FINE ART HAS OVERTAKEN WINE
Fine wine is more than an accompaniment to a fine meal. For many years, it was the go-to investment on the luxury market. Wannabe sommeliers could purchase particular bottles of wine, keep them in the cellar, and reap the financial rewards once the value had increased. If the bottles didn’t end up being worth much, they still had a great drink.
While this logic still applies, wine has found itself a new rival. Though the figures aren’t in yet, all signs point towards fine wine’s investment returns being eclipsed by those of fine art.
Estate agent Knight Frank found that wealthy investors, who mostly stopped buying art after the 2007/8 financial crisis, have entered the market once again. As a result, Knight Frank says it can predict that art will “comfortably overtake” wine as a more lucrative investment this year.
So what is it that has brought rich buyers back to art auctions?
Contemporary art is gaining value
While art by “the masters” is pretty much always valuable, it’s contemporary artists whose work has taken a financial leap forward in 2017. In May, Jean-Michel Basquiat’s “Untitled” (1982) sold at auction for $110.5 million, becoming the most expensive work by a US artist of all time. It’s not just painters either. Barry Flanagan sculptures by Alberto Giacometti often reach the millions.
With contemporary artists now going toe-to-toe with their forebears at auction, even more works are likely to increase in value.
Those who purchased contemporary art early may find themselves in the position to sell. Those who have never bought contemporary art should do so now to get ahead of the curve.
Eastern and western buyers are exchanging art and culture
Recent trends have seen wealthy buyers from the east increasingly become interested in western art. It was contemporary art collector and entrepreneur Yusaku Maezawa, from Japan, who bought Basquiat’s “Untitled” (1982), and a new generation of Chinese investors has shown a huge interest in buying American artworks.
This cross-border fascination goes both ways, with collectors from Europe and the USA becoming increasingly interested in Asian art, particularly. Contemporary Indian artist Owais Husain, Vietnamese painter Nguyen Van Du, and Chinese performance artist Liu Bolin were all featured in the prestigious START Art Fair at London’s Saatchi Gallery in 2017, which has the stated purpose of “showcasing emerging artists from new art scenes to give art collectors and enthusiasts alike the opportunity to discover artwork from developing global markets”.
This is only likely to increase the demand for Asian contemporary art amongst high-bidders in the west.
Unlike stocks, shares, and wine, art has aesthetic value
Despite these trends, and large price tags proving art investment can be lucrative, there is more behind why art is becoming an alternative to more traditional investment methods.
Stocks and shares can be lucrative, but what can you do with them while they’re accruing value? Being a stakeholder in a certain business does nothing for your décor.
Art, on the other hand, is about aesthetics first, auctions second. Many artists, in fact, never expect to make money at all (hence the “starving artist” cliché).
While wealthy buyers may be motivated by monetary matters, they are also, like all of us, driven by fashion. And art is fashionable. A fine work of art will look fantastic on your wall, and single you out as someone with good taste.
It’s easier and less risky to invest in art than wine
As for wine, it is still art’s biggest competitor in the luxury investment field. And while fine wine is another marker of good taste, it has to be hidden away in a cellar. If you’re never even going to drink it, its literal taste is mostly irrelevant. Then there is the relative difficulty of fine wine investment.
Art buyers who wish to play it safe can simply invest in works by household names (along with Basquiat, artists whose paintings have raked in over $100m include Pablo Picasso and Andy Warhol).
Wine investors, on the other hand, must learn about the investment value of different vineyards, and the range of other factors which can influence a wine’s ROI. This, along with the trends, and art’s intrinsic aesthetic value, has helped art overtake wine as the most lucrative luxury investment on the market.
FINE ART HAS OVERTAKEN WINE