The art market is at an all-time high, in the middle of a seemingly never-ending period of growth like none we have seen before. What was once a niche community of enthusiasts has evolved into a legitimate global market. As in other investment categories, data can help direct buyers’ attention when investing in art and identify key opportunities. Total worldwide auction sales in 2018 were $19.4 billion, compared to $3.2 billion in 1989, an increase of more than 500 percent. The total size of the art market today, including gallery and online sales, is estimated to be at least $60 billion.
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But a closer look is needed, as the art market consists of hundreds of individual markets that often behave very differently. While the total sales have increased, many segments are not faring so well and often haven’t been for some time. Take the old masters, which have become something like General Electric: an old powerhouse overwhelmed by the market demand for younger, sexier options such as Facebook, Amazon or Netflix.
As more investors have sought to diversify their portfolios with high-performing alternative assets, art has drawn more and more interest in the United States and throughout the world, with US collectors now claiming 36 percent of the art-market share. According to Artnet’s proprietary database (the source for the sales figures in this story), investing in art can be rewarding in many ways. Looking at the past 18 years, Artnet’s index of the 10 top-performing artists produced a 7 percent compound annual growth rate (or CAGR), beating the 3.7 percent for the S&P 500. This growth is apparent, for example, with regard to Andy Warhol’s Statue of Liberty silkscreen, which sold for just $453,500 at auction in 1999 and $3.7 million in 2016.
Andy Warhol’s Statue of Liberty silkscreen.Courtesy of Christie's
Growth in value in the last 10 years has come mainly from the top segment of artworks, those valued at more than $1 million, where a handful of artists such as Warhol and Pablo Picasso drive the entire market. On the other hand, hundreds of other artists present good investment opportunities. Cindy Sherman and Oscar Murillo, for example, don’t get the same attention, but their work is very often just as interesting—or even more so. In 2011, Murillo’s most expensive paintings sold through dealers for $8,500 each. Midway through last year, his average sales price at auction was roughly $113,000, good for a CAGR of 45 percent.
Aside from artists who are not quite in that uppermost tier, there are areas of opportunity buyers can and should get into now, according to the data. Interest has been shifting toward newer work for years. Last year was the first on record in which auction houses sold more lots of postwar and contemporary art (about 109,000) than impressionist and modern art (about 106,000). And while impressionist and modern works still outsold postwar and contemporary works by value last year, the latter category showed a greater year-over-year increase in price: 15.2 percent versus 12.4 percent.
Installation view of Gone, a solo show of works by KAWS at Skarstedt in New York.Jonty Wilde, Courtesy of the artist and Skarstedt, New York. © KAWS.
Hype is also creating new pitfalls and opportunities. After the major slate of New York auctions in May 2019, the artist KAWS—a frequent collaborator with fashion brands such as Dior as well as mass consumer brands like Uniqlo and a symbol of the rising street culture—had actually overtaken the celebrated master painter Gerhard Richter in total auction sales for the year, by a margin of roughly $52 million to $50 million, largely because many more KAWS pieces were sold at auction than Richters (382 versus 125)—though, importantly, at a much lower average price per work. With Richter’s place in the canon of postwar art already secure, this dip in supply may be long-term, in which case investors need to look for undervalued talents.
The data, conveniently, also reveal that female artists are still drastically underrepresented in the marketplace. In 2018, only five of the top 100 artists by total sales value were women. The average sales price for a painting by the top-selling female artist, Yayoi Kusama, was just under $606,000, while the average price for a painting by the top-selling male artist, Pablo Picasso, was $11.3 million. In terms of total sales, the fifth-ranked man, Andy Warhol, generated $23 million more in auction sales than the top two women (Kusama and Joan Mitchell) combined. As society at large recalibrates the balance between genders, many art investors view this value gap as an opportunity.
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FAQs
Unlike stocks or other investments, art does not tend to go up and down in value based on market fluctuations. This was especially true during the 2020 pandemic where other markets fluctuated significantly while the art market remained stable.
Is investing in blue-chip art a good idea? ›
In the art world, "blue-chip art" refers to pieces created by highly recognized and important artists. These artworks consistently sell well, usually at high prices, and are considered a safe investment due to their track record of maintaining or increasing in value.
