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Art investment: past and future

Most people perceive art objects as spiritual and cultural values or cultural and entertainment objects. But a narrow category of people – museum staff, restorers, art critics, art experts, antique dealers, collectors, patrons of art, and, of course, investors – often think of art objects in a different context, because of their activities they also perceive them as material objects of great financial value.

And art objects, like good wine, only grow in value over time. In some ways, the art market is even more stable than the global economic system, as the value of masterpieces remains virtually unchanged, unlike a number of other financial assets. Therefore, it is always profitable to invest in art, which is what many wealthy people prefer to do.

According to international auction and analytical companies during the pandemic interest in Impressionism and Modernism among collectors increased by 41% (Citi auction), during 2022 the art market as a whole grew by 29%, and by the end of 2023 investment in art became one of the most popular types of investment, as more than 50% of the world’s wealthy people engaged in active acquisition of “artistic” assets (consulting agency Knight Frank). Famous auction houses Sotheby’s and Christie’s noted that for the years 2022-2023 realized record sales. According to the same Knight Frank, works of art currently occupy the seventh place among the most attractive luxury goods for investors.

The origins of investing in works of art

Investing financial resources in art is closely related to the process of collecting. The latter has its origins in ancient times. Back in the Ancient East, Greece and Rome, the rulers and nobility were ready to pay masters a lot of money for works of art. Acquisition of “masterpieces” was for them a desire to join the beautiful, to decorate their homes, to emphasize their own status and level of wealth.

In the Middle Ages, in addition to rulers and nobles, the Church became an active customer of art. Monasteries and temples intensively added to their furnishings objects of fine and decorative-applied art, primarily of sacred significance, thus forming entire art collections.

A real boom in the acquisition of masterpieces, investing money in beautiful things took place during the Renaissance. During this period, many statesmen (kings, high-ranking military commanders, aristocrats), as well as representatives of the Church, including bishops, cardinals and popes themselves, did nothing but patronize creators. Keeping a staff of court painters and sculptors and commissioning them to create works for good fees was considered a sign of good taste. Luxurious collections of masterpieces decorated government palaces, private mansions, and religious buildings.

A persistent interest in the acquisition of works of art among rulers, court retinue, representatives of religious authorities remained in the following centuries – in the XVII, XVIII, XIX centuries. And with the emergence and development of initial capitalist relations in the XV-XVIII centuries there is a layer of people engaged in trade, financial operations, which also become customers of art. And with the steady development of capitalism in the XVIII-XIX centuries, representatives of the bourgeois class, along with the nobility, actively master the “art market”.

But it is important to note that wealthy people of the past invested their money in art for slightly different reasons than modern investors do. As we have already said, when they purchased works of art, they pursued aesthetic, religious goals, and asserted their status. It was rather an unconscious investment of finances.

Conscious investment in art dates back to the late 1980s. It was from that time that works of art began to be regarded as investment items. This is due to the activities of investment banks on Wall Street in New York, which began to invest money in the works of modern masters, create assets from works of art and provide advice on the profitable acquisition of art objects.

Modern trends

Let’s find out what trends in investing in art now exist, and what is particularly in demand. There are masters whose works have been firmly occupying the first places in the top of popular works for investment for many years. These are iconic painters of legendary creative destiny, who stood out against the background of their contemporaries with their distinctive artistic method, who made a revolution in art. Among them, first of all, are the masters of modernism (Pablo Picasso, Frida Kahlo, Mark Rothko), Russian avant-garde (Kazimir Malevich, Vasily Kandinsky, Mark Chagall), postmodernism (Andy Warhol, Jean-Michel Basquiat).

Another trend in investing is the interest in young, cutting-edge artists unknown to the general public but known in narrow circles of connoisseurs (Dana Schutz, Matthew Wong, Amoako Boafo).

In terms of trends, it is worth noting who mainly invests in art nowadays. Modern investors are, as a rule, quite young entrepreneurs (the average age is forty or so years), compared to investors of the XX – the very beginning of the XXI centuries, who have a more mature age. Many of them have only recently started collecting and investing. The interest of “young” investors is largely related to the development of innovative technologies (e.g., NFT, crypto-art).

Why investing in art has become popular

So, the fashion for art investment has been gaining momentum in recent years. And it is not only private individuals who are involved in it, but also companies, banks and entire corporations. And this phenomenon has a number of reasons. Its main advantage is its relative economic stability. It has a high level of profitability.

For many wealthy people, art investing is a special activity, laden with intellectual flavor and cultural elitism, enhancing prestige and status. Collecting is not just a profitable investment, but also a fascinating and gambling activity, an opportunity to satisfy your spiritual and aesthetic needs, as well as to create your own art collection, which you can be proud of and pass it on by inheritance.

Natalia Khadeeva