For decades the real estate and yachting industries used fractional ownership as a tool to sell more. But what is it really? And how can fractional ownership be applied to the art market?
What is fractional ownership?
Fractional ownership simply said, is a percentage ownership of a specific asset. The asset is fractionalised in ownership shares that are sold to shareholders. Co-owners then share the benefits of the asset such as the right to use it.
Fractional ownership has often been used to share the ownership of expensive assets such as luxury boats, private planes and real estate properties. When the value of the asset increases, the ownership shares do as well. Co-owners also share equally, depending on the number of shares they own, the costs carried by the asset.
Often, third parties manage the asset and assure that the rights of every co-owner are respected. Moreover, the legal manager of the asset, in most situations, takes care of the logistics and maintenance of the asset as well, taking this burden away from the co-owners.
Fractional ownership of Art
Most recently, the same concept of fractional ownership used with other assets was applied to art as well.
The logic is the same. Multiple people own one artwork and share the benefits and the costs of the asset. Galleries and Artists, instead of selling one artwork to one person, they can sell it to +1000 art lovers.
Even if fractional ownership always existed it was barely used in the art market. Co-ownership of art just started to be popular in recent years also thanks to the birth of new art-tech startups such as Feral Horses.
The benefits of fractional ownership of Art
Co-ownership of art gives the possibility to everyone to participate in the art market. The potential market for artworks is suddenly way bigger. Only a few people can afford artworks that cost +£100’000. But everyone can afford to buy some shares priced at £10 each. On top of this, all co-owners share the costs involved with the acquisition of an artwork.
For art lovers that are just starting to collect art for investment reasons, co-ownership of art can be a great tool to start learning and understanding the market without risking too much capital.
For big collectors instead, sharing the ownership of an artwork is an easy way to diversify their portfolio without having the burden of managing the asset.
Fractional ownership of Art: the bigger picture
For many years owning fine art was an elitist thing. Only wealthy people could afford to buy expensive artworks. Because of this, most artworks are hidden in private collections and dark storages since decades where the public has no access to. And, if we think that art is supposed to deliver important messages and topics and is the representation of our past and present, it seems incredible that art has become something that few people can fully enjoy.
Fractional ownership of art, by giving everyone the possibility to co-own art, has the power to drastically change this. Suddenly, art becomes an asset available to everyone and, by being more accessible, it starts to attract way more people. In fact, on our platform, about 70% of art co-owners are first-time art buyers and, a couple of months ago, we launched the exhibition of “Habemus Hominem” by Jago, an artwork that we sold on the platform to more than 1’150 people. 150 co-owners attended the event making “Habemus Hominem” the first-ever artwork owned by so many people placed in a museum.
At Feral Horses, we strongly believe that if everyone owned a bit of art, if the ownership of the masterpieces was decentralised, the art market would be economically healthier, art would play a bigger role in society and the world would be richer in culture.