Is Art a Good Investment?

Art investment could be a significant purchase, and whenever you consider a significant purchase, you should ask yourself, is this a good investment? If you’re just getting started collecting and buying art, it’s natural to ask the same question. 

So is art still a good investment in 2021, what makes it a good investment, and how can you choose good pieces? Read on to learn about the validity of investing in art and how you can get started.

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Does Art Appreciate in Value?

Many artworks do appreciate in value, but like any investment, it’s worth doing some research about your investment. You should be aware that buying and collecting art for financial gain is almost always a long-term investment. 

The art market can at times be stable and see significant returns on investment. However, just like the stock or real estate markets, an art boom market can also be followed by a recession. As with any investment, buying art as an asset can be risky, especially if you have little to no understanding of the art world.

What Makes an Artwork a Good Investment?

There are several factors you should consider when assessing an artwork, all of which will contribute to its future value. Appreciation factors include the rarity of the piece, the notoriety of the artwork or artist, the authenticity and condition of the item, and the cultural significance of the piece.

Rarity

How rare a piece of artwork is will always impact its future value. The rareness of a piece of artwork may also be referred to as the size of the edition. 

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Production of artworks or photographs which are ‘limited edition run’ is always more desirable than mass-production. However, a one-of-a-kind, original artwork will always be worth more than any replica or reproduction such as a giclées or prints. 

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Works created by a prolific living artist are likely to be appraised at a lower value than those created by artists who are deceased and have a finite number of attributed works. 

Artwork from a deceased artist is usually more likely to increase in value because that artist can produce no further artworks. When there is a finite number of artworks available, meaning the artwork is rare, it is more likely to increase in price.

Notoriety

The notoriety or fame of an artist is another indicator of price. Artworks from well-known artists will be more likely to attract high prices. 

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Some artists aren’t well-known or appreciated during their lifetimes, so fame can come posthumously. However, notoriety may also outweigh real skill and talent and raise the value of mediocre artwork. 

If you’re looking at artwork from an artist who is already well-known the prices will already be high when it comes time to purchase. 

Successful art collectors will have “an eye” for finding emerging artists they think will grow in popularity, but whose work is still relatively affordable. 

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Developing an eye for new talent will require a certain amount of knowledge and research about the art world, trends, and popular taste. Not everyone will have the talent to spot the next Jeff Koons and grab themselves a bargain.

Significance of the Work

The significance of the work can determine how valuable it will be. Artwork that is groundbreaking, inventive, and unique will usually grow in value. Artworks that are derivative or unoriginal are more common, and therefore likely to garner lower prices. Understanding, recognizing, and investing in groundbreaking, significant artwork can be a risky game. 

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Artwork that challenges the norm is often poorly received or misunderstood when it first enters the market. 

A successful art buyer should consider the overall and long-term influence of the artist and artwork. So while notoriety is a factor, you sometimes need to look beyond media public recognition to spot a good investment.

Condition

The artwork’s condition, be it a sculpture, painting, or drawing, will always be significant. If an artwork is damaged, it will be worth less than a piece in mint condition. 

Artworks made with high-quality materials are likely to maintain their condition for a longer period. So even if you’re buying a brand new artwork, you should consider how well it will age.

Authenticity

You should always get an artwork authenticated when making a significant investment. An original artwork that is signed or numbered by the artist has more authenticity than an unidentified piece. 

It’s also advisable to review the artwork’s provenance or chronological history of ownership. Provenance is particularly important when buying older artworks. The provenance will provide contextual and circumstantial evidence about the authenticity of an artwork and its original production. 

If you don’t do your due diligence at the time of purchase you may find an artwork’s authenticity is disputed when you’re ready to sell it. Take the time to do your due diligence and research the artwork, artist, gallery, or agent carefully to avoid scams or art forgeries. 

Is Investing in Art a Good Idea?

Buying art is a personal and emotional decision. Even if you’re primarily looking at art as an investment, you should choose something you like if you plan to hold onto it for a while. 

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The art market doesn’t always track with other markets. Art investments aren’t recession-proof, but they often see booms at different times to the stock or real estate markets.

Art is a long-term investment, unlike many other investments. It’s also an asset you can enjoy while you wait out any potential recessions. Therefore, buying art as an investment can be an excellent way to diversify your portfolio. 

However, art investments should always be one part of a well-diversified portfolio. In addition, art is a non-liquid investment, so you shouldn’t use it as a get-rich scheme or short-term investment. It can take a significant amount of time to sell artworks, so art is not an asset you can quickly flip.

Is Fine Art a Good Investment?

Fine art can undoubtedly be a very fine investment. Just look up the sale prices of fine artworks, and you’ll see that they can be a very worthwhile investment.

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In 2021, a painting by the Italian Renaissance master Sandro Botticelli sold at Sotheby’s New York Auction house for a record-breaking $92.2 million. 

Of course, not every artwork will see prices anywhere near those reached by Botticelli’s ‘Portrait of a Young Man Holding a Roundel,’ but if you make a wise fine art investment, it can certainly pay off.

