Art2Vu

Current market instability highlights the need to consider investments that have been shown to yield healthy returns and retain their value over the long-term, inspire original thought, increase problem solving, boost self-confidence, encourage social networking and improve worker reliability, thus stimulating productivity and economic confidence.

The art market has become comparatively transparent allowing access to auction prices, construction of indices and more accessible information. Art has arrived as a new asset class. The art market has become international, its benefits to our collective heritage are potentially priceless and permeate the globe.

 

Hirst, Damien (*1965)

Nationality: British YBA

Return: 100 EUR invested in 1997 would have an average value of 658 EUR in June 2007

Ranking Top 500 Artists: 2006 No.57

Gallery Representation:

Corporate Patrons: Deutsche Bank

http://www.deutsche-bank-art.com/

Warhol, Andy (1928 - 1987)

Nationality: American

Return:100 EUR invested in 1997 would have an average value of 534 EUR in June 2007.

Ranking Top 500 artists: 2006 No. 2

Gallery Representation:

    

Corporate collectors can pour considerable investment into research of emerging artists and expert curatorship, thus providing a useful guide to the new discerning investor on possible direction to take. 

Diversification: An investment in art can be an effective tool to reduce the risk exposure of a carefully planned investment portfolio. This would be an ideal measure to employ during a period of market volatility.

The prerequisite here, is top-quality art and a long-term view of 10 years or more. Research supports the ability of quality art to survive economic downturn, the value of the holding never going down to zero, compared to many other investments. Art prices have been consistently shown to recover more quickly after crashes than equities.

In addition, art market prices have been shown to have outperformed the S&P500 and more conservative investments in the long-term (Mei/Moses' extensive research of paintings sold at auction over a 50 year period compared to US stock market prices- note both asset classes were ex transaction costs).

Economic slowdown: During these periods investors begin to turn to alternative investments, such as art, when equities and property seem fully valued.

Historically, the United States has dominated the art market since the 1950s. At the beginning of this century, the US represented roughly half the value of the global art market, with Christie's and Sotheby's at the bridgehead operating almost as a global duopoly.

In New York and London these auction houses regularly generate sales over ten million dollars for modern and post-war artists. The icons of 20th century artistic production like Andy Warhol or Francis Bacon are gradually dethroning the former (predominantly French) stars of the market like Auguste Renoir and Vincent Van Gogh.

 

Download the file (PDF) Courtesy ArtPrice.com 

 

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The large secondary market in art indicates that the exchange of assets is becoming healthier in terms of transparency and liquidity, irrespective of the stage in the growth cycle. The current global footprint of auction houses like Sotheby's and Christie's illustrates the point.

 

Christie's primary market acquisition of the gallery chain Haunch of Venison and their selective auctioning of blue-chip artists can be compared to the behaviour of large financial markets. The main houses making markets in financial instruments such as stocks and bonds will often use their power to dictate terms for new releases in the primary market. The tail wags the dog.

 

These dynamics will affect all levels of the marketplace because they are setting the trend for  future transactions and the distribution of power.

A domestic art market index is tracking the boom in the Chinese art market. Local auction houses find it a useful tool to see where the market is heading.