As a result of the COVID-19 pandemic, life as we know it changed and the world as we knew it changed, somewhat dramatically.
But it didn’t only force the broader world to change. The pandemic changed the art world and art investment and forced it to adapt to a whole new mode of operating, one that will now become the new normal and the future of the art market and the art industry at large.
In this article, we’ll look at some of the major changes we’ve seen as a result of the pandemic and get a better sense of just how resilient and adept at recovery the art market really is.
- The reasons for investing in art
- The art investment world has gone online
- There’s a new generation of art investors
- Contemporary emerging artists are more sought after than ever
- NFTs have surged in popularity
- What does the future of art investment look like?
The reasons for investing in art have changed
A major factor that the pandemic has brought into play when it comes to art investment is that people have spent days, weeks, and months, locked down in their homes with intense limitations on leaving the house. These lockdowns have massively increased people’s desire and need to incorporate the aesthetic value and qualities of art into their homes.
It’s led to a shift in people’s perceptions of their homes, realising the value and inspiring ideas for design projects has got them thinking more about what they want on the walls, as well as pondering the long-term investment potential of art.
There’s also the fact that art has been a traditional investment option that people make in times of financial crisis, because this pandemic has proven to be both a financial and a health crisis, people are combining buying for pleasure and a sense of well-being with the investment potential for future profits.
One of the gifts of spending more time at home has been finally getting around to all of those tasks that seem to be consistently put off or overlooked, such as home improvements, design projects, looking for investments and making future plans or even preparing wills.
During uncertain times in general we tend to think about how our legacy will be handled and passed on down the generations. Art is a tangible, real asset that can be handed down to family members with relative ease. It’s also becoming a much more popular form of inheritance asset than it’s previously been.
For the most part, art is an easy to understand commodity and its value largely depends on what someone else is willing to pay for it. It’s also a popular investment choice because a person doesn’t necessarily have to be wealthy to purchase art and build a substantial collection.
Not forgetting too, there’s always a buyer for art and it’s an asset that serves as a hedge against inflation with proven historical returns.
The art investment world has gone online
In the world of commerce, the art market was definitely behind most other industries when it comes to digitalisation. eCommerce has long had its digital hooks in the music and book industries and this new transformation for the art market was long overdue.
The art market itself was at high risk to be negatively affected by the COVID-19 pandemic due to it being made up of mostly small businesses that rely on live events, travel, in-person visitors, socialising and networking.
As expected there was a fall in sales once the world locked down, but as a reaction to that happening the art world built up a momentum of change and restructuring which led to a new market fueled by digital strategies and online sales.
The resilience of the art market was tried and tested throughout this period of change and yielded some very positive results for the new online world of art collecting and investment. Online platforms for collecting and purchasing art, increased transparency and online auctions proved to be a real turning point.
Some key findings from the Art Basel and UBS Global Art Market Report include online sales of art and antiquities reaching a record high of $12.4 billion in 2020, doubling in value in the previous year and accounting for a record share of 25% of the market’s value.
This was the first time in history that the share of eCommerce in the art market has exceeded that of general retail.
The big-name art auction houses such as Christie’s and Sotheby’s taking their auctions online was also a huge gamechanger for the art world, with record online sales and even without the same sense of theatrical energy achieved from the in-person auction events that command the highest prices, they performed very well with a lower volume.
There’s a new generation of art investors
As a result of the art market fully embracing the online world, there’s a whole new generation of art investors that have appeared on the scene, comfortable in the digital realm and with money to spend.
The biggest spenders on art in 2020 were Millennial high-net-worth collectors, with 30% spending more than $1m compared with just 17% of Baby Boomers - Art Basel and UBS Global Art Market Report.
The pandemic has also pushed the buyers that would only usually make purchases when visiting physical spaces to buy online, as well as encouraging some past collectors to return to collecting art.
Smaller galleries have also found an improvement in reaching and appealing to a global audience since the art market has shifted into an online space.
Contemporary emerging artists are selling better than before
In a series of knock-on events such as the art market embracing the online world and a new generation of investors has led to another change. There’s been a heightened focus on contemporary emerging artists with their works becoming more sought after and selling better than before the pandemic.
This trend and rising interest in up-and-coming artists isn’t only being noticed with new collectors either, there are many seasoned professional collectors also investing in this area of the market, some even selling off some works of established artists to build a bigger collection of emerging artists that are showing great potential.
NFTs have surged in popularity
The pandemic played a huge part in the popularity surge of non-fungible tokens (NFTs) and we’ve seen unprecedented sales in NFT art and the prices the artworks have been sold for at auction.
The most expensive NFT sold to date is Everydays: The First 5,000 Days, a digital collage of daily images by artist Mike “Beeple” Winklemann and was sold for $69.3m at a Christie’s auction in March 2021.
We have an article explaining everything you need to know about NFT art that touches on what exactly it is, why it’s so special, how it works and where and how to buy it.
With more people locked down at home during the pandemic and saving money in areas such as commuting, they were looking more and more into investing, researching cryptocurrencies and looking for ways to use any disposable income or create opportunities for future profit.
The pandemic accelerated the shift to online sales for the art market and part of the transition involved NFT art, which offered a new investment opportunity and draws on the desires of both the art and crypto enthusiasts alike.
NFTs also provide the confidence to art collectors that they’re authentic, after all, they’re unique “non-fungible” digital tokens that can be used to represent assets and authenticate ownership as they can’t be replicated.
This works well within the parameters of the art market, most value for artworks hinges on factors such as proof of authenticity and provenance; so in a world of ever-increasing fraud, the confidence offered by NFT art can feel like a breath of fresh air.
What does the future of art investment look like?
This is the question on the minds of a lot of people, especially those that are currently looking to make an investment.
History, both distant and recent has shown the resilience of the art market and its ability to recover from crises of any kind. This can offer a strong sense of confidence and seeing how well the art market has performed online over such a short period of forced change and restructuring is a promising sign in itself.
The return to the in-person experience is something else that will bolster the industry going forward and will always remain a significant driver of business, and with this newfound eCommerce and digital era for the art world, we can definitely expect hybrid models of live events such as auctions and fairs.
There’s been a change in our sense of what’s important, what we value and the reasons behind people purchasing art is different now than before too, with a stronger focus on buying art that resonates with us as well as for its investment potential.
NFT art shows no sign of slowing down either, but it’s also worth noting that the more digitised the world becomes, the higher the value we will put on physical artworks, due to their aesthetic value as well as their increasing rarity.
Overall, the art market is showing very promising signs of future longevity and adaptation to the new age.
Are you moving into the future of art as an investment?
At Smith & Partner, we believe in making art collection and the art market accessible to everyone. We provide art investment services that offer value to collectors and investors of any experience level within the art market.
Our advisors are on hand to offer professional guidance and advice on investing in the art market, so feel free to contact our expert art brokers to arrange a consultation and begin building or adding towards a collection of art that offers the best potential for future profitability.
Download Our Free Art Investment Guide
Another way you can increase your knowledge of the art market is to download our free art investment guide, this guide was put together by our expert advisors and is packed with valuable information and advice to help you navigate your art investment journey.