Todd Nesnick
According to reports by the world’s most prestigious art fairs and auction houses, the fine art market skyrocketed in 2022, exceeding the pre-pandemic levels. While global political issues had their effects on the art market, it remains attractive to investors.
There are many reasons why you might want to invest in fine art. For example, you might want to diversify your assets to decrease risks and balance your investment portfolio. However, entering the fine art market for the first time might be challenging for someone who has previously dealt only with stocks or other forms of investment. So, where do you start?
Investing in Fine Art in 2023: Things You Should Know
Types of art you can invest in
First and foremost, you have to familiarize yourself with the types of art you can invest in.
At the very top of the hierarchy, there are Old Masters or artists who have become household names. These include Raphael, Da Vinci, Michaelangelo — you name it. Their works are incredibly difficult to acquire since they are extremely expensive, and there is only a very limited number of them.
“Blue chip” is a term used to describe established and renowned artists, for example, Picasso, Warhol, and Basquiat. Blue chip art is a great long-term investment because it will always be valued by collectors and art lovers.
Of course, one cannot leave out emerging artists. Many rightfully argue that investing in an artist who is yet to earn recognition is risky. However, there is always a chance that someone with a good eye for talent might discover the next great artist.
Investing in art: where to start?
Now that you are familiar with the available options, you must plan your further actions.
Researching the state of the market is very important whether you are dealing with art, stocks, or other types of assets. To create a profitable investment strategy, you have to understand what art sells best these days. Taking note of the tendencies and making educated predictions for the future will increase your chances of success.
The art market is a vast ecosystem that, at first, might be difficult to navigate without guidance. This is why it is highly suggested that you opt for help from professionals. Whether you decide to hire a professional art appraiser or talk to a trustworthy art gallery manager or representative of a reputable art logistics company, the insights you will receive from experts in the field will be invaluable.
Having your budget in mind is also crucial during this stage. While for the longest time, the art market was regarded as something only the wealthiest people can afford to dabble in, the current situation is different. Once again, consulting your adviser will help you find an option that fits your budget.
Outright ownership vs. fractional investing
When thinking of investing in fine art, what do you imagine? Most likely, your mind goes to physical ownership of a piece with all of the consequences that follow it, including appraisal, storage, etc. However, these days it is not the only available way to invest in art. Fractional investing is by no means a new strategy, but not many know that it is also applicable to the art market. There are firms that help investors diversify their portfolios without needing to buy shares in multiple stocks.
Advantages and disadvantages of investing in art
To make a well-informed decision, you need to weigh out the pros and cons of investing in fine art.
Advantages
The art market does not depend on stock markets or exchange rates, which means that the value of your art collection is unlikely to be influenced by external forces. Those factors make fine art a great long-term investment.
As it was mentioned before, investing in art could help you diversify your portfolio and, in turn, mitigate the risks.
Disadvantages
The possible disadvantages of investing in the fine art market include its low liquidity. You might not be able to sell your collection fast for various reasons. To liquidate art, you need to get it evaluated by professionals, and appraisal usually takes time. This is not to mention that looking for buyers might be challenging as well.
Moreover, physical art requires maintenance: artworks that are not stored or preserved correctly can get easily damaged and lose their value as a result.
The art market in 2023: what to expect?
Leading experts in the art industry forecast an increase in the middle segment market, leading to more lower-priced pieces of art appearing at auctions. There are grounds to believe that the demand for female artists and narrative-driven art will reach new heights. The influence of Asian countries, especially South Korea and Japan, will continue to grow, with local art sales hitting record numbers.
The modern-day art market is fairly diverse, with promising opportunities for any budget or end goal. Keep in mind that investing in fine art not only gives you a way to build your savings over time but also makes you an owner of something truly special — a unique piece of art.