What Determines The Value Of Art?
Art is becoming increasingly popular as an alternative investment asset. Low correlation to global equities and minimal risk make it a compelling option for those looking to diversify their portfolio. There’s also the added benefit of acquiring something beautiful to display in your office or home that will appreciate in value over the coming years. Before you take the plunge, it’s important to familiarize yourself with how the art market works. One question our clients often ask is what determines the value of a particular artwork?
One key driver is the reputation of a particular artist. Artworks which command the highest prices are usually from blue chip artists who are big names on the international circuit. Examples would include Banksy, Damien Hirst, Picasso, Basquiat or Edward Hopper. The next rung on the ladder belongs to well-established artists who have work in top galleries and museums around the globe and are approaching the apex of their career. Below these are the rising stars of the art world who have begun to attract the attention of galleries and art critics, but have not yet sold significant pieces on the secondary market.
For up-and-coming artists, the value of their work tends to increase once they have established a strong presence in the market. This is typically achieved by partnering with galleries, showing work at art fairs, and exhibiting work in solo shows in cities like New York, London or Hong Kong. The art fair circuit in particular has boomed in recent years, growing from 60 fairs a decade ago to over 300 today.
Online presence is also a growing factor thanks to the rise of visual platforms like Instagram which has become a kind of virtual gallery. And with the growing wealth of millennial investors and art buyers, this type of exposure will become even more important in the near future.
Supply & Demand
The art market is unusual in the sense that most artworks are unique, with the exception of prints which are usually produced in strictly limited quantities. When a particular artwork is put up for auction that may be the only opportunity a collector will ever have to acquire it. This is why artworks frequently overperform at auction as collectors bid fiercely to add the piece to their collection. Collectors can help drive up the value of an artist’s body of work, often with the help of gallerists who help facilitate sales and recommend rising artists.
While these are the three main factors affecting the value of an artwork, the art market is a complex and fluid environment with many nuances. It’s always advisable to seek expert advice if you’re planning to purchase art for investment purposes. Reputable art galleries will be able to guide you through every step of your purchase, ensuring the piece you acquire is authentic, in excellent condition and represents a sound investment. For further information on investing in art, please contact firstname.lastname@example.org.