Art can be a satisfying investment, providing both financial and emotional returns. 2009-2010 has seen a solid recovery in the art market. Earlier this year the quick succession of world record breaking prices by Giacometti's "Walking Man I" ($104,327,006; February 2010) and Picasso's "Nude, Green Leaves and Bust" ($106,482,500; May 2010) signaled the emergence of the high end of the market from a relatively short period of hibernation.
Investing in art has multiple benefits, including a low correlation with other asset classes. Economists have predicted that over the coming years a concern about future inflation or the return to financial instability may drive individuals towards increasing their portfolio allocation to art as an inflation hedge. In addition, the competition for art works adds to the inherent scarcity to make art a desirable asset for investment purposes. Whilst anomalies can exist in the art market (as it can in any market), record prices, strong returns and increased institutional buying has sparked significant interest in art as an asset class.
Over the last three years 1858 Ltd has noticed an increased number of clients preferring to buy and sell privately as they seek discreet and impartial advice, quicker transactional turn around and reduced transactional costs. In addition, clients benefit from an extensive due diligence process and secure and transparent transactions.
Buying well is key to successful art investment and is a delicate balance between aesthetic appreciation and financial savvy. In the current market, works from private collections with an excellent public exhibition history are in high demand and occupy some of the top lots by value at auction. On November 10th Andy Warhol’s "Big Campbell's Soup Can With Can Opener (Vegetable)” (1962) will likely make a splash at Christie’s in New York. Last acquired for $246,000 in 1986, the seminal blue-chip Warhol is now valued at $30- $50million. While the prestige of being featured in an exhibition at a world-class institution adds to an artwork’s desirability and value, this is not to say that artworks kept out of the public eye are worth any less. Turner’s masterpiece ‘Modern Rome – Campo Vaccino‘, for example, recently sold for an exceptional price of £29,792,150 to the Getty Museum in Los Angeles after not appearing on the market for 171 years.
Buyers and sellers should always seek an independent and impartial advisor to undertake thorough due diligence at all stages of the collecting process. With an unregulated market, inflated prices and counterfeit works, a good advisor will ensure clients avoid the many pitfalls and potentially unpleasant surprises.
By Viola Raikhel-Bolot, Head of International Advisory at 1858 Ltd Art Advisory; the company provides expert advice to clients seeking independent and impartial advice on all aspects of the collecting process.
Tel: +44 207 590 3112
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