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Art market plunges; time to invest?

Time to look at art for investment? Brussels,REUTERS/Francois Lenoir

It has not been a good year for the art market, although it could have been worse.

Auction sales for every type of art object dropped by almost 50 per cent for this year to date, from the same period in the previous year, according to the ArtTactic annual report. Total sales at Christie’s, Sotheby’s and Phillips plunged to year to $2.9 billion in 2020 from $5.7 billion for the same period last year.

Yet the report shows that the total value of online sales is up nearly 500 per cent over the same period, from $69 million to $412.6 million.

This is the result of a massive move online by all the major players in the business of art. Auction houses, dealers, galleries have all set up online spaces (some are hybrid) and are successfully selling there.

This offers a real opportunity to the small investor to get started investing in art, which has been one of the surest long-term alternative investments for many years.

The retail investor in art often doesn’t have time to get to auctions and art fairs where the real deals in art are to be had. With the move online, much better access to the surest values in art can be achieved.

These relatively sure investments in art are made with the great names – Picasso, Hockney, etc. along with the famous artists of the past (think of Rembrandt…). Believe it or not, it’s possible to acquire original work from Picasso for five-figure investments, sometimes even four-figures. Picasso produced a lot of drawings, etchings, unfinished work, and it’s available online.

The other route to investment in art online is to bet on an up-and-coming artist that you think will achieve the fame of Picasso eventually. This is risky business, needless to say, as this writer can testify: we’ve got a few ‘genius’ paintings around the house, purchased with emotion, and appreciated by friends – but not by the auction houses or dealers…

If you do want to go the up-and-coming route, do your research. Find out if his/her paintings have had successful gallery shows, read reviews by influential critics (if there aren’t any, this may be a sign), follow any auction sales to see the prices these works are fetching.

Art that is valued by collectors appreciates regularly, although prices can be affected by events like the pandemic. Bear in mind that there are costs associated with selling art, dealers commission, auction house fees, etc., so  the work must go up in value beyond these costs.

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