Art Thrives as the Star of Alternative Investment Classes
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No form of alternative investment is totally free from external influences, but right now art is looking like an interesting option to consider when it comes to finding a safe vehicle to put your money into.
The global financial crisis brought many of the world’s markets to its knees – many of them are only just starting to truly recover. The art world, however, remained largely resolute, with art investments proving both popular and successful. Indeed, in 2011 the Fiscal Times put art atop its list of 10 recession-proof investment vehicles.
According to the Fine Art Fund Group, 20 years ago a mere five per cent of the world’s wealthy people owned art. Despite the worldwide economic crisis, that figure now stands at almost 15 per cent, showing that the market has continued to attract investors even over the past seven turbulent years. Moreover, it predicts that this figure will rise to 40 per cent in 20 more years.
In total, it is estimated that $10 billion is spent every year on art and, importantly, these purchases are not just made by people looking for an exquisite piece to hang on their wall; a great many of them are done primarily as a financial investment.
In 2015 alone, records have been broken on several occasions, both for the largest amount ever spent on an individual piece of art at auction – Pablo Picasso’s Les Femmes d’Alger selling for $179.4 million in New York – and for the most generated by a single auction, with the four-day Christie’s auction that featured the Picasso painting achieving sales of $1.7 billion.
A global affair
There are regular hot spots where one would assume the art market has thrived, the likes of London, Paris and, as mentioned, New York. However, the burgeoning wealth found in emerging markets such as the United Arab Emirates, Mexico, China and Brazil is making art investment an increasingly global affair.
Art does not just increase its value at a healthy rate – assuming, of course, that the art is of sufficient quality – but it also carries with it a particular status. As such, in places where individual wealth is a relatively new arrival, art ranks alongside sports cars and large properties as the must have items to show-off one’s bank balance. This means that as money flows into developing nations, demand for art will likely increase, thus pushing prices higher and higher.
In much the same way that wealthy investors from the Middle East, Asia and Africa have been snapping up luxury property in the world’s most desirable places, so too have they been buying works of art by the world’s best known artists.
Emerging trends in the art world
However, it is not just the buyers that are coming from new sources, it is the art itself. African art in particular has started to create waves within the art investment world and looks set to welcome an influx of money in the coming years.
As Business Daily Live noted in an article in July 2015: “African contemporary art is increasingly attracting attention, thanks in part to a rising western interest in multiculturalism, and a hunger for new material and markets.”
As well as African art now being featured in prominent British and US museums and auction houses, this year will also see the debut of the first contemporary art and design fair in Paris to be dedicated to African contemporary art.
So while steady and reliable, the market is inevitably evolving; both the art buyers and the art itself are steadily changing to reflect the more global alternative investment market. This in turn is leading to broader opportunities for potentially lucrative art investments.
Art has clearly established itself as one of the most reliable investment options. Not only will it appreciate and rise in value as the global demand to own art increases, but while its stocks go up, the art can also be enjoyed in the investor’s home, making it a unique alternative investment vehicle.