City Wealth: The Billion-Dollar Art Vaults: Secrets of Freeports Revealed
They are now at the heart of a global debate—offering security, tax benefits, and discretion, while also facing scrutiny over their potential role in tax avoidance and illicit activity. Here, we take a deep dive into the world of art freeports, the billionaires who use them, and the evolving regulations that seek to keep them in check.
The History and Purpose of Freeports
In the art market, Geneva Freeport or Ports Francs et Entrepôts de Genève (PFEG)is a secure location of warehouses and considered the world’s oldest and largest freeport facility with 150,000 square meters with an estimated 40% of its collection being art. It has an estimated insurance value, in the press, of US$100 billion. The benefit of the facility is security for high value items with advanced technology and 24/7 surveillance.
The Art World’s Secret Vaults
Geneva Freeport is thought to hold 1.2 million pieces in two locations which has often been reported to include the most revered artists work in the world such as Picasso, Da Vinci, Klimt and Renoir. The Geneva Freeport is majority owned by the Canton of Geneva but previously included Natural Le Coultre, a logistics company, with renowned art owner, Yves Bouvier at the helm but which is now owned by French packing and logistics company, Chenue. Natural Le Coultre currently have art storage at Geneva Freeport of 35,000 square meters of secure warehouse units for artwork and valuables.
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Finance ecosystem
Chen Chowers, Head of Operations at Overstone Art Services helps clients, including financial institutions, wealth managers, insurers, and auction houses, view and manage art as a financial asset. They have a team of finance, art, insurance, and data specialists to advise. Chowers talks about the art lending market, agreeing with the previous sentiment, saying “Freeports remain a key component of the art finance ecosystem, particularly for high-value collections used as collateral in lending arrangements. A significant proportion of major collections are stored in freeports, streamlining the securitisation process, often without the physical transfer of the artwork itself. Instead, the change is reflected in the pledge holder agreement, granting the bank first access while the work remains in situ. Beyond secure storage, the tax benefits of freeports align with the economic rationale of art-backed loans – it helps with cashflow and there won’t be transactional costs. I work in art finance, specifically with art secured lending. Many large-scale collections are in storage facilities and collectors who decide to investigate art secured lending are typically more financially savvy. As a bit of context, these facilities are trusted with high value and important works by many collectors and institution. As this includes and impacts significant wealth and reputation, the confidentiality is seen to be part of the value proposition.”