Art, a “boutique” investment?

By Michael Russell

Buying art is considered a ’boutique’ investment or something that is off the beaten track. However, is this really the case? Unlike other forms of investment, economic conditions do not affect the art market much.

The art scene has its own rhythm, mostly influenced by the artist’s quality of work and excitement of the collectors. It has more to do with cycles. Basically, art investors would only buy a piece which they think will increase in value in the future and bearing in mind that art is a mid to long term investment.

People who bought art produced in the 1960s have managed to secure 500% returns on investment. However, the pieces are done by pioneer artists who started their careers in the 1960s, or earlier.

New collectors need to practice caution and not be carried away with hype and expensive art. When it comes to art investment, it can either be a costly or affordable endeavor, so it all depends on the investment.

Potential investors might initially be turned off by the price of art. However, you can start off with lesser-known artists whose paintings are relatively cheaper. You can start with as little as $500 and build up your collection from there. The initial cost of buying art would depend very much on the artist. Pioneer or seniors can command prices ranging from $40,000 to $100,000 while works from second-generation or mid-career artists range from $10,000 to $50,000, depending on the size.

So, what is good investment value? There are two important factors; style and consistency, which depend very much on the artist’s commitment level. The investment value also depends significantly on the artist’s track record, which includes their exhibition record, collection, marketability and length of career (new, mid-career or senior).

Artists with good track records are often popular. However, popularity may be hyped up. Price and quality do not necessarily go hand in hand. More importantly, it’s the psychological worth that determines the price. Similarly, investing in established artists doesn’t necessarily guarantee good investment value either as sometimes their work can decline.

There is a suggestion for collectors to buy works of artists who are growing in value rather than those who are at their peak. Works of mid-career artists are often considered to have potential for higher investment value. On the other hand, works of most pioneer or senior artists, have reached their price ceiling.

For collectors who are particularly new and budget-conscious, consider works of young artists, as they are more affordable. There is also a chance that the painting’s worth might double or triple in five years’ time.

The art world is not easy to navigate, especially for new investors. Getting to know artists, movements, genres and periods is one part of the problems and becoming competent at identifying works of art can take a long time.

You need to identify your own taste, so ask yourself why you like certain art and dislike others. Serious art investors also need to know which types of art sell and which do not. Moreover, talk to as many people as possible, from curators and gallery owners to artists.

In many ways, investing in art is like investing in your taste, which is why loving what you buy is important. People who buy art because they love the piece, end up getting very good investment value.

Whatever the reason, you may not always get great monetary returns from an engaging art piece but it can provide you with a lifetime of visual pleasure.

Michael Russell

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