Investing in Art
Investing in Art
Investing is art may be one of the oldest forms of investment in the world. For centuries, works of art have been sold to royalty and the well-to-do. With the rise of the middle class, art investment has taken on a new standard which has driven prices on certain paintings and sculptures up considerably. When you consider the works of Van Gogh for example skyrocketing in prices just over the past few decades, investing in art can be quite tempting.
However, it is also considerably risky with no guarantees that you will make good on your investment. As with any investment, you will need to become familiar with the trends in the art world, do your research, and anticipate what might be next so you can buy low today and sell high tomorrow. What follows are some tips on how you can get started and the approach you need to take if you want to maximize your chances of success.
The Great Works are Off Limits
One aspect of art investment that keeps out almost all those who want to enter the field is that a large portion of the heralded works of art, such as the Mona Lisa or Statue of David for example, will never be put up for sale. They are either the property of museums and will never be sold or they hang in private homes of the extremely wealthy, who will almost always never sell them on again, unless forced to sell the art through bankruptcy or estate sale.
This means that with investing in art, you are really banking on newer, less recognized works that you hope will increase in value one day.
Appreciating Value: Investing in Art
One major consideration for investing in art and sculptures is that it is a physical object, not at all unlike real estate. While stocks may go up and down on the whims of the market, art tends to be somewhat more stable and predictable in nature. This means that most of the time the art will appreciate in terms of its value.
Of course, that is not always the case. The usual culprit is a flood of similar art on the market which tends to depress prices. In other words, be wary of jumping on a hot trend in art in which many people are participating and the supply is extensive.
Investing in Art is a Long-Term Proposition
Art investing is not like flipping houses where you find a bargain and then make a killing in the matter of weeks or a few months. Instead, you should look at investing as a long-term proposition that reaps benefits several years from now. The average turnaround for most art investments is 10 years, so you should expect to wait at least that long before the art you purchase rises considerably in value.
Of course, there is always the occasional steal where you might find a valuable work at an estate sale or other venue. But for the most part, expect to wait a long time before your art investment really pays off.
Risk of Investing in Art
All investing involves some form of risk and art is no different. What makes art different from most other forms of investment is that the whims of the marketplace often have little to do with the economy. Just because times may be rough does not mean that art drops in demand. When you consider that those who are willing to pay the big bucks for art are generally sophisticated investors, your investment might pay off even in troubling economic times.
Of course, the risky part is that some of the factors which help determine the price may not be all that predictable. This makes getting into art investment difficult for those who are not comfortable with this type of environment.
Start Small, Build Your Way Up
The best way to start investing in art is to visit the local galleries in your community. Get a feel for the artists whose works are selling. And set a reasonable budget to get going. Always remember to only spend the money that does not affect your other purchases or obligations. Art purchases are relatively illiquid long term strategic investment to diversify an already established portfolio.
Tips for investing in art:
In addition to what you purchase, keep in mind the maintenance and storage costs for your art. Paintings must be protected from UV rays and damaging indoor air pollutants if you want them to maintain their value. Even sculptures made of marble or other hard stone will need to be cleaned and protected if you want them to maintain their value.
Expand Your Knowledge
The more you know, the better the decisions you can make about what to purchase. This means talking to curators, speaking with other art investors, and looking over the general trends in art that are prominent today and may become more popular tomorrow.
Have It Appraised
Once you have spotted art that you feel has potential start the process of understanding the cost of the work. Having the art appraised by a professional is a good way to understand both its monetary value and overall quality.
Buy Shares in Art
Remember that you have the option in some cases to purchase shares of art, not the entire work. For those on a budget who want to minimize their risk, buying shares can be a crafty strategy. Just realize that you are not going to make a big profit when you only own part of a work.
Keep Art Investment in Perspective
If you are considering art as investment, it should only be a small percentage of overall portfolio. This is because of the unpredictable nature of the art market and difficulty in selling for a large profit. Instead, view art as an extra asset to your portfolio.
It is true that investing in art can be quite risky. However, if you have done your research, have a strong love for art, and can be alert to potential opportunities, then such an investment can be considerably profitable.
Alexander Bentley leads Remedy Investments™ a private equity fund specializing in operational real estate. Remedy Investments™ has significant expertise in developing Luxury ApartHotels across Europe and the wider APAC region.
Alexander Bentley is the creator & pioneer behind Remedy Wellbeing Hotels & Retreats. Under his leadership as CEO, Remedy Wellbeing Hotels™ received the accolade of Overall Winner: International Wellness Hotel of the Year 2022 by International Rehabs.
Because of his incredible work, the individual luxury hotel retreats are the world’s first $1 million-plus exclusive wellness centers providing an escape for individuals and families requiring absolute discretion such as Celebrities, Sportspeople, Executives, Royalty, Entrepreneurs and those subject to intense media scrutiny.