Three Things You Need to Understand About Art Collectables
Smith & Partner is an organization that specializes in making fine art collecting, collecting in limited edition fine art prints and the art market in general much more approachable. This is traditionally a market that is very close to ‘outsiders’, making it difficult to penetrate without developing a wide range of contacts and professional relationships within the art market.
Smith & Partner has both the industry contacts and special individual relationships needed to give our clients real, meaningful access to the fine art market, as well as the professional expertise required to guide them to those artists and limited edition pieces which have the greatest potential for a high ROI.
To take full advantage of our services, though, you’ll need a solid grounding in at least these three subjects:
Introduction to collecting fine art
The fine art market is a thriving one, and there is a large supply of limited edition art prints produced every year. More importantly, though, the demand for these prints seems to be growing at a constant, steady rate regardless of local, national or even global economic wobbles. Indeed, there are many experts who consider collecting in the fine art to be a better option than commodities such as gold even in trying economic times.
The art market has been tracked and analysed on a professional level for many decades. The results have been very encouraging to the market, though they have not been widely disseminated – the trend is to keep a ‘good thing’ to one’s self. Experts like Wolfgang Wilke (Dresdner Bank, 2000) have found that on average fine art and limited edition art print sale prices rise more than comparable goods in times of short-term economic recovery, and follow the overall economic trend with a positive bias.
The fine art market is really 2 different markets – those for the lower end and higher end pieces. The lower end of the fine art market tends to be more volatile than the high end. Prices rise quickly in strong economies and fall quickly in weak ones.
By comparison, the upper end of the fine art collectors’ market tends to be more stable no matter what the surrounding economic conditions. This is because the market participants at the upper end of the scale – HNW individuals and corporate interests – have a longer-term outlook and tend to retain substantial purchasing power even during market downturns.
How the fine art market actually works
Unlike other markets, and especially those of comparable size, the fine art market is composed mostly of private transactions. Limited edition art prints and other art collecting are not publicly traded commodities, and there is little or no centralized recording of the relative prices of a contemporary artist’s pieces command.
Of course, much art is publicly auctioned, and these transactions can be recorded and analysed. Famous auction houses such as Christie’s and Sotheby’s make headlines several times each year with multi-million-pound sales, and lesser known auction houses specializing in fine art and limited edition art prints move a huge volume of art every year.
However, most of the sales in the fine art market are private, and not publicly tracked.
On one level, this makes the fine art market highly dependent on the expertise of a relatively few experts. The skills needed to invest effectively in fine art take decades to amass and are highly subjective. They cannot be quickly or easily taught to a new generation of analysts and dealers in the same way that the principles of collecting in the stock market can, so it is very much the domain of a relatively few personalities.
On another level, this all makes the market very difficult to approach from ‘outside’. A new collector has a very difficult time gaining access to the artists and dealers most in demand, let alone developing their own insight into how the fine art collecting market functions.
Who actually buys fine art and limited edition art prints, and who do they buy from?
Within the art market, the majority of the buyers are high net worth individuals – specific people with the resources to collect in this unique commodity. Next come art dealers, both individual and corporate, and museums.
The majority of sellers in the art investment market are not individual artists. Auction houses and galleries account for the bulk of the pieces sold as they have the reputations and contact networks among suitable buyers to make the effort economically feasible. Only a few artists sell a great deal of work personally, and then only the most well-known.
Lastly, there are a host of intermediaries connecting buyers to sellers. These include banks, financial services companies, art consultants, and organizations such as Smith & Partner ourselves.