Investing in art

Although there has always been money poured into art, art has become considered as an investment asset by individuals from far more diverse socio-economic backgrounds.  In the last two decades, investing in art has increasingly been considered an alternative asset-based investment. This is testified by the vast number of reports that have been published on the subject in recent years.  The validity of art as a tool for investment accelerated in 2004, as is highlighted by Adriano Picinati di Torcello (Deloitte Luxembourg’s Advisory and Consulting Director), ‘The interest in this alternative market was fueled by academic publications analysing art as an investment’.  He also highlights the launch of the first Fine Art Fund in 2004 as an important factor in propelling forward the general acceptance of art as an investment.

The boom of the art investment market in the early 2000s can been further seen by the globalisation of the art market and exemplified by the fact that in 2003, Sotheby’s biggest buyers came from 36 countries.  Four years later, they were spread over 58 countries and their total number had tripled.

There is certainly the chance of making extraordinary profits on art, at a time when other investments have offered poor or non-existent returns, particularly since this financial crisis of 2008-9.   For instance, Jean-Michel Basquiat’s Untitled (1982) which went from $19,000 in 1984 to $110.5 million in 2017.

 

Andy Warhol

Recently, prices have been soaring for works by Andy Warhol.  For example, Warhol’s Shot Sage Blue Marilyn sold for a colossal $195million at Christie’s in May of last year. In the wake of this, both paintings and prints by Andy Warhol have boomed this year.

Warhol’s print market size has a compounded annual growth rate (CAGR) of 27% over the last 5 years. The majority of this growth has come through the average appreciation in value of the works themselves. The sales value of Warhol’s complete sets grew 175% between 2020 and 2021. It then grew a further 135% between 2021 and 2022.

Such is the phenomenal growth, 63% of Warhol complete sets have had a greater than 100% return over 5 years. Additionally, on average, individual prints across Warhol’s portfolio are achieving a sales value CAGR of 17%. In this segment it is again appreciation in print values driving the size of the total market. By examining the distribution of returns over 5 years: 58% of Warhol prints achieved a return of between 50% - 200%.

 

Lot 331: Andy Warhol, American 1962-1987,  Oyster Stew from Campbell's Soup II


At Roseberys, in our upcoming Prints & Multiples auction on 15th June, we have a fantastic Warhol ‘Oyster Stew, from Campbell’s Soup II’  (lot 331) up for auction with an estimate of £30,000-40,000 that would provide any potential investor with an excellent opportunity to engage with Warhol’s market. 

 

David Hockney

Recently, David Hockney’s market has had two years of high growth. Given that the market for Hockney’s prints maintains relatively consistent transaction volumes, with an 8% increase 2017 vs 2020, continued growth in his overall market size can be attributed to a significant appreciation in print values at auction, where competitive prices have been driving the growth in the total sales value.

To collectors’ advantage, entry into the Hockney market remains accessible and varied, with work ranging from the low thousands to hundreds of thousands. This makes the market relatively unique among other blue-chip names such as Andy Warhol and Banksy where works typically start in the tens of thousands.

Some of the top returns of value seen by contemporary art prints in the past five years were artworks by Hockney. Hockney's iPad drawings have fared especially well, with Untitled 346, 2010 selling for a fantastic £39,000 in our last Prints & Multiples auction on 7th March. This staggering result was achieved against an estimate of just £15,000-20,000. Evidently, his innovation and engaging relevance continue to play a key role in Hockney’s longevity and appeal with collectors.

Roseberys is offering another such Hockney iPad drawing in our upcoming Prints & Multiples auction on 15th June; lot 269 ‘iPad drawing no. 281’ presents a beautiful still life that would be tempting for any investor!

 

Lot 269: David Hockney OM CH RA,British b. 1937- iPad Drawing 'No. 281', 23rd July, 2010

 

Investing in prints and multiples

Fine art, including prints and multiples, fall under the ‘alternative assets’ class. This relates to assets that do not fall into established categories such as stocks and bonds, annuities, mutual funds, currencies and EFTs. If you are looking to move into alternative asset classes, prints & editions are one of the best places to start. With a typically lower price-point than originals, prints are a more accessible way to begin collecting reliable investment assets.

As can be seen, investing in art can yield vast returns, but it is important to remain savvy.  One should ensure that they have thoroughly researched the artist’s market in which they are investing or have a trusted specialist whom can advise them.  It is also important to love it.  If you love what you buy you should never be too susceptible to disappointment if the market trends fluctuate or shift.