The global art market is booming
According to recent figures from the European Fine Arts Foundation, last year’s sales reached a record £37bn, a 7% year-on-year increase and a little above the 2007 high of £35bn. In February an oil painting by French Post-Impressionist artist Paul Gauguin titled “When Will You Marry?” sold for almost $300m (£197m), the highest price ever paid for a work of art.
As is the global trend, the internet is changing the way we buy and sell art. Online platforms and social media are making it easier than ever to invest in original art. London and New York based company; Art:i:curate, is a start-up using crowdfunding methods to finance emerging artists, giving anyone access to art investment. For as little as $10, budding collectors can buy a stake in an artist’s work and share any profits on a future sale with the creator and other backers.
Risk
Alternative Investments, of which art is one, are considered high risk and are unregulated. However, Kyle Sommer at JP Morgan has said art has shown to be an effective hedge against increasing prices when inflation rises. “On average, art has performed significantly better over the last 40 years during periods when inflation is rising, particularly high and rising. Returns on art appear weakest when inflation is falling.”
The other downside to investing in art is that it is a long term investment and does not generate income. Dom Clover at Art Investment Management has come up with a concept to challenge that. AIM is an arts investment venture based around a concept Dom put together whilst living in Australia.
“Given the global market turmoil that was affecting investment markets back in 2008, a lot of investors started looking for safe havens for their investments. The art market became an attractive option because it offers a degree of stability due to passionate demand that underpins artists’ prices.
Finding the right artist to put your money behind can be a minefield so I decided to set up a business that collates all the publically available data on the artist’s performance, including trading activity and presented it much the same way a traditional broker would.”
Art for Rent
Dom noticed a gap in the market. He realised that large corporations in Australia needed art for their lobbies and boardrooms, what they wanted were big names as well as emerging artists but weren’t prepared to take on expensive collections, so they would often settle for cheap alternatives.
“On one hand we had investors with beautiful art in storage waiting for the right time to sell – and on the other hand corporations that wanted amazing art for short periods of time, to then swap and rotate for other pieces to freshen things up without having to buy and sell. So, we married the two together and suddenly we had quite an appealing concept similar to the property investment market but without the same huge capital requirements.”
The business was set up to connect traditional investors with up and coming artists whose works would appeal to corporates. This model not only helps investors but it also opens up a huge new market for artists outside of their traditional galleries.
Supporting Artists
AIM don’t just exhibit established artists, they support emerging artist too;
“There are the blue chip artists we deal in that regularly that have a liquid market meaning works can be traded easily when required. Then we have our mid-career, these artists have regular solo exhibitions which sell out and are starting to build up some presence in the auction markets. Then we have our rising star artists who are breaking through, who have a good following and critical acclaim. Our clients ask that we put together a mix of these artists to create a balanced portfolio in terms of risk.”
After a success in Sydney, Singapore and Hong Kong, AIM has now come to the UK with new offices at the cheese grater. You can get in touch with Dom at AIM via [email protected] if you are interested in investing, or are an artist looking to be exposed to a global investment community. Before entering into any investment you should seek professional advice, get in touch with WardWilliams Creative for information and advice on alternative investments, or any other product.
