A Guide to Investing in Fine Art
As a first-time art investor, it’s imperative to understand the current global art market landscape. With $64.1 billion in total sales during 2019 and a drop by 22% in 2020 (50.1 billion), the global art economy is slated to bounce back this year. On a global scale, art is comparable to wine; it increases in value as it ages.
Fine art displays a high potential for growth, especially as an asset. This highly coveted market category has significant value that goes beyond personal wealth. The world of art investments is proven to provide significant benefits and similarly, the ownership of the piece of art provides a level of satisfaction by hanging it on your living room wall or in your office.
The United States maintains the lead as the largest market for art sales. The US, together with China and the UK, accounted for 84% of total sales by value. Within the art market, artists are identified by three classifications: emerging artists, established artists, & blue-chip artists. These three sectors serve a major significance to the investor.
Here’s a quick breakdown of the three tiers:
Emerging Artists—defined as someone at the early stages of their career. This is an artist who hasn’t yet established a solid reputation in the art world but has caught the eye of art critics, galleries, & the press. This tier is increasingly attractive to investors as the opportunity to buy work at this level offers the potential for large levels of return on investment.
Established Artists—are names you will recognize in various press articles. Established artists are widely known within the art market on a global level, have a high sales track record, and top tier gallery representation. This tier is a great investment opportunity.
Blue-Chip Artists—Blue Chip Art is any art that’s expected to reliably increase in economic value regardless of the general economic conditions. Artists like Picasso, Rothko, Warhol, and Pollock are all Blue Chip artists. Their pieces sell for well over six or seven figures.
Ultimately, all three classifications serve interest to all levels of investors and bring great value to the global art market.
Why invest in original fine art?
1. Residual value
2. Capital growth potential
3. Diversification
4. Inflation
5. Satisfaction of ownership
Overall, the global art market proves to be a fruitful investment in all three artist classifications. The art market is here to stay and is expected to grow exponentially within the next decade.
According to Maddox Gallery, “The hunger for contemporary art is now insatiable, with a broad spectrum of society desiring to buy and collect works, not only to enrich their lives via aesthetic appreciation but also as a serious investment for the future.”