It is clear that art is a financially attractive asset class that offers significant opportunities, which explains why the financially astute have been collecting art for generations. Today, art has become especially popular in the current wealth boom as the global rich and cultured professional classes turn to it as a safer, less volatile store of wealth.
The art market grew 252% between 2004 and 2014 or an annual growth rate of 15% (Raconteur, 2015). This was despite the 2008 financial crisis, the worst since the Great Depression, and the tech-wreck of the 2000s. The art market is predicted to boom for the next 10 years (Philip Hoffman, 2013). It showed robustness against potential disruptive forces, the art market: ‘Gained strength from the way in which it swept aside the Brexit blues that engulfed the world’ (Colin Gleadell, The Telegraph, 2016). The global art market reached a total of over $63.7 billion in 2017, an increase of 12% from 2016 (Art Basel and UBS Global Art Market Report, 2018). Furthermore, art tops Knight Frank’s 2017 Luxury Investment Index and has overtaken wine as the best-performing asset class: ‘According to data from Art Market Research (AMR)…the average value of art sold at auction rose by 21%’.
Now more than ever, we are witnessing a positive shift in market paradigms due to the globalisation of the art world and with this a worldwide boom. Countries are spending billions; Qatar is buying the world’s most celebrated paintings, UAE built their own Louvre (over $1.2 billion deal with France) and is building a Guggenheim, South Korea has the most privately founded art museums in the world and China is opening museums at a rate of one a day.
‘The net effect is that more money, from more places, has poured into the art market than ever before, inspiring ever more creative ways to put this capital to work’ – The Art of the Deal, Noah Horowitz
At Elizabeth Xi Bauer our passionate award winning team of international experts, who operate within the greater cultural network, apply the art world’s stringent tried and tested validation procedure on each and every artist and artwork. This recognises artworks of deep intrinsic artistic value and abiding substance by artists with a proven track record and serious exciting potential. Hence, it is the validated art that is a tangible asset of great significance, which operates outside of the financial markets:
‘The volatility of art was lower than equities as well as commodities during the last 25 years…art had almost no correlation with US equities and was negatively correlated with fixed income and real estate investment trusts (Reits)’ – J.P. Morgan
‘Fine art has shown a durable record of price retention and a low correlation to more conventional assets’ – Glenmede Trust
‘Art tends to be inversely correlated to stock market indices’ – The Economist
Sir John Maynard Keynes, one of the finest economists and investors of his time, built up a substantial collection of now priceless artworks including works by Cézanne, Picasso, Degas, Seurat, Braque and Modigliani.
Roald Dahl, the children’s author, bought Francis Bacon’s ‘Study for Head of Lucian Freud’ in 1967 for £2,850 with the proceeds from his book ‘Charlie and the Chocolate Factory.’ It was sold in 2014 at Christie’s for £11.5 million by his loved ones.
Stuart Evans, founder and curator of the Simmons & Simmons art collection, bought Peter Doig’s ‘Iron Hill’ for a few thousand pounds but the value increased so quickly that it was sold for insurance purposes. It was sold at auction for £500,000. Then, a year later it sold for over one million and its current value is now around £7 million.
In ‘Art as an Investment’ 1961 Richard Rush posited: ‘It is doubtful whether collectors have ever been unmindful of the investment value of art’.
Whilst collecting for investment purposes is not our main objective at Elizabeth Xi Bauer, we have explored the financial benefits in our in-depth report:
Art as an Alternative Asset Class
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We have also explored the investment potential of art in our streamlined and focused report:
These reports contain authoritative research discussing the investment potential and financial benefits of art collecting:
Art is a significant asset class
The global art market is booming
Collect as part of a balanced portfolio
The art world’s imperative rigorous tried and tested validation procedure
Art operates outside of the financial markets
Art as a store of wealth in these uncertain times
Art as an effective hedge
An asset that can be passed down to loved ones
We categorically oppose the twin evils of short termism and excessive risk taking; speculators will be turned away.
The services described or recommended in our marketing materials or on the website may not be suitable for all people. You should seek your own professional advice as to the suitability of any such service before you enter into any transaction. The art market is not a regulated market. None of the statements contained in this chapter are intended or should be construed as investment advice. Past performance should not be taken as an indicator of future performances. Therefore, investors may not get back all they invest. Consequently, art collecting for profit should be considered as an asset class only by those who fully understand and can afford the risks involved. We highly recommend that you consult the compliance section.