Alternative Investment Art Market Investment Research Report

Alternative Investment Art Market Investment Research Report

The art market rebounded after the last recession, even faster than traditional investments. High net worth individuals (HNWIs) with a portfolio diversified into art assets seem to be less affected by the financial crisis. Additionally, rather than investing in stocks or bonds, art provides investors with an alternative, tangible opportunity. The Art Market, particularly over the past 18 years, can be considered a safe haven in the face of economic and financial turbulence, generating substantial and recurring yields. Back then, when Central Banks were effectively practicing negative interest rates that literally destroyed populations’ savings, the art market was blooming significantly with its Contemporary segment showing a 1,370% increase in annual turnover over 16 years. To sum up, the Contemporary art market remains a profitable investment over the medium and long term.

London & New York: The Financialization of Art

new york

When art investing activity is taking place in a number of cities, it is most prominent in London and New York, the key centres of both the Western art market and financial markets. New York is home to global elite, and London is home to 44.8% of the United Kingdom’s high net worth individuals. Investors in both cities consider art investment as a diversification tool, as it has typically not been correlated to traditional markets in stocks and bonds. Wealthy clients especially are risk averse and seek uncrowded investments, which refer to stable and less volatile assets that are not in an inflated price bubble.

 

A Fine Art Can Be A Fine Investment

 

As global GDP is growing slowly, many investors and collectors view art from an investment perspective because of the current macroeconomic uncertainty. Nowadays, art market investment is an alternative investment as a means of risk and portfolio diversification. For example, one of the key factors for including art in investors’ portfolios is inflation protection. Based on a research, 30% of the wealth managers surveyed held the view that art could provide a buffer against inflation, doubling the 15% of those surveyed who held the same view in 2014.

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Currently, the focus of art investment has changed. To be more specific, collectors’ concerns about the potential return on investment when buying art has increased significantly in the past two years—from 47% of collectors citing this as a significant factor when buying in 2014, to 64% in 2016. The greater provenance and proven price track record for works in the Impressionist and modern sector make for lower, more predictable risk and thus a more palatable investment in less-certain times, macro-economically speaking.

Strategy art investment (emerging art market)

Online art market is effectively capitalizing the buyers. The players in the space gain great growth of e-commence.  The introduction and biography of the selection of the emerging artists make the information more transparent. As in our platform SMARTPIS, we have the presentation of Indian contemporary artwork (click to know more)the Chinese contemporary artwork (click to know more) and so on, it enables the customers and artists into direct contact. Not only focus on the millennial, the on-line art market also aims at the people who are comfortable with the new technologies.

Channels of Art Investment

It is commonly accepted that there are two main channels of art investment: auction and online art trade. By contrast, the latter is more convenient and transparent.

As the market is changing and the social medias have become more and more the primary way for the consumers to discover art. According to a survey provided by the Invaluable, art buyers find new art through museums account for 20%, in galleries account for 15.9%, but 22.6%find new works of art via social medias. Even though the art market experienced some friction when shifting to e-commerce, social medias plays a crucial role to make them entre the market seamlessly(Forbes).

quction

Here is the overview of some key factors in the online art trading: online art market sales reached $3.27 billion, up 24% in the last 12 months; growth patterns vary across different online art platforms, but traditional players are catching up; 92% of online art buyers expect to buy more or the same amount of art online in the next 12 months; existing online art buyers are buying more, but there is still resistance among 51% of art buyers in buying art online; gallery sector slowly adapting.

       
GRAPH

Based on the rapid growth among many of the online art platforms, we are upgrading the growth rate in the online art market from 19% in previous reports to the current 24% annual growth rate. Based on a 24% annual growth the online art market would be worth an estimated $9.58 billion in 2020.

 

In terms of user behaviour, a number of online art platforms covered in this report have seen significant growth in mobile usage. Facebook and Instagram remain the most preferred social media platforms over the past two years.

 Gallery

Smartpis Online Art Investment Platform

 

Smartpis has partnerships with many brilliant and talented artists who provide amazing artworks of high investment and collection value. Associated with our experts, we aim to provide our clients professional and customized advices in art investment field. Smartpis will offer you a unique, pleasant experience!

Please feel free to find more information on our website:

French version: ART CONTEMPORAIN

English version: CONTEMPORARY ART

Chinese version: 当代艺术

 

Sources:

  1. http://www.artprice.com/artprice-reports/the-contemporary-art-market-report-2016/investments
  2. https://www.artsy.net/article/artsy-editorial-5-things-to-know-about-investing-in-art-right-now
  3. http://www.forbes.com/sites/deborahweinswig/2016/05/13/art-market-cooling-but-online-sales-booming/#66088a032078
  4. http://www.e-ir.info/2016/03/01/the-financialisation-of-the-art-market/

 

Author: Yimeng Ning

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