Artelier art consultancy is a full-service art advisory and consultancy based in the United Kingdom with an international clientele we work with private individuals as well as hotels and corporate clients to provide investment-grade art, specialising in emerging artists, discover our analysis on the pros and cons of investing in art in 2023.
When it comes to art, there are two types of people: those who appreciate it and those who don't. But what about those who view art as a financial investment? In this article, we will explore whether or not investing in art is a wise decision. We'll talk about how to invest in art, the benefits of doing so, and why many people looking to diversify their portfolios believe investing in art to be a smart move. We'll also discuss some of the risks associated with investing in art, and offer sound advice on how to protect your investment. So, is art a wise investment? The answer may surprise you!
Should I invest in art?
If you've found yourself reading this article, the first question on your mind may be whether or not art is a good investment opportunity for you? It's a question that has been asked for centuries, and one that continues to be debated today. Some people believe that art is a wise investment, while others view it as a risky gamble. So, what's the truth? Is investing in art a sound idea, or is it a fool's errand?
When deciding whether or not to invest in art there are many factors to consider but the first is that the art market doesn't rise or fall with the stock market. This is good news for those who are risk-averse, as it means that your investment is not subject to the same fluctuations as other markets, making it a welcome addition to your portfolio. Additionally, art has been shown to retain its value over time, and increase in value as it becomes rarer and sought after.
What can have the biggest impact on whether an artwork is worth investing in and whether its value appreciates over time, is the attention the artist gets from museums, academia and the general public. An artist who is shown in major museums, has their work included in prestigious collections or wins critical acclaim, will likely see their prices increase. A good example of this is the renewed interest in Van Gogh since films like 'Loving Vincent' and special VR experiences were created around his work, its certainly a good time to own a Van Gogh.
Another factor to consider is that art is almost always a long-term investment. It can take years, or even decades, for an artwork to reach its peak value. This is important to remember if you are thinking about investing in art as a way to quickly make money. If you're looking for a quick return on your investment, art is not the place to put your money. An academic study which analysed over 1.2 million auction house transactions concluded that art appreciated in value by a modest 3.97% per year between 1957 and 2007.
How to Invest in art
The first step to investing in art is to identify the type of art you would like to acquire. Learning about art history and identifying a time period or style that interests you is a good place to start. You can then begin to familiarise yourself with the artists who worked during that time period or in that style.
Once you have a general idea of the type of art you would like to invest in, the next step is to start building your collection . The best way to do so is by working with a reputable art advisor, dealer or gallery, you want someone in your corner who can ensure a fair market price. They will be able to help you find works that match your budget and interests.
When buying art, it is important to remember that you are making a long-term investment. With this in mind, it is best to purchase the highest quality artwork you can afford. The best way to do this is by understanding the ways in which art gains value, factors such as the rarity of the piece, the notoriety of the artist, as well as the piece's authenticity and condition. Having a good understanding of the progression of an artist's career can help, observing things like an increase in public interest, literature and exhibitions.
Finally, there are many avenues towards acquiring an artwork, you can do so through online auctions specialist art dealers, art investment funds, or even buying a share in an artwork. Simply buying shares can be a good options for those who are not interested in the hassle of finding, storing and maintaining physical works of art. When acquiring a new artwork, always make sure you have the piece authenticated by a reliable third party before making the final transaction.
Could buying paintings make you rich?
Yes, if you know what you're doing, investing in art can yield a very good ROI but it truly has to be a long-term game plan, as most art will appreciate steadily over time.
If you are after the absolute best return on investment, there are a few strategies you can implement, such as buying minor works from major artists. Certain artists such as Damien Hirst or Basquiat have proven track records with the auction houses and are easily considered 'investment grade art'. However their larger more famous works are largely inaccessible to most collectors, this is where smaller works such as limited edition screen-prints have gained popularity in recent years, being far more affordable and offering an entry-level opportunity with a great ROI.
Another option is to invest in artists who are on the brink of gaining mainstream recognition, often referred to as 'emerging artists' this could be due to an upcoming solo show or museum retrospective. This can be a higher-risk investment but if timed correctly can offer very good returns, understanding which artists are on the cusp and worth investing in should only be done with the advice of art experts who follow these trends and can best advise you accordingly.
What to look for when investing in art?
