Artelier Art Consultancy is a full service art advisory and consultancy with international clients and offices in London, Bristol and Dubai. Our team of art consultants can work seamlessly with both private individuals and corporate brands such as hotels and retail spaces. We work with clients interested in art for interiors as well as those looking for investment-grade pieces. Discover our insights on the pros and cons of investing in art this year.
In this article we will dive straight into why investing in art might be a good decision. We will cover how to invest in your first artworks, the benefits of doing so, and why many investors are increasingly showing an interest in art. To present a balanced view we will also discuss some of the risks involved in investing in art and offer advice on how to protect your investment. So is art a good 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. The first factor to consider when deciding to invest in art is that the art market is far more stable than the stock market. This is particularly good news for those who are risk-averse, helping to diversify your portfolio if you also have investments in the stock market. Additionally art will naturally retain its value over time as collections from deceased artists will naturally dwindle due to theft, damage or fire making the surviving works more rare and valuable.
When deciding whether to invest in art it is important to know that there are certain criterias which make a work ‘investment-grade’. One way to determine art that has investment potential is to look at the attention the artist has received in the media, from museums, academia and the general public. There is a direct correlation between the two as the more people know of this artist and their work the more it will be sought after which creates a situation where there is far more demand than supply of original works, increasing the value over time. An example of this could be the renewed interest in Van Gogh’s work since films like ‘Loving Vincent’ and special VR experience were created, this would have had a direct impact on the value of his works around that time.
Finally, the next factor to consider is that art is always considered a long-term investment. It can take years for an artwork to appreciate significantly in value. Art is therefore not the type of work that you should purchase for a quick profit as you may do when buying and selling on the stock market. . 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. Art is therefore often considered to be an excellent asset to be passed down to the next generation as part of an estate.
How to Invest in art
The first step to investing in art is to decide the type of art you would like to invest in. This should be an enjoyable and fun part of the process. Most art genres will have investment grade works, it is therefore about identifying your own personal tastes and interests, learning about art history and identifying a time period or style that interests you.. You can then begin to familiarise yourself with the artists who worked during that time period or in that style. Working with an art advisor to provide you with gallery tours, and to help you understand these different genres may be valuable.
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. If you haven’t hired an art advisor yet this is definitely the time to get a professional involved. For a comprehensive list of art advisors have a look at ourTop 40 Art Advisors of all time article where you can find the best art partner for your needs. A good art advisor is someone who can help you navigate the art market, ensure a fair market price and curate a selection of pieces that match your budget and interests.
Buying a piece of art is always considered a long-term investment, it is therefore important to purchase the highest quality artwork that you can afford. Before making a purchase consider the different ways a piece of art may appreciate in value over time. Most art professionals will consider the rarity of the piece, the notoriety of the artist, as well as the work’s authenticity and condition. Having a good understanding of the progression of an artist’s career by looking at the attention received from the media and academia also gives a clue to the works’ investment potential.
So once you have identified the type of work you are interested in and the type of artist that is likely to yield a good return on investment, the next step is to acquire a piece. There are many avenues to acquiring a work you can do so through online auctions, specialist art dealers, art investment funds or even buying a few shares in a particular artwork. Working with atrusted art advisor will be crucial for most especially first time art buyers in order to ensure that you get a fair price, the piece is properly authenticated, and that the shipping and handling is a smooth and seamless process. If purchasing on your own always make sure that you have the piece authenticated by a trustworthy third party before making the 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?
If you followed the steps previously mentioned, you should have a good understanding of the type of art you are interested in buying. Once you have identified works that may seem of interest to you, it is important to do your due diligence in order to make sure that you are getting authentic pieces with real investment potential. Working with a dedicated art advisor will allow you to have a better understanding of the artist’s market value. Factors a professional advisor would consider may include the condition of the piece, its provenance, auction records and authentication documents to state a few.
You want to make sure that all of these different aspects mean a clear paper trail, that it is generally agreed by the art world that the piece is authentic and that the artist’s pieces have steadily appreciated over time. It is important to consider all these factors before agreeing to a purchase and to not succumb to any pressures by potential sellers.
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:
An artist 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:
Artists who are well recognised, have made a name for themselves and command higher prices for their work, they may still be working or deceased.
Blue chip artists:
These are the biggest name in the art world, will usually be mentioned in art history books all over the world. They are usually deceased and often pioneers of a particular art genre.
Which type of artist you invest in will be directly linked to your budget, and it is therefore important to have realistic expectations. Emerging artists offer a higher risk as it is very difficult to tell which will become household names, but you are catching them at an early point in their career, they are therefore the most affordable. Blue chip artists offer a lower risk but also a lower potential return as they are already well known and extremely sought after. The investment for a Blue Chip work will also be significant and reserved only for the wealthiest individuals. Lastly Established Artists sit somewhere in the middle offering a good balance of risk and potential return, this is where most people will start their investment journey.
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.
Art is considered a ‘non-liquid asset’ which means that it cannot be quickly exchanged for cash, you should therefore aim to spend an amount that is comfortable. 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 thetop art advisorsin the industry by genre which may help you in making an informed decision.
In Conclusion
There are many benefits to investing in art, however it is also important to understand the risks involved. First discover what type of art genuinely moves you, if the investment doesn’t work out you want to be left with pieces you truly cherish. Seek out the help of an expert in that particular art genre, most art advisors work to an hourly fee or a percentage of the sale price. Finally believe that you can do it! It is a brave but worthwhile adventure to invest in an artwork enjoy and trust in the process.
If you're thinking of investing in art you can have a look at Artelier’s dedicated art investment page, orsimply get in touch with ustoday for a free consultation. We would be happy to chat and answer any questions you may have about art investment.
