Despite the covid-19 pandemic, the art market is attractive. But why invest in art? And how to make this investment a success? Overview.
The art market is growing strongly.
More than 1000 years old, the art market has long been a financial investment reserved for the richest. It has become much democratized in recent decades, mainly thanks to better information for investors via the Internet.
This strong growth in the art market is also because it is a market with attractive profitability.
Banks and investment funds are also turning to the art market, not just individuals.
The development of the museum economy
In recent years, the number of open museums around the world has grown steadily. Indeed, more museums were opened between 2000 and 2014 than during the 19th and 20th centuries combined. This is called the development of the museum economy.
This trend also strongly encourages the growth of the art market. Indeed, these new museums have to buy many works, between 4000 and 5000 pieces on average.
To attract as many visitants as feasible and generate profits, they are now ready to spend millions on work. Another important point: these museums hardly ever sell their acquisitions. All this, therefore, pushes the prices of the art market upwards.
Investing in art: why it's interesting
Investing in art can be a handsome investment. During the first quarter of 2021, more than 112,000 works of art were exchanged around the world. With the health situation and the global pandemic, online sales have increased by 106% in one year.
The art market is independent of stock market values. It has withstood all the stock market crises that have taken place since the early 2000s, and it has performed better than stock market investments. This is why it is attracting more and more capital.
One rule prevails in all cases: it is essential to invest long-term to achieve good profitability. Indeed, as it is difficult to predict the evolution of the price of work precisely, it is necessary to invest in the long term to smooth any variations in the market.
How to succeed when investing in art?
To make your investments in art grow, it is essential to respect specific rules. Here they are:
Traceability
The first essential criterion to take into account when investing in art: the authenticity of the work. Do not buy anything without a certificate of authenticity from the gallery or the expert representing the artist.
The artist's choice
It is interesting to focus on works created by a listed artist. That is to say, an artist whose at least one work has already been sold during a public auction and who therefore appears in a sales catalog. You will be able to have more certainty about the existing demand in the market.
An artist is considered to have excellent average sales when he sells between 30 and 40 works per year. In terms of unsold, the average unsold rate is, instead, around 30%. Ideally, therefore, aim for an unsold rate that does not exceed 50%.
Finally, it is recommended to choose an artist who sells well internationally. Observe especially if the artist's works sell well in London and New York, the two cities which generate more than half of the art market.
The format of the work
It is recommended to favor works more suited to apartments. You will be able to resell them more easily because collectors will keep these works in their homes.
Ancient, modern, or contemporary art
For individuals, ancient and modern art (works produced before 1945) is less attractive. Indeed, the prices are exorbitant: finding a quality job for less than 5 - 10 millions.
The contemporary art market (works produced from 1945 to the present day) is the most dynamic segment of the Art market, particularly to NFTs.
Finally, drawing and photography deserve your full attention. You can acquire Abstract Art London by famous artists at lower prices.
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