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:
Why Invest in Art?
The Art of Strategy
Understanding the Art Market
Choosing Artists to Invest In
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 maximise 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 realised. 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.
Art fairs
Art fairs bridge primary and secondary markets. Many galleries exhibit at fairs such as Frieze or Art Basel, where they seek to showcase their most in-demand artists or striking new work at their stand. Depending on the gallery or dealer who is exhibiting, the artworks may be sold for the first time, or be re-sold. Art fairs attract exhibitors from all over the world, and so they are a fantastic way of discovering new galleries or artists that you may otherwise not have come across, and seeing the work first-hand rather than online. It can, however, be tempting to make impulsive choices; when discovering new artists, there needs to be a level of research and discernment before jumping into a purchase. If a collector is serious about purchasing, it is always advisable to enquire with the gallery but seek independent advice from a specialist before making a significant purchase.
Dealers
Dealers are particularly important when seeking to acquire an authentic modern master artwork or a highly sought-after contemporary artist. They are often highly specialised and knowledgeable in their field, and finding a dealer who is closely aligned with your interests can become an important avenue for growing your collection. When buying from dealers, reputation and trustworthiness are absolutely paramount. It’s extremely important to know that the work is authentic and original – a reputable dealer will provide authentication documents by independent parties or a certificate of authenticity by the artist, as well as documentation of the artist’s provenance (a history of who has owned it, with a lineage back to the artist). Dealers should also provide details of the artwork’s condition, and any restoration that has taken place; this is fundamental for ensuring that the artwork is correctly valued, and retains its purchase price.
Some of the most reputable art dealers are members of various institutions such as the Art Dealers Association of America or the British Antique Dealers Association. These membership organisations have strict codes of conduct that dealers must adhere to, which helps to ensure that their members are reputable and trustworthy. In addition, many reputable art dealers are accredited by leading auction houses such as Christie’s or Sotheby’s. This accreditation is only given to those dealers who have a proven track record of offering high-quality, authentic works of art.
Auctions
Buying art at auction is highly accessible, since sales and lots are publicised. Auctions can provide opportunities to purchase rare pieces, particularly those by collectable modern masters. Auctions with a high reputation to uphold, such as Sotheby’s and Christie’s, take great care to ensure accurate provenance; if they are in doubt, they can refuse to sell a work, as the repercussions of selling fakes are too high. With wide teams of leading specialists, they are also able to provide extensive condition reports and undergo forensic analysis (like assessing paint samples or examining under UV) to more accurately authenticate and date a work.
When an auction sale breaks records for the artist, this has a great effect on the value of their work already owned by collectors. The buyer, however, needs to be cautious; auction prices can sky-rocket beyond all expectations of experts, and this can lead to overinflated prices. The extent to which this matters to the buyer depends on their reason for acquiring the piece. If they are passionate about the work and can afford it, it may be the only chance they get for owning a unique piece. If they seek to make significant returns, a limit on the bids needs to be established between the buyer and their advisor, who will be informed about appropriate value.
Off Market Deals
A large number of works sold in the secondary market, however, are not publicised, and instead take place in off market deals. Accessing off market deals in the art world often means tapping into a niche market with a specific network of collectors. Many artworks sold in private sales will never come to public attention, and this is where unique and unexpected pieces can be found by some of the art world’s biggest names.
Getting access to these networks often depends on your own reputation as a collector and other artworks you may hold in your collection. Working with reputable art advisors can expedite the process of gaining access to these elusive markets. Some private sales are known to operate through word-of-mouth only, making it nearly impossible for outsiders to get a foot in the door. For serious collectors, however, the challenge of accessing these hidden markets can be part of the appeal.
Buying Art in the Digital Age
The online art market has a greater share in global sales than ever before. The UBS & Art Basel Art Market Reports found that in 2021, online sales accounted for approximately $13.3 billion – approximately 20% of overall sales – which was significantly more than the $12.4 billion sold online in 2020, and double the amount sold online in 2019. Online sales can be directly from artists, galleries, dealers, secondary market websites such as Artsy, or via online auctions.
Investing in art through online sales has increased access like never before, as collectors are able to quickly browse enormous volumes of work and easily learn more about the artist through engaging content. It is also an opportunity to discover work made and sold all over the world, enabling access to entirely new markets. The online market sells works at all price points, from emerging art under £5,000 to masterpieces worth many hundreds of thousands.
