The Art of Collecting Luxury: With growing political uncertainty in the US, many UHNW American citizens are starting to look elsewhere for second residency options. Serial entrepreneur Drew Aaron and his supermodel wife Hana Soukupová were fixtures on the NYC social and fashion scene for nearly two decades before they decided they wanted a quieter pace of life to raise their family, and Mallorca ticked off all the boxes. In 2016, after viewing many homes on the island they purchased a rustic Finca in the mountains of Mallorca and established themselves in Spain. The home is named Turmalina, Spanish for the word “Jem” as it was originally built by the Swarovski family.”
Drew’s first venture was Lionsgate Capital, which has become the leading financing firm for luxury properties in the Balearic Islands and throughout southern Spain. Two years later he launched Gallery RED, which is the only gallery in Spain that sells Warhol, Basquiat, and other iconic artists, along with top emerging international artists. Gallery RED now has a total of 18 spaces, 12 open to the public, and 6 by appointment only, all located throughout the Balearic Islands, Gallery RED has become the fastest growing gallery in Spain. A year later Drew Aaron opened Rouge Mallorca, the most coveted luxury boutique that stocks the nearly impossible to find Hermès, Chanel and Louis Vuitton special edition luxury bags and accessories. This year Rouge Mallorca added Rolex to their roster of blue-chip brands maintaining 25 of their most desirable Rolex special edition models and Daytonas, etc. Their ultra high-end space is located in the center of the best shopping street in Palma de Mallorca and only carriers brand new product.
From an insider’s perspective for fashion, luxury, and art, what is next for this dynamic couple with the Midas touch? Drew Aaron shares his outlook on art and luxury goods as an alternative asset and how to lessen your tax exposure for expats looking to move to high tax countries such as Spain.
How did you get started as a collector?
I was fascinated by Warhol as a young child; he’s one of my favorite artists and I began collecting the most desirable Warhol prints in the early 2000s, at the time that’s where my budget was. The first pieces I bought were a Campbell’s Soup Can from 1968, and a Warhol Marilyn from 1967. Our neighbors in the Hamptons were one of the largest private art “dealers” in the world. Our neighbors in Greenwich, CT are amongst the most respected private art “collectors” in the world. Having many close friends in the top tier of the art world helped us to become much more astute collectors, putting together the right strategy for investing in art.
What is your philosophy for collecting and investing in art?
If the world came to an end, and the art market plummeted, I would only want works we love to live with. We won’t buy a work unless we truly love it. Whatever the work is, if it’s something that I wouldn’t hang in one of our homes, I won’t buy it. We love Basquiat, Warhol, Jeff Koons and George Condo. Gerhard Richter is an example of brilliant established artist, whose price should only increase as he is in his senior years, and is arguably one if not the most important living artist today. It would be interesting to see an A+ Gerhart Richter abstract bild, a large-scale Calder mobile, Twombly or a beautiful de Kooning canvas in our permanent collection, as these artists are clearly amongst the best to invest into and are unique from all our favorite artists that we’ve been collecting. The most important overall philosophy in collecting is “Only Buy Unique Works”. It does not matter if it is a large-scale painting , sculpture, or small work on paper, if it is a unique work, it will always be more special and hence should appreciate more in value when looking at similar works or that are of larger editions.
The more established an artist is, the more we are willing to invest. We are always looking for fantastic works, also the ones that we believe will increase the most in value, despite volatile markets. We are living in scary and unpredictable times with a global recession looming over the economy and all markets will rise and fall, but Christie’s November contemporary art sales exceeded 1.5 billion in less than 24 hours. Between the additional auction results from Sotheby’s and Phillips in conjunction with Art Basel Miami and the myriad of art fairs that happen simultaneously. Over $5 billion in art sales will have transacted globally in the 4th quarter of 2022. The art market in general has had a steady upward rise in value over the past 20 years and is a great indicator that art as long-term investment is here to stay.
Gallery RED is one of the only galleries in Spain that focus on Warhol, Basquiat, Hirst, Richter and Murakami. From a price range of 10 thousand dollars for a print, to 10 million+ for an original work on canvas, and we have everything in-between. There are many other great well respected galleries in Mallorca, Barcelona and Madrid, we partner and collaborate with almost all of them, they each have their own niche, expertise and distinctive identities.
One of the most important factors that separates Gallery RED from many other global galleries is that it was created by a “collector” with a pure “collectors, mentality” and natural love for contemporary art. I still hand select every work we purchase, it’s where I spend most of my time in addition to working closely with our artist’s.
When we launched Gallery RED four years ago, there was a huge learning curve, it was learning by doing, and a lot of learning from my own mistakes. We brought in great Basquiat and Jeff Koons works, everyone came to our spaces, took pictures and wowed, but very few purchased. I didn’t take into consideration that no one gets off an airplane to Mallorca and says, “I want to go and buy a Basquiat”. They are here for the sun, the sea, Mediterranean vibes, beautiful beaches, hiking, biking, gastronomy and of course the immense culture in Mallorca and Spain. To succeed which was a humbling process and we had to adjust our business model to both top established artists and in addition top international emerging artists, that one day could be the next Picasso. We needed to find some form of special “value” that we offered to our clients, and in the end, what Gallery RED brings to the table is “access”. Access to the best works of the bests international Established and emerging contemporary artists.
