We regularly welcome visitors to our galleries who ask us, “is art a good investment?”
There’s more to the answer than a simple yes or no – so let us explain more.
Art can be considered a luxury asset, or a passion asset, along with the likes of cars, wine and jewellery. These collectible items have real tangible value, and allow investors to “put their money where their heart is,” as Paul Sullivan recently explained to the New York Times.
Art topped the ten leading luxury asset classes in Knight Frank Luxury Investment Index 2018. Reasons given for the popularity of luxury assets include asset diversification, capital appreciation and the simple joy of ownership.
Buying works by blue chip artists like Picasso demand an enormous budget. However, it’s entirely possible to buy art as an investment within much more modest means.
Maddox Gallery Editions, for instance, sells limited prints by exciting contemporary artists such as Dan Baldwin, Marc Quinn and Joe Webb. These works are affordably priced and provide collectors the opportunity to acquire works by their favourite names in the market.
Just as the prices of artwork can vary hugely, so too can its potential to increase in value. Works by established arts such as Andy Warhol or Banksy are generally expected to steadily increase in value, or at least hold their value over a period of time. In contrast, works by emerging artists can increase in value far more dramatically if their star rises in the future, although this trend is not as reliable.
Collectors can therefore pick their level of risk and reward, opting for potential high growth with emerging works, or slower but more consistent growth with established names.
Art is a good investment in terms of stability. Historically, the art investment market has remained relatively stable throughout huge changes in economic, social and political circumstances, which has seen conventional asset classes such as gas and oil spiral in cost.
Part of the reason for this is that art is not directly tied to major economic markets, and so retains its value while commodities fluctuate.
We advise all our visitors to invest with their eyes, and choose artworks that speak to them on a personal level. In our mind, art is a good investment if it brings you joy, and this is a quality which naturally varies from person to person.
Part of the beauty of art as an investment is that it has a tangible and subjective value; beauty really is in the eyes of the beholder, and a collectors’ appreciation for a work is something that few other investment assets achieve.
There’s no one-size-fits-all approach to art investment. As a result, we encourage budding art collectors to explore the market, find works they love and learn about their favourite artists to inform their purchase. Our Sotheby’s-trained art consultants are on hand at each of our central London galleries for this very reason.
Approaching art as an investment can be complicated due to the way market trends change.
Artworks by Basquiat and Warhol, for instance, have seen incredible returns on investment over the space of a few decades. Other emerging artists and photographers, such as Harland Miller and David Yarrow, have doubled or even tripled in value the space of a year or two.
Changes in an artwork’s value often depends on the creator’s changing reputation within the art world, and this isn’t something that moves at a set pace. For this reason, buying a piece of art as an investment doesn’t provide fixed returns.
Art is a good investment to enjoy in the home, providing aesthetic worth while it accrues in value. Conversely though, if a collector chooses to realise their value, artworks can take more time to sell than liquid assets such as stocks and shares, as it cannot be split up and sold to multiple buyers.
For this reason, we advise collectors to buy artworks they love and will enjoy owning over a period of time.
We’re proud to share our knowledge and passion with gallery visitors every day. Pay us a visit in central London, Gstaad or Los Angeles to start the conversation and discover amazing and highly investable contemporary talents.
Written by James Nicholls, Chairman, Maddox Gallery.