Art is expected to overtake wine as the best-performing luxury investment asset this year as a growing number of millionaires snap up contemporary masterpieces for their mansions.
Rich people, hit by a collapse in art pricesafter the 2007-2008 financial crisis, have returned to the market, according to high end estate agent Knight Frank. Art sold at auction increased in value by 16% over the 12 months to the end of September, slightly behind fine wines which rose by 17%, its luxury investment index revealed.
“We are predicting that art will comfortably overtake wine as the best-performing asset class this year,” Andrew Shirley, a partner at Knight Frank and author of the luxury index. “Prior to the global financial crisis, art was one of the top performing assets in the index, but growth slowed considerably over the past five or so years. However, confidence seems to have returned to the art market in 2017, highlighted spectacularly by the recent record-breaking sale of Leonardo da Vinci’s Salvator Mundi for $450m (£333m). Contemporary artists like Basquiat are also seeing higher and higher prices paid for their works.”
Shirley said the record $450m paid for Salvator Mundi was a spectacular one-off “but there are plenty selling for $50m, $100m, $200m – the confidence is definitely back”.
Rich art buyers are most interested in modern contemporary art, according to Knight Frank, with works by Andy Warhol and Lucian Freud attracting considerable attention.
Shirley said most buyers are from North America or Europe, but wealthy Chinese are increasingly interested in western art. “As the developing world becomes more mature, and people send their children to school in the UK they start to become more exposed to art and become wine connoisseurs,” he said.
Shirley said the vast majority of rich people insist they are buying art for pleasure, “but they have the investment in the back of their minds”.
He added: “Art is a lot more tangible than stocks and shares, you can’t hang them on your wall. There is also the status element. They like to show off to their friends and say ‘I bought the most expensive painting’.”
Other assets in Knight Frank’s luxury index include cars (up 7% so far this year), watches (up 5%), coins (up 4%). The poorest performing luxury asset class was Chinese ceramics, the value of which fell by 7% over the period.
Over the past 10 years, collectable cars have risen in value by 363%, but Shirely said the market for classic cars had fallen away recently. Fine wine values increased by more than 200% over the past decade, with coins not far behind at 182%.