How do you feel about investing in NFTs?
I know that digital currency is the future, and I think digital art is an important part of the future as well. However, I don’t believe NFTs have found the right equilibrium in the marketplace yet, and everybody needs to be a little more patient and see where NFTs will fall into place within the global art market. I think that everyone who has been in the art world for a while is still trying to fully understand what an NFT is, and what the actual value of it is? I’m a very risk adverse person, so currently, I don’t purchase cryptocurrencies, and I’m not actively investing in NFTs. The first six NFTs we dropped about a year ago were for Domingo Zapata, who’s a fun global emerging artist and a friend. It was fun to be a part of the action, but when it comes to NFT’s I am truly still trying to understand them.
How did you and Hana Soukupová transition to life in Mallorca?
For us, Mallorca was a big life change. It’s very safe living in Mallorca and we have 320 days of guaranteed sunshine per year. We were going out most nights in NYC for 15 years. Between our involvement in different businesses and organizations, it all grew a little tiring. The rat race scene and too much focus on material things grew tiring. Now we just want to lay low and enjoy the natural life with our children in Mallorca. We love NYC and it’s one of our favorite cities in the world, but for raising your children, Mallorca is one of the best place in the world and it’s incredibly international as well. Our kids go to a British school just outside the city center of Palma, Mallorca, and we live close by surrounded by the Tramuntana mountains in central region of the island. It’s a beautiful and privileged place to live and raise our kids surrounded by nature, trying to keep them a little bit sheltered from the typical major city daily routine which includes more screen time, cell phones and digital devices. My wife grows 60 different fruits, vegetables, and spices on our farm. We rescued three donkeys, and we live a fun life. We are naturally still adjusting, but really love the slower pace and being settled down in the countryside. Separate of the great climate and nature, the doctors and hospitals are fantastic so is the gastronomy. Mallorca is very ecological and focused on the environment and sustainability. I am on the advisory board of the Mallorca Preservation Foundation and enjoy the feeling that we’ve found ways to get back to the island.
I’m also the one who’s primarily travelling to the city in Palma most days and am involved in helping oversee Lionsgate Capital, Gallery RED and Rouge Mallorca. We luckily have a very senior and talented Management Team in place, so a lot of what I’m focused on is the future growth strategy. Lionsgate Capital’s President is a former Director of Banco Santander, the largest bank in Spain. We have built a great team and she runs more of the day-to-day show of the business.
How does Lionsgate Capital work with investors wanting to buy property in Spain?
I would say that Spain is one of the highest tax jurisdictions in the world, and the Balearic Islands are specifically one of the highest tax regions of Spain. Many people consider the Balearic to be non-business friendly which creates a lot of barriers to entry. But it’s great to see that many entrepreneurs are successfully exploring new opportunities in the Balearics and are willing to invest in a climate where it’s by nature difficult to do international business. To open a business in Mallorca with the strident tax regulations, you must do everything by the letter of the law.
90% of our Lionsgate Capital clients are cash buyers, who have never had a mortgage in their life, and don’t need the financing but understand when buying a home in Spain it clearly makes the most sense. Most importantly, there is a personal wealth tax in the country of Spain of up to 3.45% of your personal assets. So that means if you buy a 10-million-euro property, you could be paying over 300,000 euros per year. We just processed a mortgage on a 26-million-euro home, and we saved the couple over 600,000 euros a year in personal wealth tax. Even if you’re a non-resident, when owning a home in Spain you are still liable to pay wealth tax for any assets that you have in Spain. Lionsgate Capital works with the top 30 banks in Spain, and many other private banks, and financial institutions in Luxembourg, Switzerland, Germany and throughout Europe. Many of our clients are not residents in Mallorca, they just have an ultra luxury vacation house.
What do you see as viable alternative investments right now?
Art and Real Estate, the dot-com bubble burst in 1999/2000, the global market meltdown in 2008/2009, and Covid and various other unexpected financial crisis have each proven art alongside real estate in certain regions, to be a terrific alternative investment against other more volatile markets and investing in art when done correctly, can be a safe hedge against inflation. If you buy unique and strong works, by great blue-chip artists, in the end, you will typically fare much better than a lot of other than more traditional investments. Art and Real Estate are tangible investments you can live with and enjoy, a blue period Picasso painting or a flat in London, or home in Palm Beach. One can’t get that same enjoyment out of shares of stock, bonds or bitcoin. A lot of our client’s are interested in investing in art but are initially under the misconception that you need a hundred thousand, or million dollars to buy a piece of art. We have art available from any price range, and specifically with emerging artists is where you can see the best ROI. You can have 100,000 dollars in Apple stock, maybe it goes up maybe it goes down, but you don’t have any tangible enjoyment from it. If you buy the right art from the right artists, they should be a great long-term investment and one you can enjoy and experience.