31.01.2024
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As the new year unfolds, the allure of art as an investment category continues to grow. This can be attributed to the ability of this asset class to increase and maintain value, even in turbulent economic times like the 2020 pandemic. However, a successful art investment isn’t solely about financial gains; it’s deeply intertwined with a passion for the art itself, making it a prestigious addition to any portfolio.
At Timeless Investments, we offer fractional ownership of selected artworks to make this exclusive asset class accessible to all. Invest from as little as €50* per fraction in unique assets and participate in their performance.
The appeal of well-known artists cannot be overestimated in this investment realm. Established names like Pablo Picasso, Andy Warhol, Roy Lichtenstein, Gerhard Richter, Yayoi Kusama, and David Hockney are ‘blue chip’ artists. These artists, recognised for their substantial impact on the art world, tend to maintain or increase in value over time. Their works are also often featured in major museums and have a well-established presence in the art market, which all adds to their investment appeal.
This article, part of our Timeless Guide series, is aimed to provide insights into the world of art investments, offering readers valuable advice on how to navigate this exclusive sector confidently.
Jean-Michel Basquiat – Flexible (1984/2016)
The art market is a complex and multifaceted sector, combining cultural significance with economic value. In 2022, the market was estimated to be valued at around USD $67.8 billion, a compound annual growth rate (CAGR) of 3% from 2021, exceeding its pre-pandemic level.
The art market is generally subdivided into two categories: the primary market and the secondary market:
The primary market refers to the initial sale of new works, either directly from the artists’ studio or through galleries or art dealers, setting the initial value of an art piece. Contemporary art galleries account for a large portion of the sales, with ‘mega galleries,’ like the Gagosian, even blurring the lines between galleries and museums due to the amount of influence they hold. International art fairs, like Art Basel, are also an important presence in the market, accounting for a quarter of the sales worldwide. While art dealer sales reached an estimated USD 37.2 billion in 2022. The primary art market is characterised by its exclusivity, with limited data availability and transparency, making it a unique challenge for investors and collectors. This often leads to a reliance on expert opinions and established reputations within the industry.
The secondary market is where artworks are resold, often at higher prices due to increased demand, scarcity or the artist’s rising reputation. A lot of the sales on the secondary market happen through auctions: either via auction houses or online auction brokerage Auctions accounted for USD 30.6 billion art market sales in 2023, with some of the most famous auction houses being Christie’s, Sotheby’s, and Phillip’s.
Overall, the art market encompasses a wide range of art forms, from traditional paintings and sculptures to contemporary digital and multimedia works. It comprises one-of-a-kind artworks (for example, canvas paintings), multiples, and various types of prints (regular and limited edition) that can be created by the artist or the artist’s estate, among others. In the art market, the price of art is influenced by various factors, including the artist’s level of acclaim, the provenance of the piece, its condition, and current trends in the art world. Art fairs and auctions are some of the biggest drivers of market dynamics, often setting records and establishing benchmarks for artists and genres. The market’s global nature means it is influenced by economic and social trends worldwide, and the rise of online platforms and digital art forms is continually reshaping its landscape.
In 2023, the art market showed resilience amidst economic fluctuations. Auction sales at top houses like Christie’s and Sotheby’s exceeded 2019 levels but marked a 16% decrease from 2022. The art and antiques import market reached a new high of $30.7 billion, with significant growth in the US, UK, and Hong Kong.
Collectors, particularly those from Mainland China, spent an average of $65,000, favouring paintings over digital art forms like NFTs.
Physical buying channels, especially through established dealers and galleries, remained preferred. Art fairs, though experiencing a slight dip, continued as a vital platform. A trend towards overseas galleries emerged, with France and Japan becoming popular choices.
These figures and trends indicate a robust yet evolving art market, adapting to global economic trends and changing collector behaviours. Younger collectors are gaining prominence, and technology is playing an increasingly significant role.
The market also displayed adaptability, embracing new trends and artists. Ultra-contemporary artists, particularly those born after 1975, experienced a surge in demand. Female ultra-contemporary artists gained more representation in auctions, marking a significant shift towards inclusivity. Although abstract art garnered increased interest, figurative works maintained their dominance in both demand and auction results. The market saw over 123,000 artwork transactions, a substantial increase from the early 2000s. There was a notable volume of artworks priced under $5,000, indicating market expansion and accessibility.
Keith Haring – Untitled, 1985
In 2023, the art market’s top auction results showcased both classic and contemporary masterpieces. The auction highlight of the year was the sales of Picasso’s ‘Femme à la montre’ and Klimt’s ‘Dame mit Fächer,’ which fetched $139.4 million and approximately $106.8 million respectively. These sales underscored the continued high value placed on iconic works by historic artists.
Overall, the art market in 2023 was dynamic, adapting to global economic trends and evolving collector behaviours, and showing promise for future growth and diversification.
Some times art scenes transcend mere style, creating cultural landscapes that shape and are shaped by their participants. The 1980s New York art scene, featuring iconic figures like Basquiat and Keith Haring, exemplifies this. In a city grappling with economic challenges, these artists found expression in alternative spaces like Club 57 and PS 122, challenging traditional art norms.
Their work, influenced by street culture, hip-hop, and the issues of their time, showcased a blend of graffiti, political commentary, and vibrant visual language. This era’s artistic dynamism mixed with the impact of more established figures like Andy Warhol, not only revolutionised their individual styles but also left an enduring impact on the contemporary art market.
Investing in art involves a nuanced understanding of various elements that influence the long-term value and appreciation potential of artworks:
Investing in art, although offering significant potential for appreciation, comes with its own set of risks, such as market volatility, authenticity concerns, and the cost of preservation and insurance.
At Timeless Investments, we provide a tailored solution to these challenges through a fractional ownership model. This innovative approach allows investors to own portions of high-value artworks, thereby diminishing the direct responsibilities associated with full ownership while still reaping the benefits of potential value appreciation.
Through our model, investors gain access to a curated collection of art without the complexities of authentication, maintenance, and insurance typically associated with art ownership. Our team of experts handles these aspects, leveraging their extensive knowledge of art history, market trends, and authentication techniques. This strategy not only simplifies the investment process but also opens the door to a diversified portfolio.
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The art market presents a unique fusion of cultural significance and financial opportunity, offering stability and potential for growth and diversification, making it an appealing option for savvy investors. In 2023, the market showcased resilience and adaptability, balancing traditional appeal with emerging trends. The enduring value of blue-chip artists like Picasso and Warhol, alongside the rise of ultra-contemporary and female artists, such as Louise Nevelson, reflects a market rich in history yet responsive to change.
The evolving dynamics of auctions, art fairs, and galleries also play a significant role in shaping market benchmarks and influencing collector behaviours. As the market continues to adapt to new trends and collector preferences, it promises both stability and exciting possibilities for growth and diversification. This combination of historical depth and forward-looking dynamism positions the art market as a compelling and rewarding investment landscape.
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