Some collect rare coins, others are interested in stamps or adore antiques, furniture, or even property. Every investment is a risk, but why would anybody invest in something as subjective as Art in this time of crisis?
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While Art is a field of subjective and emotional values, stocks appear to be the contrary appear - a world of objective figures and statistics. Why would someone mix the two? Why investing in art could be a good investment during this period?
When it comes to investments, and specifically to investing in art, the central idea is to rely on figures, trends and world affairs to predict larger returns. Apparently objective it is not as scientific as it may seem.
However, one thing is predicting that an innovative technology and brand will be successful because it is original and useful - but Art?!
Art does not have a specific purpose. Art is decorative. Art is volatile. Art is emotion. It makes us feel good, it is therapeutic… The function of Art itself is a difficult concept, but however vague or complex to pin down, Art is incredible and without artists our world would be so bland.
Investing in art combines the emotional value and commercial value – even though they are apparently opposite. How to invest in Art?
Investing in the Art Market
When it comes to investments, a pivotal point is to be able to understand how financial values fluctuate according to many distinct factors, environmental and even consumer habits. It is crucial to see the big picture.
The Art Market is a bit different. We could even say that there is only one rule; there are no rules. Meaning that trends are difficult to predict – especially today, with so many artists available.
This, however, is what makes it interesting and exciting for so many. When investing in Art, the possibilities are endless.
How to invest in Art?
How to start investing in Art? Buying Art as an Investment is risky. Like any investment – you can lose your capital. The risk needs to be evaluated, the potential loss seriously considered, and the circumstances established – both personal and of the market.
Should you invest in Art, where and how? It is personal. One should buy Art you love, but also Art which could potentially bring profit in the coming years.
You do not need to be a Billionaire to invest in Art. Especially thanks to the influence of the internet and social media channels, the Art market has become extremely accessible. In fact, young and new collectors represent a growing percentage of investors.
Anybody can see new artists, anybody can research an artist’s background or popularity, and anyone can buy Art.
Start small, get a feel for the market, evaluate the risks and do your research.
Is investing in Art a Good Idea? What paintings should one buy for investment?
Unlike stocks, an artwork is a long-term investment that will definitely pay off one way or another; if not through actual money, then through the pure pleasure of looking at it. If it is a profitable one all the better.
Of course, news headlines constantly draw attention to the big names of the art world. Paintings by Jean-Michel Basquiat, Claude Monet, KAWS and of course Leonardo da Vinci, go for staggering resale prices. The 600-years-old painting “Salvator Mundi” by Leonardo da Vinci became the most expensive painting ever sold at auction in 2017 - because it is now worth a staggering 450 million dollars! (Top 10 Most Expensive Paintings Ever Sold At Auction)
Nevertheless, less impressive names are also worth looking at (15 Contemporary Black Artists Everyone Should Know About)
Even though the losses seen last year can be discouraging, the arts can be an extremely good field for investors.
Indeed, if we look at the pre-pandemic art market reports, we can see that the sales on the global scale reached as much as $67.4 billion (The UBS and Art Basel Report for 2018), continuing a steady rise. It marked one of the best periods of the past decade for the Art Market.
Collecting Artworks
Owning an artwork can be an emotional and progressive journey. It involves visiting exhibitions, talking to art professionals and artists themselves, and caring for the piece itself in a special way. What’s not to like?
While it is exciting to see a painting’s value rise tens of millions of dollars over the course of just a few years, we should not ignore the fact that the art market is not exactly a transparent one, it caters to taste, and it sometimes succumbs to forgeries. And, like many other markets, it leaves you with an item you must care for and maintain.
But seeing Art as an investment does involve a unique way of looking at art and the Art Market.
Looking at the Art Market
According to Art Basel and UBS 2021 report, in 2020 global sales dropped 22% since 2019. Despite this, the Art Market is extremely resilient, resisting even when the Sales Market falls.
