For a long time, the world of art purchases was closed off and limited to those “in the know”— the rich, elite, and those with access. Though art markets—places where art is created, traded, and sold—have existed for centuries, most people weren’t familiar with the ins and outs of art purchasing and investing.
Things have begun to change. In 2020, worldwide art sales reached an estimated USD 50.1 billion, and much of that amount was driven by online art trading, which in itself was accelerated by the Covid-19 pandemic. The Internet is creating opportunities for artists to earn a fair price for their art, and it’s also made it possible for anyone to become an art investor.
What’s so great about art? Why do people invest in it? Read on and find out more.
A history of art investment
Many great and wealthy organisations and individuals have served as patrons to talented artists. Their purchases and commissions of customised art have appreciated over decades. Take Da Vinci’s Mona Lisa, for example. The famous painting, thought to have been a commission by noblewoman Lisa Gherardini and her husband, is now worth USD 3.3 billion per year to the French economy.
Investors have traded art for centuries. The Stockholm Auction House, the first auction house of its kind, opened its doors in 1674 to buyers seeking rare art and goods. Sotheby’s opened in 1744, and Christie’s opened in 1766. And they still remain open until the present day.
Art is an investment that can be passed down or gifted to family members. The artwork accrues values over generations, and it can become so valuable that people try to steal it or replicate it. The plot of Wes Anderson’s film The Grand Budapest Hotel revolved around the theft of a priceless painting, “Boy With Apple”. Real art heists have happened throughout the years; Gustav Klimt’s Portrait of a Lady disappeared in 1997 and only resurfaced again after nearly two decades.
Recently, you may have heard about crypto-art investing or “NFTs” (non-fungible tokens). This is a new, digital form of art investment that mainly happens online. Artists like Beeple, Grimes, Azealia Banks, and even the creator of NyanCat have earned hundreds of thousands of dollars by selling their art on online platforms.
Is a purchase of art automatically an investment?
People may purchase art simply because they like how it looks, or because they want to use it as home decor. In modern times, some people collect artbooks, comics, or fanart of pop culture. You don’t have to own a Van Gogh piece to be considered an art investor!
According to Barclays, art is similar to precious jewellery, automobiles, precious metals, and wine. These are all classified as “treasure assets”—they hold deep meaning for their owners, and people who buy them may not necessarily do so to gain a return.
Art is a medium- to long-term investment, and in most cases, you’ll need to wait for the purchase to appreciate. A work by a deceased master, for example, is one of a kind. It’s original, and there will never be another like it. This limited supply helps to drive prices up in the long term.
If you have purchased artwork in the past, take good care of it. One day, it may become a valuable asset for you.
Why invest in art?
Some people invest in art for personal pleasure. They might be a loyal fan of a specific artist, for example, and the pieces they purchase just make them happy. Or, they might experience joy from getting something that is limited edition. People might purchase art for the same reason they purchase sneakers or luxury bags—it is a passion and hobby that happens to be financially sound.
Others see art investment as a method of diversification. Diversification is a risk management strategy. By mixing a wide range of investments and asset classes, investors reduce their exposure to risk. Diversification can lead to higher long-term returns, and it helps balance out the risks and volatility from investments like equity.
Art also serves as a hedge against inflation and economic challenges. The value of art is less susceptible to external economic conditions. A portfolio that includes art is more resilient against recession, inflation, currency devaluation, and more.
What does the art market look like now?
Though the traditional offline markets for art remain, the times are beginning to change. Art auctions and auction houses can be a very obscure world—one difficult to enter for those without connections. In-person activity conducted in these venues has also reduced due to Covid-19 travel and gathering restrictions.
As a result of both the pandemic and shifting attitudes, online art markets have emerged as an alternative. Websites like NiftyGateway are a great place for young investors to test the waters of art investment. Online sales—especially of Crypto Art and NFTs—reached record highs in 2020, reaching USD 12.4 billion and doubling in value from 2019. In just a year, online art sales have also successfully claimed a 25% share of the global art market’s total value.
Online art markets are much more accessible to the general public; they aren’t only for the rich and wealthy. Thanks to the Internet, anyone can create an account on an online investment platform and begin their investment journey. In the future, we are likely to see many new kinds of investors and a completely unique and creative market for art.
People have sold unique GIFs—moving images or animation—for thousands of dollars. In some cases, they sell for even more. A 10-second video clip titled “Crossroads” by digital artist Beeple sold for USD 6.6 million in an online auction in February 2021. In the future, it may be worth hundreds of millions.
How can I get started?
Any purchase of art—and, indeed, many treasure items—can become an investment. You can begin simply by collecting merchandise or seeking out online art marketplaces.
Everest Gold will soon be expanding its product offerings in the near future. If you’re interested in investing in art in a convenient and accessible way, keep your eyes peeled on our updates and announcements, and download our app from the Apple Store and Google Play Store.