Revolutionizing Art Investment: Securitization, Digitization, and the New Generation's Impact

Investing in the Art and Collectables Market: A $1.7 Trillion Asset Class

Historically confined to the exclusive domn of ultra-wealthy investors, the art and collectibles market is witnessing a dramatic shift with advancements in technology and the increasing participation of younger generations. This asset class has grown from strength to strength over the years and is now being transformed through securitization and digitization.

The Evolution: Securitization Digitization

Securitization allows for fractional ownership and liquidity in art, breaking down barriers to entry that once were steep due to high prices. Platforms like Masterworks offer investors access to iconic artworks by renowned artists such as Van Gogh or Warhol through fractional shares. This model democratizes the market, making it more accessible to private collectors, families, and institutions.

Digitization through blockchn technology is revolutionizing how transactions are conducted in art and collectibles markets. Blockchn ensures provenance and authenticity verification for each piece, boosting transparency while significantly reducing the risk of fraud. These innovations have not only bolstered security but also facilitated global trade by eliminating geographical boundaries.

The Demographic Shift

A noteworthy demographic shift is underway with younger investors entering this once traditional market. Gallerists, dealers, and auction houses alike report a surge in participation among millennials and Generation Z collectors who are leveraging technology for discovery and acquisition. These tech-savvy collectors use online platfor discover niche pieces, engage in discussions, and participate in digital auctions.

Economic Outlook

With the art world starting to recover from pandemic-induced disruptions and transitioning back to live events, expectations are high for a robust year ahead. Simultaneously, the ability of auction houses and galleries to mntn global connectivity through their online platforms suggests that this will be an era where both traditional brick-and-mortar spaces and digital marketplaces coexist harmoniously.

Future Prospects

Given the potential for further technological integration and the wealth transfer from baby boomers to younger generations the largest in history, it is reasonable to anticipate a continued ascent of art valuations. Young investors, with access to knowledge through digital platforms, are poised to seek uncorrelated market returns that align with their risk profiles.

In

The art and collectibles market has transced its traditional boundaries through innovative strategies like securitization and digitization. Coupled with the demographic shift towards younger collectors and the imping wealth transfer, this asset class presents compelling opportunities for diversification in portfolios seeking uncorrelated returns or looking to invest in a space that appreciates over time.

Sources: Deloitte, ArtTactic: Deloitte Art and Finance Report 2019; Preqin, McKinsey Company: Private Markets Come of Age 2019; Internal Masterworks Analysis; Yahoo Finance; MSCI Database; FRED St. Louis Federal Reserve.

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Estimated based on surveys of wealth allocation to art and estimates of total wealth held by individuals.

Private market assets under management investing in debt, real estate, natural resources, and infrastructure.

Private market assets under management investing in private equity.

Repeat-Sale Pr using Standard Poor’s CoreLogic Case-Shiller Home Price Indices.

The SP 500 Total Return Index as of December 31st, 2020.*

: This content has been prepared by Nomura solely for information purposes and is not an offer to buy or sell investments.
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