be surprised to learn that more than a million of some of the most treasured art works ever created, such as ancient Rome treasures, museum quality paintings by old masters and an estimated 1,000 works by Picasso, are crated or sealed in tight storage vaults within the walls of such storage facilities.
With the rise in the price of art, masterpieces and other exquisite art works are increasingly being stored away in free ports by collectors who are interested in seeing such works appreciate in value rather than filling up wall space to be viewed. As collectors become more financially savvy with art being treated as a capital asset in their portfolios, free ports have effectively become the support for all of this.
This recent upsurge in the use of free ports by collectors has led to concerns over the use of such storage spaces for illegal activities as well as worries in the art world on the effect such wholesale storage has on art itself. Within the last few decades, a small group of free ports have increasingly served as “storage lockers” for the wealthy. Free ports are geographically located in tax-friendly countries and cities and offer attractive savings and security to collectors and dealers alike.
In addition to the at least four major free ports in Switzerland that specialize in the storage of art and other luxury goods, such as wine and jewelry, there are four more free ports around the world, including Singapore (2010), Monaco (2012), Luxembourg (2014), and Newark, Delaware (2015).
Out of concern that these rapidly growing private storage spaces could become havens for various illegal activities (i.e., contraband, money laundering, etc.), Swiss authorities initiated an audit back in 2012, the results of which revealed a significant increase in the value of goods stored in some warehouses since 2007 with an increase in high value goods such as art. The audit estimated that there were more than 1.2 million works of art in the Geneva Free Port alone in which some of the art has not left the facility in decades.
Many in the art world remain critical of free ports. With many valuable masterpieces being stored outside of public view, critics argue that works of art are created to be viewed. Those who disagree point out that paintings are not a public good as much art work was created as private property. Others say that free ports represent a financial system in which investors lack a connection with the art they purchase, but recognize that the storage warehouses enable responsible collectors to manage their art collections and limited wall space.
Collectors and dealers often decide to utilize the free ports for the storage of their art for more common reasons than tax avoidance. Some collectors and dealers simply have no more room in their homes and galleries. In a free port, their valuable art works are protected in climate-controlled environments behind fire-resistant walls and often under video surveillance. Some of the free ports even have viewing rooms where collectors can view their art and show it to potential purchasers.
According to an officer of the Geneva Free Port, as a result of the audit, the Swiss have been working to address concerns over the lack of transparency. As of this September, all storage contracts will require clients to allow inspections of any archaeological artifacts they would like to be stored at the facility.
Only time will tell whether additional free ports across the world will take steps towards increasing transparency as to inventory and ownership as collectors and dealers continue to store their valuable art works in such warehouse facilities.