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The Expert’s Guide to Art Investment

In this Article, discover all you need to know to start investing in Art within a 20-minute read

Your Personal Art Concierge

The art market is an exciting, yet often elusive, place. Accessing the art world and managing an art portfolio is a complex, long-term process, that can seem overwhelming for new and existing collectors alike. Additionally, each collector has unique motivations and priorities, whether that be the financial, personal or social benefits of art collecting. Recognising that no one dealer, gallery or specialist can provide a turnkey service for art collectors, Artelier brings a new approach: to act as a personal "art concierge", providing a range of bespoke services and acting as the client’s representative in navigating the art world.

What can an Art Concierge offer? Each collector we work with needs tailored support. Some may look to acquire a stand-out piece by an 20th Century Master, others to commission a new work by emerging talent. New collectors may want to work with us to gather an entire collection, whilst existing collectors need reputable specialists to help them appraise and grow their portfolio, and provide ongoing collections management.

Our team have over two decades’ experience of delivering large-scale projects for residences, yachts, hotels, public spaces and beyond, and this expertise provides clients with a wide range of in-house skills at their disposal.

  • The scope of our projects has developed a far-reaching understanding of the international art market – rather than representing a set of artists, we draw on our database of over 15,000 artists who have been hand-selected over decades, and also conduct fresh research for every client.

  • Working to different budgets, our curators are knowledgeable in collecting at a range of price-points. Every investment is backed by a deep knowledge of what constitutes value, providing collectors with sound investments as part of a long-term strategy.

  • The curatorial team are accustomed to drawing on diverse sources for acquiring pieces, be that dealing with specialists for blue-chip work, or spotting emerging talent. Commissioning new work is complex and exciting; we collaborate closely with contemporary artists on the majority of our projects, and so are accustomed to overseeing a smooth commissioning process and meeting key deliverables for the client.

  • With experience in delivering large-scale collections internationally, our curators are specialists in the logistical aspects of presentation, preservation, handling and installation, working across the world.

Yet, this broad experience also reminds us that the art world is truly a collaborative place – to cater to the niche interests of collectors, we connect with external experts to draw on their expertise and introduce a wealth of highly specialised knowledge. For instance, we may approach a leading dealer of Picasso lithographs on a client’s behalf, or work with an academic of Barbara Hepworth to appraise a collector’s piece, or work with art advisors of contemporary East Asian art to build on a client’s passion. Our aim is to work with the best positioned individuals for a client's investment goals, becoming indispensable to the client in finding reputable contacts and negotiating on their behalf.

As an Art Concierge, we seek to create a seamless experience for investing in art – liaising with specialists, dealers and artists, so that the client can enjoy the thrill of art collecting in the knowledge that they are making sound investments and their collection is managed by a knowledgeable art partner.

In this article, we take a deep dive into the world of art investment, to provide an in-depth view of collecting fine art today. We will cover:

  1. Why Invest in Art?

  2. The Art of Strategy

  3. Understanding the Art Market

  4. Choosing Artists to Invest In

  5. The Practical Side – Collections Management

I. Why Invest in Art?

Art investment holds a unique place in the world of investing. On a basic level, it is about purchasing art you believe will increase in value; but this is not a passive income – it requires knowledge and engagement, and a long-term approach. Additionally, art investment should never be purely financially motivated. Whilst sound advice and decision-making protects collectors from losing money, there is never a guarantee on the extent of profits from reselling. Artworks hold a cultural and personal value, and this is one of the advantages; if you collect what you love and are passionate about, there is always a return on an investment.

  • Diversifying your portfolio: From a financial perspective, investing in art can be a good way to diversify your portfolio and balance risk, while also providing an opportunity to see a return on your investment. Diversifying is the best way to minimise risk and maximize returns, as it protects against the downsides of investing in any particular asset class or sector. The art market itself is diverse, offering opportunities for both high-end and speculative investments.

  • A Stable Investment: Art is one of the few assets that has consistently increased in value over time, meaning that art is most likely to perform well when other investments are doing poorly. Art also has low correlation with other investments, which means that if you hold a diverse portfolio of assets such as stocks and bonds, art will help balance out their risk profile. An advantage of art as an asset is that art's value is tangible, and not subject to devaluation in the same way to inflationary pressures and market volatility. Even in times of crisis, the global art market has long been a reliable source of investment. The UBS Global Art Market 2022 report showed how the market grew strongly in 2021 – despite the far-reaching impact of the Covid-19 pandemic on global markets, aggregate sales of art and antiques estimates at $65.1 billion, representing a 29% increase on the previous year. As demand grows year on year, so does the potential for long-term financial gain.

  • Investment Potential: Blue-chip works and modern masterpieces are highly sought-after, and so have a high entry point that is inaccessible to many. Investing in such pieces is naturally reliable, as to reach that price-point, the artists’ work would have been extensively sold on the secondary market which has verified its value, and the artist would have received critical acclaim through public and academic channels. Savvy investors who are looking for a lower initial investment, however, can look to established artists whose careers are accelerating, or emerging talent with investment potential. Whilst there are no guarantees, investing early in an emerging artist has the prospect for earning collectors considerable profit as the artist’s career grows.

  • A Cultural Dimension: Collecting important work contributes to the passage of art history, with real cultural and public significance. Collectors are positioned among museums and institutions for acquisition of key works, which allows them to impact the cultural landscape at both national and international levels – loaning works, preserving heritage, and contributing to further research. Engaging in this aspect of art collecting raises the reputation of your artists – and, therefore, the value of your collection.

