The world of investing in art is not an easy one for amateurs to navigate. For one, it’s immense, and knowing what you are looking for can be incredibly difficult, even for experts.
Potential investors should compare the returns on investment in art with that of other investments, as the wise investor would do with any type of investment. So where should you start? The first aspect to consider is that the art market is no different from the stock exchange – it is in constant flux and it is cyclical. It has been said that the art market is the only one that will never go bankrupt, as art always has a currency value. You also have to keep in mind that an investment in art will probably only yield significant returns in the long term.
Getting to grips with artists, trends, genres and periods is only part of the challenge. Becoming competent at knowing what you are looking at can take a very long time. It’s not just the artists you need to know; the subject matter of a work can also influence its value. Unfortunately, speculating through purchasing new artists’ work and hoping it will be worth more when they become known is not synonymous with investing in a small company early and cashing in later.
When investing in art, you need to treat the purchase of an artwork like the purchase of other major assets. For those without an art history background and with a distrust of unregulated markets, art indices such as the Citadel Art Price Index are the best way to assess trends. Indices are, however, limited, due to data being limited to auction prices, which only represent a quarter of the market and exclude certain transaction costs. The auction system, where prices are public and transparent, is still the best measure of art’s ‘true’ value.
Once you have done your homework, turn to an independent expert to verify the price and viability of the investment. Many people invest in art for the first time without first verifying the provenance of the work: the seller and the work’s history and its value. It is always wise to look at both auction houses and private dealers. If you choose a dealer, ensure that he/she is reputable. Lastly, never forget about insurance. Determine exactly when the risk passes from seller to buyer, and make sure you have adequate insurance in place from that moment.
Above all, you should remember that it is art’s aesthetic qualities that underpin its future value. Develop your appreciation as well as your eye for value by visiting local galleries, engaging with the gallery owner, meeting the artists at exhibitions and participating in the walkabouts with the artist and/or the curator. It is a whole new fascinating world and an incredible journey.
It is important to thoroughly research an artist before committing to an investment. Investors should have extensive knowledge of a particular artist’s entire body of work, as the quality of some artists’ works fluctuates throughout their lifetime. Some artists produce their best works in their youth, while others mature with time and experience, but even the most sought-after artists may experience periods when the works produced in that time are unlikely to ever be considered masterful.
Once acquired, an art work should be properly looked after. Poor handling and inappropriate or incorrect framing can result in irreparable damage. If you do not have the right environment to keep a work, it may be inappropriate to own it. Get professional advice on how to care for your art. All works of art should, furthermore, be appropriately insured; there are insurance companies that specialise in art insurance.
Technology and, especially, social media and the internet, have influenced how we interact with art. The top auction companies receive applications to participate in online auction sales from nearly 200 countries, mainly thanks to the ‘mobile internet.’ The new mobile internet economic model is an irreversible development that has received a massive boost from the recent arrival on the market of ‘silver surfers’ – rich over-50s who enjoy and collect art and who, today, represent the primary users and buyers via mobile devices. For this population, the internet has become the primary hunting ground for artworks in the world, particularly via tablets and phablets, which perfectly suit senior lifestyles.
