Investing in art: Introduction
Art is big business. In 2019, the global art market reached an estimated US$1.7 trillion and experts are predicting growth to continue.
Despite a global pandemic, the Post-War and Contemporary Art market (artists born after 1910) generated strong financial returns in 2020.
This is due to:
Strong price performance. Amidst significant volatility across asset classes, art’s price performance remained exceptionally strong. Post-War and Contemporary Art’s 2020 return was 15.1%.
Online sales boom. As a result of Covid, auction houses, galleries, and dealers demonstrated their ability to immediately shift online. The increase in total sales through online marketplaces was 511%.
Expanding contemporary market. Post-War and Contemporary Art continued to gain market share, reaching an all-time high in 2020. Post-War and Contemporary Art’s transaction volume share was 55%.
The art market is more accessible and transparent than ever before, and investors are taking note. Art is widely regarded among investors as a great portfolio diversifier. Its low correlation to the stock market, bonds, and real estate makes art a valuable insulator and a store of wealth. It also offers the rare benefit of “tangible pleasure” as you hold.
The key to a successful and profitable art portfolio is getting the right advice. In subsequent art investment guides, I’ll introduce you to the rationale of investing in art. I’ll use stock market analogies and provide case studies to explain the categorization of artists and opportunities for investors at the various career stages. I’ll outline strategies, such as risk profiling within an art portfolio, and examine liquidity, aesthetics, and the potential to earn high rates of return from your art investment.
In essence, art provides the world with a sensory experience like no other asset. To own a piece of this world is a dream, to view it a privilege, and to earn a rate of return on it, a bonus. I will guide you to combine all three.
This post is excerpted, edited, and sourced from ArtBasel, Art Price, ArtTactic, Deloitte, Masterworks, UBS, and Yahoo Finance. The content is for general informational and entertainment purposes only and should not be construed as financial advice.