Yes, specific sectors of the art market worldwide are booming (there are exceptions, hello, Greece?) Emerging market investors increasingly view art as a safer investment when compared to their volatile currencies and unstable economies and this 'new buyer phenomenon' has led to the creation of a vast population of new collectors globally. Aiding this, technology has made auction houses accessible to collectors all over the world and enables exposure to buyers at levels never seen before.
When you consider investing in art, keep these tips in mind:
1. Old Masters statistically yield more stable results over the years, with a smaller return margin. Investing in Contemporary artists carries a higher risk with increased price volatility, but with (possibly) significant short-term returns. So, if you want to place your money in a safer investment without expecting a significant increase in value, go for Old Masters. If a quicker gain is what you are after, place a bet on a contemporary piece.
2. Do not look at record-breaking sales; they do not necessarily have a significant impact on prices for that artist and are, in fact, divorced from the wider market. There may always be a couple of people that badly want just that thing, but that is no rule-setter for the broad-based market.
3. Look at the percentage of an artist's work that sells successfully at auction: out of the total number of an artists' works offered at auction, how many actually managed to sell? That sell-through rate is quite indicative of the value of an artist's overall work. You will find that few artists sell more than 80% of their works at auction.
4. Go to contemporary art fairs. They are a great place to familiarize yourself with current trends and the work of new artists. And there is always the chance that you may discover the next rising star.
5. Buy only pieces you love. At the end of the day, art is about aesthetics and no trend or rule is a better judge of that than yourself. So even if that painting you love so much loses some of its financial value over the years, it will not seize to be a piece of art you love. After all, isn't that the real value of art?
Phoebe Kouvelas is an attorney-at-law specializing in art law, offering legal and commercial advice on issues related to the acquisition, retention, lending and disposition of fine art.