In case you haven’t been paying attention to the art world lately…
A painting bought by an American man in 1958 for £45 pounds (US$58) at Sotheby’s was recently resold in 2017 for US$450.3 million. Apparently, the man walked into a clearance sale at Sotheby’s, saw a painting he liked, and bought it, not knowing that it was a lost painting by Leonardo da Vinci, the Salvator Mundi (circa 1500).
Stories like these are rare but the potential for such exponential returns is what has led an outpouring of frenzied buyers from the investment world to take big risks in the fine arts market.
Until recently, the world of fine-art collecting has always been exclusive to the mega-rich, impenetrable to the average investor.
Whether you know anything or not about the art world, the fact of the matter is, if you are someone who can walk by a piece of artwork and appreciate its artistry, there is potential for you to make smarter buying decisions for any piece of artistic product out there.
Knowledge is power. So what major disruption has been happening to the art world that should concern you?
1. Online Shift
Traditional art galleries and auction houses had a monopoly on selling art, tightly controlling the selling process to ensure the artists’ work was not sold for too low or left unsold for too long.
Now, thanks to the internet and e-commerce, the market has shifted from catering solely to the traditional art snob to opening up access to anyone with an interest to collect art.
Now, it is the trend for online apps like Letart, Artsy, ITgallery, Uprise Art and our own online app, InstaPaint, to allow people to buy fine art pieces online. Putting up art on sale online allows artists to save money on rent, provides greater exposure, and opens up another way to earn commercial success, in line with the increasing e-commerce trend.
Apps such as Magnus will help add transparency to the process of buying art by allowing you to scan a painting you like and the app will use image recognition technology to identify the price of the artwork you’re interested in buying against the third-party verified information in its database to reveal the true price of a painting.
Still, for the average buyer, knowing what art piece to buy that would make a good investment is still a head-scratching task. Read on for more options to invest in art.
2. Invest in an art fund with low minimums
According to the AMR Art 100 Index, art prices have increased at a compound annual growth rate of 8.0% over the past 25 years.
However, most new collectors don’t realize there are ways to enter the market besides bidding at auction houses or walking into an art gallery in person.
Arthena is a tech start-up that enables investors to put money in various art market sector funds. For a minimum $10,000 investment, anyone can buy into a collection and see their investment rise as the value of the pieces increase. The pieces are kept in fine art storage and loaned out to museums and galleries (for now).
Ideally, investors should work towards owning more and more of a single piece of painting rather than holding onto a minor stake in several paintings.
A risk to keep in mind however, is that art is not a regulated investment. So before jumping head-first into an art fund, newbie investors should ask themselves whether they’re willing to take on the potential loss of an artwork if it turns out to be a fraud. Art is also an unregulated and illiquid asset with volatile performance and produces no income, so make sure you’re not too attached or dependent on the investment.
With this information in mind, what art piece is worth buying? Even with all the new technology allowing price transparency, the availability of online retailers, and now accessible art funds, what kind of art should the regular art enthusiast buy?
3. Follow these art buying tips
For investment into art, art buying expert Patrick Connolly advises that it is best to have an investment time horizon of 10 years or more, and he does not recommend his clients invest in art at all because the downsides outweigh the upsides.
“What you get back is based solely on supply and demand and there are big movements upwards or downwards if there are changes in the economic environment or if particular works or artists come in or out of fashion.”
There are certain tips that art experts like Patrick Connolly recommend, as below:
- Buy art by emerging artists from cutting-edge galleries – this is higher risk, but lower outlay –you get to enjoy contemporary art, while supporting young artists and galleries.
- Buy a piece of blue-chip art – it doesn’t have to be a Da Vinci or a Picasso. “A piece of auction-quality Impressionist or Modern art has the potential to really appreciate,” art investment advisor Erica Waldbaum said. There’s not much risk to buying a blue-chip painting you genuinely like, even a minor work by a master artist or a piece of well-done, high quality art by emerging artists is likely to generate solid returns over time.
- Make sure you really like it – behind the magnificence of masterpieces like the Mona Lisa and Van Gogh’s Starry Night is the symbolic meaning of the pieces. Mona Lisa’s mysterious smile captivating the observer’s attention and Van Gogh’s precision in rendering the exact positions of the Moon, Venus, and several stars on the night he painted the painting both hinted at secrets of inspiration behind the creative minds that created the painting.
With your painting, make sure it represents something significant and powerful to you. “So a strong artwork you enjoy looking at, and really believe in, is an investment that can retain value and grow.”
Blue-chip modern art can be bought at various sources. However the most special paintings are those that have particular significance to the buyer, leaving a keepsake for generations to come.
For those who wouldn’t have the time to write a memoir and want to leave something sentimental and lasting for their descendants, a piece of artwork can convey a thousand words and emotions to their loved ones who wish to honour their memory and their story.
4. Commission your own
Many will find that investing in art is a sinkhole, some find they do not have good enough taste, enough access, or enough information to play the game well.
As a collector, it is almost always better to purchase an A+ object by a second-tier artist, than acquiring a B example by a first-tier artist. Even a well-known artist is also not enough to guarantee a return on investment.
Most art industry experts suggest that you buy a piece of art because you like it, not because you want to get rich. If it goes up in value that should just be a bonus. The best art buys will always be those with special meaning to the buyer.
So, after all these options, the best path to go for the beginning art collector is to commission your own painting with a trusted source. Normally, commissioning your own fine art painting of museum or auction quality would cost thousands or many hundreds of dollars. However, that isn’t the case anymore.
InstaPaint is a service that allows anyone to turn any photo into a 100% hand-painted painting by real artists. The artists are vetted vigorously before they can join the platform and their drafts of each painting have to be reviewed and approved by the customer before it is shipped.
You can upload a photo of a special memory you have or anything you want, choose your own style by different artists, and customize your painting. You will get unlimited revisions on your draft painting before it is shipped, along with free gift wrapping and free shipping. You can also speak directly to your artist on the platform.
Whichever method of investing in art you choose, always remember that art, like beauty, is in the eye of the beholder. What matters the most to the subjective value of a painting is the meaning it holds for the potential buyer. As seen above, the objective value of artwork is difficult to determine even for well-seasoned art experts, due to the vulnerability of art prices to the economic cycle.
Have fun with art and don’t be afraid to make some mistakes when buying and investing in art. As long as you keep to the golden rule of only buying art that truly resonates with you, your purchase was not in vain.
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