The Investor’s Guide to Buying Art

The Investor’s Guide to Buying Art

It’s easy to give up and think it’s a game of dice, but there are nuances you must take into account…

 

A much-needed preface

Quite the lengthy read awaits, so I’ll cut the fluff by only positing that whoever you happen to be—a seasoned investor or an absolute philistine—there is something of value in Fine Graff Art’s detailed exploration of investing in the art market. For a field that for once hasn’t ceased churning out pieces, it’s definitely a safe option to consider. However, we’ll show you how to mind some underlying snags that may come as a bottleneck for your performance.

 

Understanding what the art market is

To lay the groundwork here, we’ll break the difficult truth that buying art is not similar to buying stocks. Sure, artworks appreciate over time and grow in resell value just like stocks, and are even bent by trends in a similar fashion, but they are not as liquid (i.e., you can’t resell them almost immediately) and should be considered a long-term investment.

 

And here’s one critical, but mildly depressing, fact: art has no core value in the economic sense. Here’s what I mean:

 

This is Picasso’s “Repas Frugal”, an etching he did when he was 23 years old. It sold at Christies’, NY, in 1990 for $374 000 and two weeks later got resold at London’s Christies’ for $189 980.

PABLO PICASSO | LE REPAS FRUGAL (BLOCH 1; BAER 2) | Prints & Multiples | 2020 | Sotheby's 

To further illustrate how erratic the art market can get, think of another overused case that is Van Gogh, who once bartered paintings for flowers and is now worth millions. Tracking a piece’s price evolution is sensible but not completely reliable if you want to get a clear estimate of a piece’s worth.

It’s easy to give up and think it’s a game of dice, but there are nuances you must take into account…

 

Consider first the physical characteristics 

The bigger the better should be the motto of this section, but only to a certain point. It is natural to believe that paintings or prints of a smaller scale cost less than their larger counterparts. But if that’s 100% true, then why isn’t A Sunday on La Grande Jatte, one of the largest canvases in history, valued more than Mona Lisa, a painting famous for disappointing fans with its small ‘stature’?

A lot has to do with utility, storage, and conservation. You can make a valid case that large paintings are high-maintenance and wouldn’t fetch higher prices just because of their unwieldiness.

 

If the only guideline you go by is size, then mid (20.32 x 25.4 – 30.48 x 40.64 inches) to large-size (40.64 x 50.8 inches) canvases should be your target. But there’s always more to it.

 

Abstract contributing factors

Death, or the force that pushes scarcity to the forefront.

 

A grim (and a bit disheartening for living artists) trait of high-value art is the artist’s absence from earth. John Ruskin, the eminent art critic and scholar, put it vividly when he noticed how much an author’s death increases the value of their works:

 

The moment he [the artist] dies, his pictures, if they are good, reach double their former value.”

 

When the original artist is no longer among us, the chances of him or her trying to recreate an older painting are obviously slim. This makes the work rarer and more appealing to cutthroat art collectors (provided that the work is any good, of course).

 

Signature: The industry standard certificate of authenticity wasn’t as prevalent as it is now.

Today, every reputable art dealer follows Fine Graff Art’s practice of issuing a certificate of authenticity that verifies an artwork’s integrity and originality. Our certificates are not just for originals, as prints are also of a limited run and receive their due verification. However, back then, artists had to designate the originality of their effort in some way, so the signature was common practice until the late 19th century.

 

Provenance: has the artwork frequented notable museums, collections, or art galleries? Or has it been sponsored by a famous patron? If so, then there should be a bump in its value. Name and product are interlinked and many times a famous owner could bolster the piece’s value 

 

Historic value: has the painting endured some major historic event, or even better, does it depict an episode from history that has directly inspired it? Maybe it was contemporaneous with the said event. Irrespective of that, consider the time the artist has lived or the passage of time the painting went through. If the condition is good, then you can safely put a higher price tag on it.

 

Dictionary power: is the artist you are buying from a pioneer in any way? Are there volumes written about them in books or on the web? They may not be the most skilled artist, but if their input in the art scene has started an entire movement, then consider your art piece’s value cemented for a good number of decades.

 

Open or restricted market: Artworks could be geo-restricted, usually in their country of origin, and therefore can’t leave its borders. Such is the case of Caravaggio’s The Calling of Saint Matthew. Caravaggio’s paintings rarely appear at auction, to begin with, but because most of his art is locked within Italy, fetching a high price would be cumbersome. Couple that with the fact that a lot of paintings considered ‘national treasures’ are not sold to foreign buyers, and you can then say you own a piece of real estate rather than actual art.

Caravaggio, Calling of St. Matthew

How volatile is the investment?

The art market doesn’t come without its chinks, which are mainly expressed in black market sales, which, of course, do not record prices and hinder the exponential growth of the global art market.

As off-putting as this may be, the art market continues to grow by 3% year on year, staying flexible and resilient despite unfair practices behind the scenes. The biggest piece of advice for new investors is to keep things local and see what your domestic or nearby markets have to offer. 

Recent stats

Adaptable market

 

While that pesky virus was still rampant and no one could leave their homes, the online art market quickly seized that opportunity and nailed an increase of 7% (or 900 million dollars) in sales from the previous year, resulting in 13.3 billion dollars of overall revenue.

 

Forward-thinking 

These same online markets also happen to accept cryptocurrency as payment. In 2021, 13% of online art markets dealt with using some form of digital token. This has not that much to do with investing, but to a certain degree, it dispels biases about the market being conservative and closed to innovation.

 

Promising figures

A rough estimate shows that the global art market is about to hit a new record very soon. Expected 32 billion dollars in global exports by the year 2026 shows a great demand for new and old artists.

 

More representation

Overall, the art market is opening to new authors from all walks of life. Just last year, it’s been estimated by A Survey of Global Collecting that women last year represented 44% of all collections, compared to 33% in 2018.

 

Skies are looking blue for artists of various cultural backgrounds, too. In 2016, the US recorded 38% of solo exhibitions attributed to African artists. Today, we see that percentage staggering to around 68%, which opens many doors for new entrants into the art scene and, what’s better, enriches the available perspectives in art.

 

And while the market’s becoming more receptive, newer, more immersive art forms are getting more appreciation. Underground artists, who may be popular online, grab the chance to monetise their message in bigger auctions among more acclaimed authors.

 

Conclusion

It’s clear that one cannot be purely guided by their aesthetic gut to buy art and must factor in both pragmatic and more abstract variables. In any case, we’ve made investing affordable and easy by following industry-standard practices to promote both established and budding artists. Start investing by visiting our store.

 

Want to start investing? Make your first step by visiting Fine Graff Art’s store.