Art can be an investment

Luke Sparkes
15 Aug 2019

You have spare money sat in your account; you may have earned it, maybe you inherited it or were lucky enough to have won it. Either way, it’s sat in your account making a couple of quid a month interest and not much else.

You thought about investing in stocks and shares, but in light of the current climate, decided it might be a little risky at the moment. You considered investing it in property, but that requires work, attention and time, the latter two things you’re massively lacking in.

Maybe you might decide to use your money to make some changes in your home; a shiny new T.V, or a new sofa? Maybe some double glazing? It’s functional, but not an investment as such. So, what does that leave?


 

Art Can be An Investment

Art investment has long been a way to showcase an individual’s wealth and prestige. In the past, the great art academies turned out nearly every artist capable of selling their work, and those institutions, in turn, governed the display and sale of art. As artists began to realise the monetary potential of selling their work, the first auction house – The Stockholm Auction House – opened in 1674.  Then world-renowned Sotheby’s made its entrance into the auction and art circle in 1744, followed by equally as famous Christies, in 1766.

All three auction houses are unsurprisingly still operating successfully. And while their art investment premise is still functioning essentially the same way they did at their inception, the landscape and methods in the art world have undergone drastic changes.

Over the years we have seen different art styles emerge and dominate the world for years only for it to be overtaken by something new, something different. As with fashion, there aren’t really “trends” demanding what an artist should and should not be creating. We’re in an everything goes era; the dawn of the latest revolution to strike the art world is technologies like AI and VR are dominating the art scene. Money is being invested in braver and more modern things.

But even as art and technology become more and more intertwined, and a lack of “fashion” in the creation of art, doesn’t mean that everything is investible.

Investing in art

For some, owning artwork is still a way of showing to the world that they have a disposable income. But it’s becoming more and more popular for people who have a bit of spare cash to invest in artwork to make money. Art is starting to be viewed as a financial product, just another investment that can be capitalised on.
And for good reason too, the fine art market has grown over 113% in the last ten years, recovering much faster than any other market after the global financial crisis. It now falls under SWAG asset – a term coined by Joe Roseman, an analyst at Investment Week – it’s an acronym for Silver, Wine, Art and Gold; all of which are the alternative investments that defy economic gravity.

Accessing the art market has become easier too; no longer do people have to attend or call in auctions or spend time building and nurturing a network of relationships with galleries, dealers and artists themselves. You can invest in art online, through galleries who either specialise in investable artwork or sell pieces that will go up in value, tokenisation and fractional ownership allows individuals the opportunity to buy affordable shares in not so affordable pieces of art and of course, not all investible artwork is created by the old masters – you can go to art fairs, end-of-year student exhibitions and large open-studio events.

Finding art, viewing it and buying it has become increasingly easier, but with such ease comes the cost of trust. Many galleries, for example, will promise you an ROI without the facts to back it up, a consultant might use the line, “this piece is a good investment” but in fact, they’re just trying to make the sale. This shouldn’t put you off though, it should act as a caution and encourage you to find a reputable organisation that has proven expertise in art investment, with case studies to prove their works of art help make you money and it always helps if you like them too.

So, make sure you do your research – investments whether big or small should always be extensively researched; read art magazines, investment textbooks and articles. Find out what you should be doing once you’ve purchased the artwork, speak to other investors and if possible, speak to someone else who has years of experience in the industry.

Know your budget
Jean Paul Getty, once the richest man in the world, was a prolific art collector. His ‘millionaire mentality’ or cost-consciousness is what paved the way for the success of investments. He was known as a big value investor, focusing especially on currently undervalued goods and enjoying the potential rewards once prices had risen. The art market was a great place to start reaping the benefits of his investments. Like Getty, keep an eye on the price tags of your artwork of choice and make sure the value is something you can still see rising in the years to come.

Focus on emerging talents
We all know that Gustav Klimt or Monet or Picasso is juiciest of art investments, but unless you have a couple million in the bank, it’s unlikely you will own one. Don’t overlook the potential of rising artists. The best artwork is usually just under your nose… subscribe to the mailing list of your local gallery and attend events too. Not only will there be free bubbly there, but you can mingle with like-minded people and the artist themselves.

Buy from trustworthy sources
If it’s your first time investing, don’t go it alone. Buy from a reputable gallery, where you can build up a relationship with the curators. Doing this means that you have the safety net of a gallery looking after you, curators can keep you updated on new artwork that’s coming in that they think you would like and probably get first dibs on exclusive pieces.

Visit galleries and museums
It’s not imperative that you have an understanding of art in itself, but acquainting yourself with the classics and exposing yourself to the exquisite collections the UK galleries have to offer, you can narrow down your tastes and preferences and maybe even notice something that you might deem investible yourself.

Care for your investments
Protecting and caring for an artwork is one way to maintain its value over time. Purchase high-quality framing with UV filters to prevent sun damage. Ask framers to use acid-free tape so that they will not leave any marks or stains that can ruin the artwork. If you are displaying your pieces, hang them in the dimmer areas of your home, avoiding intense humidity and direct sunlight. Get in touch with art specialists for paintings that require professional treatment.

Treat your investment as an investment
The value of art moves along with the current state of the economy. Just like any type of investment, patience is key. Monitor the art market as well as the performance of the economy to see where the value of your purchase stands. This will help you determine the best time to sell your artwork and when to keep it while it rises in value.

Don’t make the mistake of selling your artwork immediately after purchasing it, many pieces only increase in value over time and just like other investments, it may take years before you see any returns. However, time can be kind to those who wait!

Here at Smith and Partners, we specialise in making the fine art market approachable to new investors and old hands alike. Our extensive expertise in both the original artwork and limited edition art prints markets let us offer very important services:

  • Professional, unbiased evaluations of individual and fine art pieces
  • Authentication of both original art and limited edition art prints
  • Brokering services of various kinds
  • Access to galleries, auction houses and private collectors which are unavailable to many new market participants.

Our expertise has been a part of portfolios that have returned as much as 64.6% within 12 months and Smith & Partner consultants pride themselves around two key factors, safety and security over the long term.

 

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