Being astute when buying online is critical, and this is where the support of independent advisors becomes indispensable. Advisors can ensure that the source selling the artwork is reputable, and liaise with them to provide all necessary documentation proving ownership, authenticity and condition. Even if all the necessary requirements have been met, and the source is legitimate, not seeing the artwork in person opens up potential pitfalls – there is no way to truly get a sense of its quality or condition, as well as aesthetic aspects such as colour palette and texture. Art advisors are accustomed to seeing thousands of artworks online, and so their eye is honed to recognise quality more easily; they can also arrange for the artwork to be viewed, if possible. Additionally, the price of artworks sold online can be less regulated – even if they are authentic, the artwork may be by a relatively unknown artist whose work hasn’t been valued by market forces, or only be valued by a gallery that represents them. Independent advice can help safeguard against choices that are unlikely to see profitable returns.
The purchase of digital art is another new aspect of the market. For the first time ever in 2022, NFTs were given their own section in the Art Basel & UBS Art Market Report – in 2021, sales of NFTs reached $2.6 billion. An unusual aspect of the NFT market, as reported by Art Basel & UBS, is that NFTs are owned on average for 33 days before being resold – a huge contrast to the decades of ownership in the traditional art market. Resale on the secondary market, the report found, saw total profits of approximately $1 billion in 2021. This incredible activity has attracted hundreds of thousands of investors, and only promises to grow in the future.
IV. Choosing Artists to Invest In
When choosing investments, Artelier’s curators consider artists through four key categories:
Emerging artists: An emerging artist is defined as an artist who is beginning to receive recognition for their work. This can be evidenced by excellent craftsmanship, winning a few awards, prizes or residencies, or having work sold on the primary market.
Established artists: An established artist is typically an artist who has been active in their field for at least 10 years, and who has a solid track record of exhibitions and sales. Established artists are generally more expensive to purchase than emerging artists, as they have a proven track record of success and have built a name in the art market. However, many investors feel that established artists are a safer bet, as their work has already been vetted by the art world and is more likely to appreciate in value over time.
Contemporary Blue-Chip: A blue-chip artist is an artist whose work has been consistently sought after by collectors and commands high prices in the market. Their work is typically associated with a period of great artistic achievement, and their status as a blue-chip artist is cemented by critics, academics and art world insiders.
Modern Masters: Modern Masters refers to historical artists from the 19th and 20th centuries, whose distinguished oeuvre has confirmed their significant role within art history. Since they are deceased and no longer producing work, they are highly collectable. Their work should only be purchased from reputable dealers to ensure authenticity.
At all levels and price points, it is essential to consider different factors in the artist’s practice and career to help ascertain what the trajectory of the work’s value will look like in the future. This is especially pertinent for collecting emerging artists, whose prices have less verification in the market at large.
Consider the quality of their work and the level of skill required to work in their medium. Is their technique highly unique, or need years of training few artists have? Does the material itself have any inherent value? What is the condition – this is objective, rather than subjective, and can make or break the value the work will later achieve. It’s also important to consider whether the work you are buying is typical of the artist, and therefore perhaps more recognisable or with comparable pieces sold before; if it’s atypical, this could be a benefit (more rare, and therefore sought after) or a disadvantage (less significant in the artist’s oeuvre, or a less-skilled part of their practice). It’s also important to research the artist’s career. What is their training? Have they won awards or residencies? Has their work been shown at exhibits, collected by institutions or high-profile individuals? What kind of attention have they received – from prominent critics, academics or the wider media? Consider also what the demand is like for the artist, and trends in similar pieces that have sold on the secondary market. All of these considerations are important, and need to be assessed on an individual basis; it’s not always the case that more publicity, representation or exhibitions mean that the artist is a financially profitable investment, but it can be a good indicator.
Investing in emerging artists can be the most suitable price-point for the majority of investors, and yield a higher profit margin over time. They also produce some of the most exciting work, innovating techniques, creating fresh ideas, and giving the collector pieces that are unusual and rarer. Emerging artists can be some of the most rewarding to invest in, as collectors can feel like they are supporting new work and shaping the development of contemporary art, as well as having the opportunity to see the artist’s career and the value of their work grow with time. Buying work from emerging artists also opens up greater opportunities for commissioning new work, as they are typically more accessible, open and affordable for bespoke commissions. As such, Artelier are specialists in finding and collaborating with talented emerging artists. More about what the criteria that we look for can be found here.
