As we move into 2024, more and more people are beginning to see the value of investing in art. Alongside the launch of our dedicated 'Art Investment Concierge Service' we wanted to share advice for those considering investing in art, perhaps for the first time.
While it is true that art is not a liquid asset, it can be a very smart investment for those who know how to do it correctly. In this article, we will discuss why art is a good investment and provide some key advice for beginners on how to get started. We'll also talk about what to look for when buying art and how to secure the best price.
Why is Art a Valuable Investment?
A long-term reliable investment
One of the main reasons why art is a good investment is because it holds its value over time. Unlike stocks or other investments, art does not tend to go up and down in value based on market fluctuations. This was especially true during the 2020 pandemic where other markets fluctuated significantly while the art market remained stable. The changes were not felt because the value of investment grade art is independent of most external events and so has a tendency to steadily increase as the years go by.
Although art is considered a reliable long-term asset class, it is also important to know that it is a non-liquid asset which means that it is not something you can quickly exchange for cash. To liquidate your art asset means having an appraisal, working with an auction house or art consultant to find an appropriate buyer all of which can take time. Many art investors therefore keep art collections as part of a diversified portfolio, and as a part of their estate to be passed down to future generations.
Passion & Prestige
Another reason to invest in art is because you have a genuine interest in it . When you invest in something that you're passionate about, you're more likely to do your research and learn everything there is to know about it. If you are intrigued by a particular artist or time period , you can gain a lot of knowledge by going to auction houses, talking to art advisors and sourcing rare finds in your growing collection. Having a collection of art also holds a certain level of prestige that other asset classes do not, a great talking point at dinner parties.
Diversification of Assets
As previously discussed art is a great investment solution because it diversifies your portfolio. Having a variety of assets in your portfolio helps to minimise risk while adding interest.
How to Invest in Art
Set a goal
The first step towards investing in art is to clarify your goal . What are you hoping to get out of this investment? Do you want to make a profit, or are you more interested in collecting art for your own enjoyment? Ideally it should be both, art like any investment cannot guarantee a return, it is therefore important that you are interested in the art you invest in for its own merit as well as its potential ROI.
Research
Once you've decided on a goal, it's time to do some research, identifying the type of art you might like to invest in. The art world is vast, from 18th century renaissance etchings to contemporary digital installations. It is important at this stage to really figure out what speaks to you personally, ensuring you have a genuine interest in the type of art you collect as you will be their custodian for a long time.
You can do this initially by doing your own research, but eventually you will really need to seek an expert who can educate, advise and give you access to certain pieces.
Seek out an Expert
Once you have done your own independent research and you have better idea of what you might be after, it is time to seek the help of an art professional. This could be an art dealer, gallery owner or even a private collector that you know and trust. The most important thing is that they are an expert in the type of artwork you are looking to acquire. The art world is vast and so an expert in renaissance etchings won't be able to advise you on contemporary lobby installations. The right person will have the experience and knowledge required to help you navigate the art world and find the best pieces to invest in. Checkout our article on 40 of the world's top art advisors by genre to find the right person.
Decide on your budget
Another key factor to consider when investing in art is your budget. Art can be expensive, so it is important that you have a clear idea of how much you are willing to spend. Having done that initial market research on your own or with a trusted adviser it is important to decide how much you are willing to spend. Many investment grade artists will have historical valuation from past auctions so you can get an idea of ROI over time.
Make an informed decision
When you find a piece you like you should think back to your list of criteria and make sure that the work meets your requirements. The first question you should ask is whether the artwork is investment grade, this often determined by checking historical sales by the artist who should have a positive ROI for its investors. Secondly you should really think about whether the artwork brings you joy, art like any other investment is a risk and so if you do not see a good return on your investment then you should at least take some enjoyment from the artwork itself. Finally you should seek the help of an expert who can appraise that artwork as well as inform you of the potential investment value over time and organise shipping and installation.
Where to find Investment Grade Art
If you are looking for contemporary artworks your best place to begin is Artnet or Artsy if however you are looking for more historical pieces it is best to check auction sites such as Bonhams or Christie's to see available pieces and historical sales. Typically auction houses will have special auctions through out the year by theme and will announce these well in advance you can find out about these in places like Sotheby's auction calendar.
When doing your own personal research you may quickly find that the art world is overwhelming and hard to navigate. The shear volume of artists and the lack of transparency over prices can make it virtually impossible to know if you are making the right decision. It is important to have the guidance of an expert from early on, one who is expert in the type of art you are looking for and who can get you access to pieces that may never be available on the open market. Checkout or list of top 40 art advisors by genre for a comprehensive list of options.
When should you invest in art?
It is generally advisable to invest in art when prices are low and sell when they are high, this sounds simple and obvious but requires a very strategic approach. When it comes to contemporary art, the earlier an artist is in their career the more affordable they will be, however they are also a much higher risk investment. These types of artists are often referred to as 'emerging artists'. Art collectors invest in this type of artist hoping that they will become household names. If you were for instance one of the first to purchase a Basquiat during his beginnings in 1970s New York, you would be seeing a significant return on your investment in the auction houses of today.
If an emerging artist seems high risk, then an 'established' or 'mid-career' artist is the next option, this type of artist is always bought for a higher price point but is a far less risky investment. They have already asserted themselves in the art world, have had consistent sales at auction houses and are seeing consistent yearly returns on investment, artists like Banksy and Damien Hirst could be considered established.
Finally, Blue chip artists are the biggest names in the art world, they command the highest price points, and so require a hefty upfront investment. The value of blue-chip artists however is almost assured, as their works grace the walls of the world's most prestigious museums, while entire theses have been written on their work. Artists such as Monet, Picasso and Cezanne would be considered blue chip. The sales prices of blue chip artists are well known and established by price indexes such as Artprice100 measuring the top 100 performing artists at auction within the last 5 years.
Need more advice
Art is a great investment for anyone looking to add value to their portfolio, by setting clear goals, doing your research and seeking the help of a professional you will be well on your way to acquiring a desirable work of art, adding value to your estate for generations to come. If you would like assistance with your art investment needs discover our dedicated 'Art Investment Concierge Service'. Alternatively you can get in touch to setup a call with one of our art consultants today. At Artelier we specialise in investment grade art by modern, contemporary emerging and blue-chip artists. We can build a bespoke collection for you according to your specific tastes or on a lower scale, source artwork to add to your existing collection.
If you are interested in a different type of art then check out our article '40 of the worlds' top art advisors by genre'.
Happy investing!
Really interesting read, thanks for sharing.