In the not so distant future, good or bad, 2013 will be seen as a watershed moment in the history of art. Not only was it a remarkable year for the art market as a whole, in terms of online sales, it was a tremendous and notable 12 months. This burgeoning segment of the market realised over a billion dollars for the first time ever.
According to insurance group Hiscox, this division alone is expected to grow by $3.8 billion (approximately £2.3 billion) over the next four years. Again, that bears worth repeating … nearly four billion dollars alone for a still niche slice of the market over a four year period. Financially speaking, this is truly a great time to be involved in the art industry.
That much is true of 2014. It has been a solid year so far, allaying fears that the record-breaking auctions of 2013 represented the absolute zenith of this current and unforeseen boom. Consider it then to be the dawn of a new era, or as the art adviser Abigail Asher perfectly captured it: “It’s a new world; it feels like a reinvention of the art market. I’m overwhelmed.”
An appropriate choice of words because the 2013 figures for the art market as a whole – inclusive of antiques – was staggering. The European Fine Art Foundation (TEFAF) revealed in its annual report that $66.9 billion (£39.7 billion) was made in sales, an eight per cent increase on 2012’s tally and roughly £40,000 short of the all-time record set in 2007.
As things stand, there is nothing to suggest that the art market has peaked. Economies around the world are starting to pick up pace, confidence is returning to investors who have been somewhat dormant and the nouveau riche – especially those in emerging economies – are increasingly looking to add to their already diverse asset portfolios.
“In sheer defiance of other global economic trends, or perhaps because of such trends, there is an unprecedented flow of money into the art market,” the New York art dealer Edward Tyler Nahem was quoted by the Financial Times as saying last year. “For some, this could represent a flight of capital from other conceivably more unstable harbours to comfortably park one’s wealth.”
However fantastic a shape the art market may be in, eager investors have to be realistic about how far they can go in securing notable works of art and how rich they can get in a short amount of time. The upper end of the market is dominated by the super rich, which, although a fact well known, is something that enthusiastic newcomers to the scene need to accept.
There is, and always has been, a division of sorts in the art world, with ultra-high net worth individuals actually representing a minute portion of activity. The market is actually dominated by smaller investors. TEFAF confirms as much, stating that over 90 per cent of the lots that went under the hammer around the world were for less than £41,000, while 50 per cent sold for under £2,500.
This is where the action is at. This is where the real magic is happening. This is the heart and soul of the art market. The blockbuster sales make for great entertainment, spark up new conversations about seminal artists and timeless works, but on a day-to-day basis, it is the comparably modest sales that help keep art alive, help emerging artists thrive and help galleries invest in more art.
As an investor or collector you need consider fine art storage options, especially when you are transporting and storing works ahead of an auction.