With works by Paul Gaugin and Picasso fetching over $100m apiece and auction record seemingly being broken as soon as they are made, art has become increasingly popular as a form of alternative investment.
According to the European Fine Art Foundation’s recent report, art market sales grew to an astounding $51bn in 2014, the highest level ever recorded, and US sales rose to over $27bn. Moreover, the value of auctionable contemporary and post-war art, the largest sectors in the fine arts market, surged from $250m to almost $6bn between 1995 and 2015.
Consequently at least 75% of collectors are now purchasing art with an eye for long-term investment, as highlighted by the Deloitte Art & Finance Report. Given that art fetched online sellers a total of $4.7bn in 2015, this is somewhat unsurprising.
The reality is that many now see the value of art as an investment because it is impervious to economic uncertainties. In comparison to the volatile stock markets, it is a non-correlated asset, unaffected by financial or stock markets. This makes it appealing to those looking to diversity their portfolio.
Indeed, any engagement with the global arts market necessities careful consideration of volatile tends, extreme diligence and a reasonable degree of luck. Art needs to be invested in like a monetary asset if it is to act like one.
To yield a significant RIO, one must painstakingly analyse which artworks are most likely to hold their value. This requires taking into account the fact that art is receptive to tends in fashion and consumer taste- and thus that its market value does not always correspond to long-term monetary worth. Likewise, whilst one can take note of record prices for ‘comparable’ artworks, each artist and artwork is unique, which makes it difficult to predict on future price.
With this in mind, buyers should try to select for individual motivations rather than simply financial profit. When a buyer’s individual interests correlate with those of an artist or movement, the larger collection is far more likely to yield profitable results.
Why? Because art is more than a financial investment. It is a cultural investment. In acknowledging this, engagement with the arts market becomes a far more appealing concept.
As a collector and the founder of the Stellar International Art Foundation, my own experience has taught me that collecting a series of works by a given artist out of genuine enthusiasm allows you to value a collection as more than the sum of its parts.
I have long endeavoured to acquire and commission complete series of artist’s works because together the value of a collection becomes inestimable.
For instance, the Foundation contains a huge array of works, including the entire Maria series by the controversial but brilliant talent, MF Husain. Similarly, we hold the largest private collection of works by Paresh Maity, one of India’s most accomplished living artists. Featuring works that span the full breadth of his career, from his earliest watercolours to the mixed media works he creates today, the Foundation has been both patron and collector. Such comprehensive and far-reaching global collections enable a unique contemplation into the artists and their lives, cultural perceptions, and beliefs. Their significance extends far beyond monetary-worth.
Thus the value of art as a form of cultural expression cannot be underestimated. Comparing artworks from diverse regions of the world enables extraordinary insight into how different cultures view and comprehend the world.
Personally, I hold one should primarily focus on the non-financial positives of art collection. In this view, any monetary profit is simply an added bonus rather than an anticipated end result.
On the other hand, my son Bhanu Choudhrie, who is a second-generation collector, businessman and investor, is likely to argue that one need not come without the other. Whilst he welcomes and esteems the cultural value of art investment, he also perceives the long-term returns on investment for the artists themselves and for the Foundation.
Either way, what remains is that when pondering an art investment, it is necessary to take a step back and take a more holistic view.
Art may prove to be an admirable financial investment, but its value by no means ends there. Whilst paintings may have a price tag, art itself is priceless.