Is buying art a good investment? ›
Investing in art is not for the faint of heart. Art can be a risky investment. Like fashion, artists and their work go in and out of style, affecting the resale value and return on investment. Art acquisition comes with considerable extra costs, such as commissions and insurance.
Is art a good investment during high inflation? ›
The results suggested that artworks are a better way to preserve purchasing power than financial instruments like bonds, for which cash flows are fixed in nominal terms. At the same time, art has delivered less protection on average against inflation than some other collecting categories.
Why do millionaires invest in art? ›
How To Begin Investing in Art. For high net worth individuals, art provides an opportunity for high returns and portfolio diversification, while also serving as a store of value and a hedge against inflation. Art also allows them to create a lasting legacy and make an impact on the world.
Why is art hard to sell? ›
As an artist, it's very, very personal. We're creating and expressing how we feel and what we see and when it comes to selling a piece of art, it's hard as it becomes a part of you. Selling something for someone else is easy as you don't have that personal, emotional connection that you have with your own art.
What is the best art to invest in? ›
Investing in art by blue-chip artists like Pablo Picasso, Vincent van Gogh, or Andy Warhol can provide a solid foundation for your art investment portfolio. Their artworks often appreciate in value over time, making them a relatively safe investment option.
Is it safe to invest in art? ›
Art can be a good investment for those with the understanding and money to invest in it. That being said, investing in art can be risky, as it is difficult to determine what art will appreciate and how much it will appreciate. Like any good portfolio, art can be a component of diversification along with other assets.
What makes art blue chip? ›
Blue-chip art refers to high-value artworks by well-established artists – artists with a solid reputation for creating art that increases in value over time. Blue-chip artworks usually sell for the highest price at auction houses and become a more valuable investment with time.
Why do people invest in art? ›
By adding art to your investment portfolio, you can effectively diversify your assets, reducing the overall risk. Art investments typically do not correlate closely with traditional financial markets, such as stocks and bonds, which means that they can remain relatively stable even in times of economic uncertainty.
The fact that they feel good and sense a strong connection with a piece is reason enough to buy it. These collectors purchase art that they love, which speaks to them and is a visual expression of what they find meaningful. Great Investment: Art is one of the best and oldest ways to invest your money.
How does art gain value? ›
Several factors determine the value of fine art—the size of the edition (that is, the number of prints the artist makes of one work), the significance of the work, the condition of the print, and whether it is signed and numbered by the artist.
Does art go up in a recession? ›
Investing in Stocks vs Investing in Art During Recession
Investing in art can be a better option than investing in stocks and bonds during times of economic uncertainty. Stocks are liquidated to fight against inflation – but the art market remains steady against these changes.
What not to invest in during inflation? ›
Inflation is most damaging to the value of fixed-rate debt securities because it devalues interest rate payments as well repayments of principal. If the inflation rate exceeds the interest rate, lenders are, in effect, losing money after adjusting for inflation.
Do art collectors make money? ›
There are millions of ways you can make money with art, and art collecting definitely ranks up there. It's a real money-maker if you get the hang of it. Don't miss the ongoing democratization of the art market — start curating your own collection in 2024!
What are the disadvantages of art investment? ›
Disadvantages of Art Investment
This usually takes some time. This usually takes some time. There is some investment risk in that you cannot redeem or sell your holdings on a daily basis, but it is reasonable considering the type of assets you are dealing with.
Is art investment better than sp500? ›
A spokeswoman said: “Between 1995 and 2022, contemporary art has appreciated at a compound annual growth rate of 12.6%, outperforming the S&P 500. S&P total returns for the same time period have been 9%.”
Is buying art a tax write-off? ›
Fine art, original creations by living artists, and collectible pieces may qualify as tax-deductible art when purchased for business use or as a corporate holding. Such artworks can potentially be leveraged for tax deductions under specific circ*mstances.
What is the average return on art? ›
According to Sotheby's Mei Moses Index, which tracked the broad art market from 1950 to 2021, the annualized average return has been 8.5%.