The first thing to do when deciding to invest in art is to figure out what genre or time period you want to invest in. It's important to understand the market you're buying into and familiarise yourself with the artists working within that field.
Once you have a good understanding of what it is you want to buy, it's important to do your due diligence and make sure you're getting the best possible value for your investment. This is a good time to rope in an art advisor who can assist in helping you navigate the art-world. An expert will think of things like the artist's market value, the condition of the piece, it's provenance, auction records, awards and accolades the artist may have earned as well as checking for all the relevant documentation at the time of acquisition.
When you have found a piece you're interested in, it's also important to consider things like framing, storage and hanging, this is especially important when it comes to insurance. Most insurance companies will charge significantly more if an investment-grade piece is hanging on a wall rather than placed in purpose-built storage.
Understanding the different types of artists: Emerging, Established and Blue Chip
In the art market you will often come across the terms emerging artist, established and blue chip.
An emerging artist is somebody who is on the cusp of becoming mainstream, they will usually have had a few solo shows but are not yet household names.
Established artists are those who have made a name for themselves in the art world and usually command higher prices for their work.
Blue chip artists are the most sought after, these are the heavy hitters who's work hangs in major museums and galleries around the world. They are often household names and their work is highly coveted by collectors.
When deciding which type of artist you want to invest in, it's important to understand the risks and benefits associated with each. Emerging artists offer a higher risk but also a higher potential return on investment, as their careers progress and they become more established their work will increase in value. Blue chip artists offer a lower risk but also a lower potential return, as they are already at the top of their game the initial investment will be substantial. While established artists sit somewhere in the middle, they offer a good balance of risk and potential return.
Is art a high-risk investment?
When investing in anything you should be comfortable with a certain element of risk , art is no different. However there are certain ways you can mitigate this by following the tips we have already discussed such as buying from a reputable source, understanding what makes an artwork valuable as well as having a long-term view, which will all help reduce the inherent risks associated with investing in art.
In terms of financial risk , it's important to remember that art is a non-liquid asset, meaning it can't be quickly converted into cash should you need it. This is something that needs to be taken into consideration before making any art purchases. You also need to have a plan for storage and maintenance as well as being comfortable with the fact that it may take time to sell the piece should you ever need to.
To mitigate risks you should also make sure that art is part of a diversified portfolio and not your soul investment. Finally, ensure a diverse selection of artists within your collection so that if one artist does not fair so well another may pickup and gain in value.
So how do I start investing in art?
You should treat investing in art just as you would investing in the stock market, be as informed as possible, do your research or better still seek the knowledge of an expert and make sure you're comfortable with the risks involved. Make sure that when investing in art you also have the passion of an art collector , this will help you stay the course when things get tough and the market isn't performing as well as you had hoped.
When buying art it's important to buy from a reputable source, whether that be a gallery, art fair or online platform. There are many scams within the art world so doing your due diligence is crucial, if something sounds too good to be true it probably is.
Since the covid pandemic a large portion of the art world has moved online such as auctions and art fairs, so there are more opportunities than ever before to get involved in the market. However this does come with its own risks which is why it's even more important that you do your research and only buy from reputable sources. Finally just to reiterate its so important to invest in art you love , if you don't the chances are you won't hold onto it for the long term and it will be much harder to weather any storms that come your way.
Trusting the expert
As it would be rare to spend millions of pounds on a luxury home without seeking the help of an expert, so too should any investment in art be properly vetted with the help of a professional. This is where an art advisor comes in, at Artelier we have a team of experts who can offer guidance and support throughout the entire process, from gallery tours where we can introduce you to the current artistic landscape, to sourcing pieces, to framing, hanging and storage as well as offering an ongoing art management service to take care of your collection. We have also compiled a list of the top art advisors in the industry by genre which may help you in making an informed decision.
Working with a company with their finger on the pulse will ensure you're always up to date with the latest market trends as well as getting access to exclusive artworks and exhibitions.
In Conclusion
Art is a great investment and can offer many benefits, but it's important to understand the risks involved. Be sure to do your research or seek the help of an expert before making any decisions, and always invest in art you love! With a bit of knowledge and guidance, you can navigate the art world successfully and build a beautiful collection that will last a lifetime.
If you're thinking of investing in art or would like to know more about how we can help, simply get in touch with us today. We would be happy to chat and answer any questions you may have about art investment.