Provenance — seamless data chains as a guarantee of value in the art market
The demand for art objects has increased rapidly in recent years, but the supply is only growing slowly. An artist and his works must first prove themselves on the scene and build up a reputation. Due to their market stability and increase in value, renowned art objects are an attractive asset class for private investors, even if they are not art historians by profession. What do you need to pay attention to? In addition to the trading history on the art market, which includes the auction and gallery prices traded, and the condition of the art object, a complete provenance is decisive for the value of the work of art.
Importance and relevance of provenance
The moment private investors decide to invest in a work of art, provenance comes into play. In general, the term “provenance” refers to the origin of an object. With regard to art objects, it is used to completely reconstruct his ownership structure. This task is usually carried out by art experts from the field of provenance research — state institutions such as museums have set up their own departments for this purpose in some cases. This reconstruction is particularly important to ensure and document the authenticity of the works and, at the same time, to uncover forgeries.
The ownership structure also provides information about who previously owned the works of art. This information can also be used for Increasing the value of the art object contribute, as a well-known previous owner can significantly increase popularity and significance. In some cases, this history is far more relevant than the work or the artist himself, as it contains a piece of history.
The fame of well-known previous owners is transferred to the work of art
Some fascinating examples from recent history show how relevant the name of an object owner is. “La Bella Principessa” is a painting by Leonardo da Vinci and was sold for 20,000 euros — this is an extremely low amount for a painting by the world-famous painter the “Mona Lisa”. At the same time, Picasso's “Les Femmes d'Alger” grossed 179 million US dollars — solely due to the difference that this painting had a detailed provenance with all owners and storage locations, while Leonardo's “Beautiful Princess” poses many puzzles: Where has the painting been located for the last 500 years? Why did da Vinci paint the portrait on Vellum? Doubts and gaps in the provenance reduce the value of the small painting by many millions of euros.
Conversely, a confirmed prominent previous owner can turn everyday objects into real collectibles. At an auction in 1996, a rocking chair was auctioned off for 450,000 US dollars, although its value was previously estimated at just 5,000 US dollars. Simply because it was previously owned by US President John F. Kennedy.
Optimized provenance using cutting-edge technologies
In order to guarantee a complete provenance and to be able to carry out an adequate valuation below, correct authorship and dating are necessary. This requires all reference documents: including factory markings, exhibition and auction catalogs, and sales contracts. However, obtaining and reconstructing these documents without errors is not always easy and can take several years, particularly with older works. In the meantime, even art forgers are so sophisticated that even the associated documents of origin are falsified. This makes it difficult for investigators to identify the falsification or even become aware of it.
With the help of cutting-edge technologies, provenance tracking can be significantly improved today. For example, by digitizing auction catalogs, which have not been systematically collected to date, important sources for provenance research can be preserved and made accessible in the long term. In this way, not only origins and changes of ownership can be reconstructed transparently. Computer-aided data analysis and data visualization can also be used to track behavior patterns of market players and changes in prices. Blockchain as a decentralized registry method also offers enormous potential for secure traceability of ownership.
Museums and libraries are even working together across countries for innovative digitization projects. For example, the Kunstbibliothek der Staatliche Museen zu Berlin, the Heidelberg University Library and the Getty Research Institute Los Angeles networked together to support the ambitious project of “German Sales 1901-45” with 830,000 entries: 10,000 historical auction catalogues published primarily in Germany, Austria and Switzerland from the years 1901 to 1945 are now available online and in open access.
The aim of the provenance investigation depends on the client
State and public institutions are primarily interested in uncovering illegal changes of ownership and thus clarifying ownership claims. This includes the area of provenance research, which deals, for example, with looted art from the Nazi era. According to current estimates, there are still around 10,000 works of art in public or private ownership that have not yet been returned to their rightful owners.
Private investors are not only interested in a provenance when they are just planning to buy an art object, but also many years after the purchase. In doing so, they want to identify a potential increase in value or address an art-historical gap that can also increase the value.
Provenance as an indispensable prerequisite for long-term increase in value
For investors who want to build up private wealth via a complex multi-asset portfolio , art is an attractive addition. This investment in exceptional tangible assets combines the prospect of long-term appreciation with prestige and aesthetic pleasure. However, private investors should ensure that the respective property actually has complete documentation of its provenance. This guarantees that the work of art has been handled with care and that investors receive an appropriate appraisal of its value.
