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Investing in Art
Be Realistic - Art is a long-term investment. Thus, it can take years to have your art piece sold at auction.
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In the mid-90s, an M F Husain work could have been valued at INR 100 thousand. Today, a typical M F Husain work is valued at a minimum of INR 5 million. In fact, recently, an oil painting called the ‘Voices’ by M F Husain was sold for INR 184 million at an online auction. So, is art a good investment? The above number definitely suggests so.
Every financial advisor suggests that a well-diversified portfolio is key to accumulate long-term wealth. Today, many long-term investors are probing beyond the conventional asset classes and investing in different, even exotic, asset classes. One such investment class that is increasingly gaining popularity is artwork.
The Art Market outperformed the stock market back in 2018. And, according to a 2020 report by Art Basel and UBS, the art market is now worth $64.1 billion.
While art pieces earlier simply adorned the walls and spaces of a room, today, it can multiply in value by simply existing in your care and also adding value to your home. And, it has been gaining gradual acceptance as an investment in India.
For example,In June 2010, Raza's painting, 'The Saurashtra', was sold for INR 160 million, an extremely high price from what it was purchased at originally in the early 1980’s
According to Art Market Research, the price of art has risen over 1,000% in the last 40 years. Recent years have shown a consistent rise of 25% and more. Evidently, beauty doesn’t exist solely in the eyes of the beholder — the market has jumped in and attached a claim to its value; turning the eyes of many long-term investors.
What is Fine Art and Why Are People Investing in it?
When you think of fine art, famous names like Picasso or Van Gogh come to mind. However, fine art is more than that. Fine art includes just about any creative pieces with an artistic expression such as paintings, sculptures, photography, collectables, and even fashion pieces.
Today people are drawn to the art industry because it is impressively resilient. Over the last few decades, there have been many other periods of recessions, pandemics and unpredicted events which have sent shock-waves through the stock market but the art industry has always recovered.
According to a Statista report, the global art industry was valued at $67 billion in 2019, a jaw-dropping contrast to the art market’s evaluation of $39 billion in 2008. Art does not correlate with the stock market. It can go up in value even when the market crashes, making it a good diversification for an investment portfolio.
Does Art Investing Pay Off?
Investing in art is more of a calculative decision rather than just having a passion for art. Art is a source of investment that can yield a handsome return in time and rightly so; it does.
For example, let’s consider the Jim Crow (1986); demonstrated in the Artprice list of the best-performing art stock sales of 2017. The buyer sold the item for 130 times their original investment after holding the piece for 25 years.
Whooping returns such as these are why the global fine art market is inundated with buyers looking to capitalize on the next big hit. Sales like these are rare. However, you can achieve this too with planning and thorough research of the art’s historical and cultural significance.
Useful Tips For a Beginner Art Investor
- Be Realistic - Art is a long-term investment. Thus, it can take years to have your art piece sold at auction.
- Do Your Research - Investing in art isn't something you should do on a whim. Instead, study the market to know what you can expect from your investments.
- Consider Hiring a Professional
The fine art market is like an exclusive club; an art consultant or art investing consultant can help you enter the market and keep you from making dud purchases.
- Look Beyond the Purchase Price
Remember to factor in the additional costs that come with the artwork. This includes framing costs, sales tax, auction fees, storage costs, etc.
Art investing holds the potential for substantial financial returns. However, most investments come with some form of risk, and art is no exception. With that said, with some thorough research and consultations you get to invest, while flaunting that beautiful piece and decorating your spaces with sme cultural pieces at the same time.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.