Indeed, although the art market was affected by a strong decline – the arts are still an important field for investors with the US, the UK and China in the lead. Above all, it has been re-shaped by the insecurities and restrictions caused by the pandemic and the economic crises it is has caused. It has, in fact, changed significantly in the last couple of years…
We saw some trends surge redesigning the Art Market for investors and collectors, even in the face of the overall losses last year. In particular, despite the tightening of sales overall, online sales reached a record high of $12.4 billion, doubling since 2019.
The share of online sales jumped from 9% of total sales by value in 2019 to an impressive 25% in 2020.
This is the first time Art e-commerce has exceeded general retail.
Social media remains a central channel for artists, art lovers and collectors. It helps reach new audiences and generate sales. Indeed, about one third of collectors purchased art using Instagram in 2020.
Additionally, Millennial collectors represented the highest spenders in 2020, with a median expenditure of $228,000 and with 30% of them having spent over $1 million. Impressive against the 17% of the post-war Baby Boomers. Female collectors spent more than their male counterparts in 2020, with their median expenditure rising by 13% year-on-year.
However, with these shifts collectors have been moved by very different motivations. Collectors they have started to buy artworks to support artists, rather than for personal investment – and this is something to consider.
Who should I support? Who needs to be represented?
Doing Your Research
A big myth which surrounds the art market is that buying artworks is only for the rich.
Surely only artworks worth millions will end up on the news, but that does not mean that there are no affordable artworks out there. Artwork prices vary considerably.
Even if it turns out that one of your favourite artists of all time is Andy Warhol, and you just found out that none of his five top-selling artworks goes beyond $30 million, chances are you can still find a print of his for a few thousand. In fact, experienced collectors advise younger or new collectors to focus on drawings or limited-edition prints.
When it comes to less well-known artists, it is important to research their background - whether they are signed with a gallery, their CV, past exhibitions, reputation, etc…
Of course, the internet can be a good place for gathering information from other collectors. Auction sales records such as Artnet and Artprice are also useful sources of information on previous sales.
Where To Buy Art?
So many options exist nowadays, online and offline.
In fact, with the rise of online sales, galleries, e-commerce, selling platforms (i.e. Kooness.com), social media and online auctions have become more and more popular for collectors. Many younger collectors even find works directly from artists on Instagram.
The new platform like Masterworks allows for collectors to invest indirectly in works and, theoretically, to be protected by market fluctuations. Democratising art investments, they make it possible for even the no-extremely-rich to put their money into famous artworks. By joining this platform, you join an exclusive community of people who are investing in blue-chip art.
However, even more classic options exist. In-person auctions, galleries or art fairs are all effective ways of getting to know different artists and the market prices for their works. are all valid.
For many it is a question of personal preference, but also the type of art one is interested in influences the choice to buy artwork in person or online. Now with NFTs, a lot of contemporary artists who work with digital mediums and sell their works on various online platforms.
The digital revolution also means that artists can have more of a say in how their artworks get sold. Typically, collectors used to invest and resell, profiting enormously on that. This was a typical dynamic and the artist would miss out on the increase in price. Recently, with online sales - and especially Blockchain technology - artists have been able to profit more directly form the resale of their works.
Nevertheless, around 90% of all collectors surveyed by Arts Economics for the report published by Art Basel and UBS in 2021, had visited a gallery or art fair during the year. Therefore, it is still preferable and common, even when buying artworks online to see the work in person by visiting the artist and their studios and galleries which represent them or art fairs.
8 Point Check list for Investing in the Arts:
1. Follow the news and keep updated on latest trends
2. Have a big picture of where the world is heading
3. Go to art fairs and galleries
4. Speak to professionals (curators, art advisors)
5. Do your research
6. Get to know the artists you are interested in
7. Check Provenance
8. Start small
9.ENJOY!
Enjoy the Art, discovering incredible artworks and the encounters you make along the way!