Passion is the key motivator behind contemporary art investment

29 March 2018|investment |James Nicholls

Passion is the key motivator behind contemporary art investment

Contemporary art investment may be a more emotionally charged market than you first thought. According to new research by Swiss bank UBS, ‘passion’ is the main driver behind art investment, rather than profit.

The UBS Investor Watch Pulse Report was based on an extensive survey of US art collectors. It explored their motivations to collect, their purchase decisions, their attitudes to collecting and their plans for the artwork’s future.

In contrast to the dramatic and lucrative art sales often reported by the media, most art collectors report a very different desire. Passion, rather than profit, is the driving force behind the majority of those individuals surveyed.

What drives contemporary art investment?

Here at Maddox Gallery, we always advise visitors to invest with their eyes and purchase art they are drawn to aesthetically. It seems as though many art collectors agree with us, with 71% of UBS survey respondents stating their interest was driven by “enjoying beautiful things.” In addition to this, 54% admitted that art collecting was a “passion.”

Others reported being driven by more altruistic reasons. UBS found that 32% of survey respondent like to support talented artists, and 23% plan to gift their art to family or charities in the future. In fact, 87% of collectors said they planned for their collections to be inherited.

We’ve discussed previously how art as an investment asset is surprisingly stable in the face of economic turbulence, global conflict and shifting attitudes. The alternative investment asset can also help investors to diversify their portfolios and avoid putting all their eggs in one basket.

Contemporary art investment is rarely a quick financial fix

While “flipping” works is known to happen in the art investment market, the majority of art collectors aren’t in it to make a quick profit. In fact, UBS found that 65% of those surveyed had never sold a single work of art from their collection, let alone made a habit of it.

Interestingly, 25% said they view their collection as priceless, and 41% had never had their collections appraised, so are lacking fair market or replacement value for their collections.

“Collectors don’t apply the same principles to buying art that they would to a typical investment portfolio of stocks and bonds,” said John Mathews, head of private wealth management and ultra-high net worth, UBS Americas.

Indeed, we believe that contemporary art investment is so enticing precisely because of its unique qualities as an asset class. Art can be enjoyed while also holding inherent value, and offers much more pleasure to the investor than stocks or shares can ever provide.

Art investors like to do their own research

The UBS report also found that the majority of collectors prefer to do their own research before investing in contemporary art. While 88% of survey respondents said they don’t rely on art advisors when making acquisitions, most admitted they seek advice from other sources as the “first step in the purchase journey.”

In all, 62% of collectors use galleries to educate themselves ahead of purchasing art, while 50% visit museums. Maddox Gallery welcomes a large number of first time visitors to our central London galleries, and our Sotheby’s-trained art consultants are able to advise, educate and support them throughout the art investment process.

Closer to home, UBS found that 60% of art investors use online resources to conduct research and 44% look to magazines. UBS states that this trend towards using alternative sources “underscores the evolution of the art buyer’s journey and how the industry will need to adapt to keep pace.”

For this reason, Maddox Gallery works closely with Artsy to provide art investors with online access to our works. We also share all of our latest works, exhibitions and other events on Instagram, so our followers can keep up with all our goings on.

Do contact me for advice or assistance with regards to contemporary art investment.

Written by James Nicholls, Chairman, Maddox Gallery,

Art Critic for London Live TV, Patron of the Royal Academy of Arts, Patron of the National Portrait Gallery

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