At times of economic uncertainty, whether brought about by political or market forces, many savvy investors look to the alternative investment market of which art is a leading pillar. Art is an asset with unique qualities and a consistent track record of growth that has the advantage of being uncorrelated to the stock or bond markets.
That's exactly what investors should be looking for when diversifying their assets. No matter what the financial markets are doing -- moving up or trending down -- the art market isn't affected very much. Research from Deloitte backs this up, with 85% of wealth managers recommending the inclusion of art in a balanced investment portfolio.
In 2020, whilst Covid raged, and galleries and auction houses shut up shop, the art market appreciated by more than 15%. The average art investor increased their interest in art, and the shift online brought more young buyers into the market. A trend that bodes well for the future of art as an investment. Whilst the global middle-class market for art as investment is rapidly expanding, it is also true that millennial collectors are flocking to the sector. Demonstrating a current and future market for investable works necessary to sustain demand in the longer term.
It is not necessary to spend £Millions on original paintings to make worthwhile returns; the market for works on paper is extremely strong and has offered consistent growth over the last decade and over the period 2020-22 specifically. This is equally true whether your taste is to Picasso or Banksy, and whether your budget is modest or expansive (The majority of our customers commit £5 - £10k on their first purchase). New collectors to the art market often begin with print as a more affordable way into the field, whilst experienced collectors advise younger or new collectors to focus on drawings or limited editions.
Dealers and galleries were the most used channels for purchasing in 2021, with 82% of respondents to a survey by Art Economics having purchased through a dealer in the first half of the year. Given the choice of buying works through a dealer versus an online marketplace, 80% of collectors preferred dealers. The quality of works and artists they offered was the main reason given for their preference, followed by dealers’ trustworthiness and reliability, knowledge, and expertise. One of the key reasons for this is that there is much more to the sale of art than the exchange of an object, with dealers offering personal, intellectual, social, and academic services that are crucial parts of the market and are essential in developing trusting relationships.
Whilst online has a key role in any business, we believe that galleries offer a unique environment for collectors to get to know the company and the works we offer; this is why in the last year we have doubled the number of galleries we operate and intend to continue to grow our locations.
An additional key factor in continued growth is that of market confidence. Art Economics report that more than 89% of the collectors they surveyed are positive about the art markets' performance over the next 12 months, with more than 50% anticipating buying prints, multiples and works on paper. This is our forte. We source, conserve, mount and present works by artists we are confident in recommending, and believe wholeheartedly in the work we offer. It is carefully chosen to offer collectors long-term value growth as well as aesthetic pleasure, and we work hard to develop long-term relationships of mutual benefit.
We’d love to hear your thoughts on any aspect of the market. Please get in touch.
Written by Chris Kendall (Hidden Gallery Owner & Director)