If you have a relatively lower budget, investing in artworks by established or blue-chip artists is still possible through prints and multiples. Prints and multiples are a growing market – they are limited editions produced by the artist themselves, and are available at lower prices than more traditional paintings or sculptures. They are typically numbered, sometimes with a low quantity overall – such as 100 – making them desirable to own. They can also be more appropriate for collectors in terms of practical considerations; artists such as Jeff Koons sometimes produce smaller editioned versions of larger-scale pieces, which are more affordable, easy to install, and can be accommodated to more spaces than monumental installations. Prints and multiples can therefore be ideal if your budget is limited but you still want to invest in high quality artwork that will appreciate over time. Bear in mind that with prints and multiples, as with any fast-growing market, there is still the risk of making a bad often ill-informed investment. A common mistake that new collectors make is not understanding the difference between limited and open-ended editions. A limited edition holds far more value because the quantity of artworks is finite, and so all works from that edition will eventually be sold on the secondary market at a higher price point. Open-ended editions can be sold indefinitely and hold far less value and should be avoided when it comes to investment-grade art.
Choosing artworks for your collection should be an engaging process, led by personal interests. Developing and nurturing your taste, honing your eye to quality work, and becoming more knowledgeable in the breadth of artistic practices is part of the unique joy of investing in art, as well as a way to become more astute in the market. Going to galleries, art fairs and artist studios develops these skills, whether you are beginning your journey in collecting, or already have an extensive collection. Our curators can organise tours of galleries and art fairs, tailored to your artistic interests. This service not only helps educate on cutting-edge artists, but also on the mechanics of the art market. As we are not a gallery ourselves, this process is entirely led by the client's personal tastes.
V. The Practical Side – Collections Management
Amidst the excitement of the art market, a less considered but critical aspect is properly managing and caring for the collection. Art collections management is not just for museums: if artworks are to retain their value, they need to be carefully preserved, presented and stored to maintain their condition. This is where the art market – the galleries, the dealers, the auction houses – cannot provide a full service to collectors, and professional art advisors are undeniably important.
There are many considerations and questions to ask at the point of sale, or to work with an advisor who is widely aware of the needs of different art typologies.
What care does the medium need? Does it require special conditions to be preserved? Is it suitable for display outside? Some materials age with time and weather better than others. For example, acrylics can fade in direct sunlight, and bronzes have patinas that change over time.
How should it be stored? Are there any environmental factors that might cause damage to the painting or sculpture such as humidity levels or temperature changes? When storing or presenting highly valuable or historic pieces, avoid areas exposed to direct natural light, strong air currents and vibrations from nearby machinery; these factors can accelerate deterioration of the work over time. Proper maintenance using specialised products will help preserve your investment for many years after purchase; however if left neglected over time some works may require restoration services which can cost vast amounts.
How should the artwork be presented? Considerations such as framing and plinths are not only decorative, but help protect the artwork from damage by people, dust and moisture. Specialist UV glass can also be applied to paintings to protect them, and likewise technical fixings are needed for more unusual installations (such as suspended artworks) or particular environments (like yachts).
An art specialist can advise on these aspects, and arrange for proper care. Depending on the investor’s needs, they can manage the pieces within a specialist art storage facility, oversee necessary maintenance, keep on top of all necessary documentation, and arrange for insurance. Proper insurance is particularly important – the artwork needs to be valued accurately to be covered, and also protected in distinct circumstances, such as shipping, loans, theft, or damage.
If the collector wants to display the artworks in their home, the presentation needs to protect the pieces from the typical demands of a household, as well as being thoughtfully and attractively curated. Location, lighting, and framing can transform the impact that an artwork has within the home, and this effect can be maximised through intelligent curation by specialists in residential art.
Conclusion
Due to the personal, financial and social benefits of collecting art, it is a unique investment opportunity. A long-term strategy that is tailored to the collector’s personal goals is key, and having realistic expectations of potential returns. The best way to have a fulfilling journey in collecting is to purchase what you love, rather than try to predict what will see the most returns in the future. Researching and developing knowledge of the art market, honing your eye for quality, and keeping an open mind for new artists makes the process more engaging, and sound investments more likely.
Working with a specialist art advisor helps to make financially responsible decisions, so that the artworks purchased will at least retain their value, or have the greatest opportunity for seeing profits. Advisors help with navigating the art market, and increasing access to a wide array of galleries, dealers and off market sales. A knowledgeable advisor can spot talent, increasing the possibility that you invest in the next major artist within the contemporary art world. They can likewise support in proper due diligence for sales of modern masters, or historic pieces. Whether you are looking to safely store the artworks or present them in your residence to highlight your collection, this is best organised through a specialist who is accustomed to maximising the potential of your artworks.