Art is perceived by many private investors as a purely speculative object, the media focus is usually only on a few spectacular auction results, although auctions account for just a quarter of the total trading volume on the global art market. In 2018, more than 67 billion US dollars were spent on the international art market worldwide, a growth of 7% compared to the previous year, 150% more than ten years ago, 600% more than at the beginning of the nineties. Auction houses act as secondary sellers on the art market, the first sale is usually made through gallery owners, dealers, art advisors or curators.
As in other markets, supply and demand determine prices on the art market. For many years it has been observed that demand tends to increase more strongly than supply. This is related to a slowly growing supply, since established artists often “produce” with restraint and new artists need time until they are accepted by the art community. On the other hand, however, there is an increasing demand due to established art collectors who remain in the market, but are supplemented by new collectors from new countries. China, for example, is already the third largest market for contemporary art.
What do famous personalities and companies like Allianz, AXA Versicherung AG, Commerzbank, Julius Bär, Deutsche Bank, UBS, Gunter Sachs, Reinhold Würth, Edouard Carmignac or Roland Berger have in common? They secure their capital with art. This tangible asset has long had a firm place in the investment portfolio of institutional investors and wealthy private clients. “The two biggest asset holders today are contemporary art and also apartments in Manhattan, Vancouver and London,” said Larry Fink. “If you’re looking for something permanent, you’d better invest in art.”
Dr. Reinhold Würth, King of Screws and entrepreneurial legend from Baden-Württemberg also relies on art to secure capital. For him, art is not only a passion, but also a commercial device. With over 50,000 works of art in its own holdings, Deutsche Bank, for example, has one of the largest corporate art collections in Germany. Edouard Carmignac, who manages one of the largest mixed funds in Europe, is one of the largest art investors in France, but interestingly enough, his company doesn’t have a single product through which end customers could invest in art. But what is really true about art as an investment?
Art only becomes beautiful through money.