Artworks that are defined as “fine art” are more likely to be one-of-a-kind and rare, both strong indicators of perceived value. Conversely, commercial artworks or “low art” are more likely to be mass-produced, lowering their value.

Is It Worth Buying Original Art?

Original art is always worth more than duplicates. If you are primarily buying art to display and enjoy, there’s no harm in buying giclées or prints. 

However, these replications are less likely to accrue in value. Limited edition prints and glitches can still have collector value, but original artworks will always garner the highest sale prices. 

10 Most Expensive Artworks Ever Sold:

Most art collectors and investors won’t see these sky-high sale prices, but the sales of this artwork certainly show what a lucrative investment it can be.

  1. ‘Salvator Mundi’ by Leonardo da Vinci, $450.3 million
  2. ‘Interchange’ by Willem de Kooning, $300 million
  3. ‘The Card Players’ by Paul Cézanne, $250 million
  4. Nafea Faa Ipoipo, by Paul Gauguin, $210 million
  5. ‘Number 17A’ by Jackson Pollock, $200 million
  6. ‘No. 6 (Violet, Green, and Red)’ by Mark Rothko, $186 million
  7. ‘Pendant portraits of Maerten Soolmans and Oopjen Coppit’ by Rembrandt, $180 million
  8. ‘Les Femmes d’ Alger (“Version O”)’ by Pablo Picasso, $197.4 million
  9. ‘Nu couché’ by Amedeo Modiglianis $170.4 million
  10. ‘Masterpiece’ by Roy Lichtenstein, $165 million

How Do I Start Investing in Art?

Successfully investing in art takes a certain amount of knowledge and effort. As with investing in the stock market, you’ll need to understand how the demand for artworks works and research different opportunities. Art investments are unlikely to be snap decisions, so take your time and shop around to get a feel for what you like and what is worthwhile investing in.

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Do Your Research

Unless you have millions available to spend, you won’t be buying a Van Gogh as your first art investment. Instead, start by researching living artists whose work catches your eye.

Learn more about the artist, their education, their press, commissions, and exhibits. Then, start looking at the art for sale by that artist and their contemporaries and comparing the prices. 

You can visit art museums and art galleries and look for trends in style or artists. Then, speak to the curator and get to know people in your local art scene. Over time, you will start to recognize potential art “movers and shakers” in your area. For example, suppose you see that an artist is growing in popularity on social media, getting more publicity, or being more frequently exhibited. In that case, you can tell the market for their artwork is getting hotter.  

Build a Network

It’s true in life that it’s often not what you know, but who you know. The art world is no different. In an increasingly digital world, it’s never been easier to find artists online and do your own research. But personal connections are still extremely valuable in the art world. 

The right introduction could help you find a hot up-and-coming artist or forgotten gem. It’s well worth the effort to build up your professional art network. Attend events, exhibitions, auctions, and art fairs in the fine art space and network. 

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If you truly love art, this won’t be a chore. Those who succeed in art investing usually have a deep and genuine appreciation for art. If you enjoy spending time at art galleries and exhibitions, networking and researching will come naturally.

Get an Appraisal

If you have a bigger budget for investing and you’re looking at artwork from a renowned artist, be sure to get an appraisal. Look for quality, and do your due diligence to avoid being duped by a fake. 

Buying Shares

Buying an entire artwork allows you to enjoy it while you wait for it to appreciate in value. However, it’s also possible to purchase shares in the artwork. You can do this through an online marketplace or crypto art platforms. 

Diversify Your Art Portfolio

You can diversify an art collection portfolio, just as you might diversify a stock portfolio. Even after doing your research, you shouldn’t put all your eggs in the basket of one artist or artistic style. To mitigate the inherent risks of art buying, you should diversify your art collection.

Try to purchase art from various artists, techniques, styles, traditions, mediums, and historical periods. You may choose a few paintings to get started, then expand your investments to include crypto art or mixed media artworks.

Buy and Hold

Art is not a short-term, buy and flip investing strategy. Investors who see significant returns on artworks can often hold onto them for decades. Many artworks are collected and passed down by families through several generations. 

These artworks are then sold after the artist’s lifetime, increasing their value. Many collectors buy and hold their artworks, that way they can enjoy them for many years and see an eventual return on investment. On the other hand, if you’re just looking to make a quick buck, art may not be the right investment for you.

Explore Crypto Art

Crypto art is a relatively new way of buying art that may appeal to some art investors. You can learn more about crypto and buying digital Art with NFTs here or explore our exclusive luxury crypto art collection.

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Protecting Your Art Investment

Whenever you make an art purchase remember the additional costs and considerations that come with collecting art. For example, you’ll need to store and maintain the artwork properly. Art is a physical investment that must be protected from decay, damage, theft, or fire. Don’t forget to factor in the additional costs such as storage as insurance.

Start exploring contemporary artists and get a feel for what you like before making an investment you can enjoy and benefit from for many years to come.

 

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