  • Becoming a Patron: As a collector, you become a patron of the arts. Investing in early career artists supports them at a critical time in their development, and over time you can enjoy following the artist's progress as they become more established. Many collectors love the social aspects of this role; connecting directly with artists, being a respected visitor to show openings, and contributing to publicising the artist through personal connections. This enables the collector to have an impact on the value of their pieces, as more critical attention is paid to the contemporary artists that the collector has invested in, bringing higher market value for their work overall.

  • A Personal Collection: Art investing is also about building a personal collection, and a lasting legacy. Many choose never to sell their prized pieces, preferring to leave them to institutions as part of their legacy in art history, or to be inherited by future generations. The prestige of high-profile collections also opens the door to exclusive art networks, giving access to pieces which are not easily available on the market. Beyond all of these attractive aspects, however, most art investors are truly passionate about learning and engaging with art, and find the process emotionally fulfilling in a way that few other assets can provide.

II. The Art of Strategy

The expert advice is to take a long-term view when embarking on building a collection as part of a wider portfolio. The art market can be unpredictable, and is not transparent; much art is sold away from the eyes of public auctions. It is generally advisable to expect to hold onto artworks for over 5 years before re-selling, but the return on investments is only more likely to increase with significant time as the artist’s career and reputation grows.

In terms of market forces, a diverse art portfolio is the best complement to time. A best practice approach is to have a range of good-quality works of art bought at different price points, from artists at different stages in their careers. It is also wise to have realistic expectations about the profits that may be realized. Collectors need to consider diversifying investments among various types of works that complement one another in terms of initial cost, risk/return profiles and capital preservation characteristics. If you are looking at investing in pieces at a lower scale, then diversification becomes even more important because your investment will have likely less impact on your overall portfolio’s return profile than highly-valuable pieces do for wealthy investors who have larger sums available for investment (and thus can afford more significant commitments, that are more likely to yield significant returns). Specialist advice on market forces, and artwork valuation in the context of the artist’s careers, is integral to building this balanced portfolio.

A long-term approach is not only critical for increasing stability, but is also inherent to the art collecting process. Investing in art takes research and careful consideration. It is necessary to undergo extensive research to uncover artists on the cusp of a rise in their career, to understand what type of work has been selling well, and what constitutes a reasonable price or inherent value in an artwork. In this aspect, the role of an advisor who has the collector’s interests in mind is indispensable; they bring to the table the specialist knowledge acquired over many years by themselves and their team, providing unparalleled expertise to both new and existing collectors.

It's also critical to understand what kind of art collector you are – your approach to collecting will inform your strategy. Are you an art enthusiast, drawn to a particular time-period, art movement, medium or style, and seek to display your collection in your home? Are you first-and-foremost a financial investor, guided by increasing opportunities for returns, and need specialist support for preserving the value of your investments? Do you want to be involved in the contemporary art world, meeting living artists and becoming a recognised patron for art? Your personal, financial and social goals are important to assess, since art prices fluctuate – depending on many factors including supply and demand, auction records, market trends and gallery representation agreements. In such a market, the purchase decisions you make need to be guided by what is most important for you in your identity as a collector. Evaluating these goals is helpful for the relationship you have with your advisor, as an art advisor understands that maximising profits is rarely the only motivator for collectors, and this filters into their approach for guiding you through the art world.

III. Understanding the Art Market

Art can be bought on two channels – the primary market and the secondary market. The primary market refers to the initial sale of an artwork by an artist or their representative (such as a gallery with whom they have a contract). Any sales made after this are referred to as secondary market sales: such as private sales by dealers, public sales at auction houses, or exhibiting and selling at art fairs. In many ways, these markets are distinct, but ultimately they are interdependent.

What does this mean for collectors? Typically, artworks sold on the secondary market reach higher prices than when they were initially sold on the primary market. The primary market is spearheaded by galleries, who seek to be competitive in order to attract buyers, as well as the artists themselves. This also means that collectors often get direct contact with artists, through studio visits or exclusive show previews. This market is essential for artists to gain exposure and build their reputation, which in turn will help to boost prices in the secondary market.

When works are sold on the secondary market, they are more sensitive to market demand and positive factors such as recent developments in the artist’s career – this is where record-breaking auction prices take place, and where publicity can have a huge impact on the price achieved. This has clear benefits for those looking to sell work. The secondary market, however, also has benefits for buyers; prices in the secondary market tend to be a more reliable indicator of value as they are on the open market. It should be noted that there is still a need for caution, since secondary markets aim to achieve the highest price possible, and the eventual selling price at auction can be inflated beyond typical market value.

Going to the Source – Buying from artists

Purchasing directly from artists has multiple advantages. If an artist is selling directly, they can often offer a more competitive price to collectors, without the gallery margin. Additionally, one of the best ways to understand an artist’s work is to meet them in person. Seeing their studio and having a personal relationship with them gives a better sense of their artistic process, what inspires them and the trajectory of their career. This makes the process of investing in their art more fulfilling, and ultimately the collector is more informed about their collection. The other benefit is that there is no question about authenticity, which makes the work more valuable in the long-term. It should be noted, however, that buying from the artist lacks the reassurance of specialist appraisal or market forces, and so it is recommended to still work with an advisor to ensure a good investment.

Traditional art galleries

The gallery model, where a gallery represents an artist and sells work on their behalf, is a traditional avenue for purchasing works. If the gallery is reputable, they will ensure a fair price for the artwork, and professionally manage the sale. Galleries work to publicise the artists they represent, and so with time, their work to get the artist critical attention and public awareness will increase the value of works that collectors acquire. When an emerging artist is signed to a high-profile gallery, their work almost always sees an instant jump in value in both the primary and secondary markets.

Fostering a good relationship with galleries is essential. Buying from a gallery is not the same as purchasing goods, and many high-profile galleries prefer to sell to reputable collectors, or offer long-standing clients more competitive prices or first access to new works. Connections are fundamental, in order to get the most out of buying in galleries.