If you have both cash and time in 2020 it is a good time to invest in Art. Global interest in art is rising, thanks to the pandemic (as people spend less on things like travel) and a desire to diversify away from the stocks-and-bonds axis.
Larry Fink, CEO of BlackRock Investments, told attendees at a 2015 conference in Singapore that along with high-end apartments, contemporary art is “among the two greatest stores of wealth internationally today … and I don’t mean that as a joke, I mean that as a serious asset class.”
Yang Gallery . Singapore
‘Art Meets Investment 2020’ / He Sen & Shen Hongbiao
Contemporary artists, in particular, are attracting interest. Their works now account for 15% of the global art resale market, according to Artprice. That’s up from 3% in 2000, lagging only modern art (43%) and postwar art (24%).
Many more are coming around to that view. A survey last month of high-net-worth investors by UBS and Art Basel found that “59% felt the Covid-19 pandemic had increased their interest in (art) collecting, including 31% saying that it had significantly done so.” Periods of economic stress often boost the appeal of alternative assets, like gold, real estate, and art.
HOW TO INVEST IN ART? When you find artwork that you like, you should learn about the artist and look online at auction house websites or sites such as Artprice for past sales results. The chances of an increase in price are better when an artist has been featured in reputable galleries or acquired by major museums. While prices can range from a few hundred dollars to millions of dollars, starting with lower-priced investments may be beneficial. Artprice estimated that the average price for a work of contemporary art was US$27,600.
One big draw of art investment is having the pleasure to appreciate aesthetically pleasing art pieces adorning your home or office every day. Compared to equities or bonds, art is tangible and visible. If one loves and enjoys what one owns, that is perhaps the greatest dividend. Even experts advise buying art that you like, rather than simply what others recommend. Beyond that sensory experience, you can make money by investing in art. In particular, art was one of the top performing asset classes in the 2019 Knight Frank Luxury Investment Index, registering a 9% price growth over a one-year period and ranking ahead of watches and cars.
A study published by JP Morgan also found that the volatility of art prices over the long term was lower than US and international equities as well as commodities. JP Morgan said there is evidence that art prices operate within their own market bubble rather than simply following general economic conditions. Thus art prices have fluctuated independently of investments such as shares, bonds and property funds. Art investors still need to be careful, though, as an earlier study by Wolfgang Wilke from Dresdner Bank found prices for art, especially in lower price categories can sometimes drop quickly when economic conditions worsen.
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