Massive art storage center to address Korea's growing market

Arshexa plans to build Asia's largest storage house for artworks and luxury goods at Incheon International Airport in Korea. The facility aims to address the lack of storage options in the country and provide optimal preservation conditions.

A rendered image of Arshexa's art storage house, tentatively named AH Freeport, scheduled for completion by 2026 [ARSHEXA]

What do art fairs, fashion shows and motor shows all have in common? Their works need to be shipped and stored properly before and after the event, in a place that knows how to deal with invaluable goods.

Despite a fast-growing art market and the already proliferating manufacturing industry, Korea lacks a large-scale storage space designed specifically for artworks and luxury goods that need special facilities to ensure that they are preserved in the most optimum state.

Not only does the moisture level need to be kept to a minimum, the oxygen level must also be kept low so as to rule out any possibility of a fire, along with anti-earthquake infrastructure and security against theft.

There are currently only two major art storage houses in Korea — one owned by the Museum of Modern and Contemporary Art (MMCA) and another by the National Museum of Korea — and auction houses’ spaces are very limited, making it difficult for private collectors or companies to store their large quantities of goods in the safest hands.

That’s where Arshexa comes in. The company was founded in July 2015 with one grand goal: to build Asia’s largest storage house within the grounds of the Incheon International Airport.

A rendered image of Arshexa's art storage house, tentatively named AH Freeport, scheduled for completion by 2026 [ARSHEXA]

The Freeport project

Tentatively dubbed the AH Freeport, a consortium led by Arshexa signed a memorandum of understanding (MOU) with the Incheon International Airport Corporation in August 2022 in which the airport lends 43,669 square meters (470,049 square feet) of its land to Arshexa and the latter runs the storage house for 30 years after completing construction in 2026.

It will break ground in April next year. A total investment of 379.5 billion won ($283.3 million) will be poured in, and the goal is to start operations by the first half of 2026. It will be a five-story building with a total surface area of 96,347 square meters — the largest in the world.

Eight more companies have joined forces for the consortium: strategic investors Bisunjae Gallery, Sonid, Shinsung Safes, Tongyang and Shinwa Wise Holdings; asset management company Mastern Investment Management; financial investor Eugene Investment; and construction investor Dongbu Corporation. More companies may join later, according to Arshexa.

Arshexa has also signed a consulting deal with High Security Hub, a storage facility in Luxembourg Findel Airport, also known as Luxembourg Freeport. The term Freeport refers to a zone designated by the government that pays little or no tax with the aim of encouraging economic transactions.

Korea already has a relatively low tax rate when it comes to dealing with artworks, but a deduction never hurts.

The tariff on artworks is already 0 percent, and artworks made by living domestic artists or works priced less than 60 million won are not subject to any tax. A 22 percent transfer tax would need to be paid otherwise, but the 22 percent is not of the whole price because up to 90 percent can be deducted as the cost of acquisition.

A rendered image of Arshexa's art storage house, tentatively named AH Freeport, scheduled for completion by 2026 [ARSHEXA]

A rendered image of a viewing room within Arshexa's art storage house, tentatively named AH Freeport, scheduled for completion by 2026 [ARSHEXA]

More than just storage

The idea of a large warehouse may not sound fancy to the average laymen, but its very existence may be just the ticket that the Korean art and manufacturing market needs to give it a major boost globally, says Arshexa CEO Song Moon-suk.

While working in Paris for his personal business seven years ago, Song came to the realization that the reason the Korean art market wasn’t on par with the country’s economic growth was due to a lack of infrastructure for global art dealers and collectors.

The Korean art market surpassed 1 trillion won in sales volume for the first time last year, but that’s still less than 1 percent of the global art market and only one-20th of the Korean game market.

“Time, experience and investments are crucial for our art market to match our economy, which may take tens of years,” Song told the Korea JoongAng Daily.

Song Moon-suk, CEO of Arshexa at right, and Lee Mi-a, the president of Arshexa Europe branch, during the Paris+ par Art Basel art fair held in Paris, France [ARSHEXA]

“What we aim to do is give a place for global art industry players to use and come together and where domestic market players may also come and grow together. Art needs infrastructure, just as any real industry does, and I thought that a large-scale storage space for valuable artworks is essential. The Freeport model came to my attention, and I became certain that the Incheon International Airport was the place.”

Korea is already working toward trying to replace Hong Kong as Asia’s go-to art hub, in tandem with the geopolitical turbulence that surrounds the autonomous city. The Korean art market grew by 37.2 percent in 2022 compared to the previous year, and that did not even include the sales that came from Frieze Seoul, which was held for the first time last year.

Adding to that is the fact that the Incheon International Airport became the world’s first airport to achieve the highest level of Airport Customer Experience accreditation by the Airports Council International (ACI) in September last year.

“It was evident during the Seoul Frieze events that there isn’t a place where collectors can feel absolutely safe in storing their goods when they’re in Korea,” Song said.

“If experts come for either exhibitions or auctions but continue to have trouble finding a proper storage place, then Korean art can only inevitably develop at a slower pace. Just as any industry starts with infrastructure and logistics, we started with the very basics for an art hub — storage.”

A picture of the Paris+ par Art Basel art fair on Oct. 18, where Arshexa participated as a host partner of the event [ARSHEXA]

Asia’s new leader

The timing is more than right for Korea to aim to become Asia’s new art leader, the CEO stressed.

Currently the largest storage house in Singapore, the Le Freeport, situated next to the Changi International Airport, has reached up to 86 percent of its full capacity, according to Song, while the uncertainties facing Hong Kong will likely continue to linger for years to come. Unpredictable politics in China and the frequent earthquakes in Japan make investors weary, meaning Korea may be the perfect contender in the Asian race.

Arshexa recently seized the opportunity during the Paris+ par Art Basel held in the French capital city earlier this month to promote its project as the only Korean host partner of the art fair. The company met with officials from major groups in the country such as LVMH, LBG, BPCE, Groupe Dassault and Christie’s, according to the Arshexa CEO.

“The art fair was a chance for us to officially announce the art storage project to the European market, which we had only done with separate entities in the past,” Song said.

“Some people had questioned whether an art storage house would ever be built in Korea, but we were able to tackle such concerns one by one. The latest Art Basel was a chance for us to show that a Korean storage company can become a partner of such a major event, something that even European companies could not do before.”

A promotional booth for Arshexa is set up within the Paris+ par Art Basel art fair on Oct. 18. The company participated as a host partner of the Parisian Art Basel. [ARSHEXA]

Over 50 percent of the AH Freeport storage space has been pre-booked by potential customers as of September, even before the construction has begun, according to Arshexa. The target is to reserve 80 percent of the space by the time the house is built.

The ultimate goal isn’t to suddenly become the No. 1 art market in the world, but to provide a place for people from the top countries to come and start their works, according to Song. Along with the Paradise City hotel and resort complex and the soon-to-open Inspire Entertainment Resort, Incheon strives to become a vibrant city of art and entertainment that includes cultural experiences in all genres.

“A Freeport art storage house is crucial in taking the Korean art market to the global stage,” Song said. “Storage and preservation is of utmost priority for foreign museums and galleries, so providing a facility that knows how to do that properly will make Korea a much more attractive stop for overseas businesses. That’s why we believe that this project is essential for the Korean market as a whole.”

A promotional booth was set up within Terminal 1 of Incheon International Airport on Oct. 12 to be showcased for three months. The technologies that will be used within the storage house, ranging from volts and security to robotics and logistics, can be viewed inside the booth.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]