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How supporting emerging artists can also be a good investment

Sponsored by Red Eight Gallery
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Red Eight Gallery’s art expert Julian Usher explores whether a beautiful piece of art can also be a wise investment

 

If you’ve ever walked past a gallery and fallen in love with a particular artwork, you probably weren’t thinking about its investment potential. It’s a well-kept secret in the art world that even work by emerging artists can offer substantial returns if you’re willing to part with it in a few years’ time.

 

Wealthy investors have long known that passion assets such as classic cars, art and even rare postage stamps can be a smart counterweight to stock market volatility. Not only do they act as a hedge against inflation, they also typically retain their value during economic downturns and deliver impressive mid-to-long-term returns.

 

The good news is that you don’t need to remortgage your house to splash out on a Rembrandt or Picasso. Investment-grade art is now more accessible than ever thanks to the meteoric rise of contemporary art and growing interest in emerging talent.

 

Over the past couple of decades the sector has experienced an impressive rise in auction turnover, from just $92 million in 2000 to $1,993 million in 2019. That’s equivalent to a 2,100 per cent increase. According to the Citi Global Art Market chart, the sector has also performed well against the stock market over this period, delivering an annualised return of 14 per cent over the past 25 years, compared with 9.5 per cent for the S&P 500.

 

Contemporary art is thriving despite Covid

 

The past 18 months have tested the nerves of even the most seasoned investors, but art has continued to hold its value or even advance during the Covid-19 pandemic. Citi’s 2020 Global Art Market Report notes that even during the first seven months of 2020, contemporary art averaged a 6.7 per cent return, beating all other asset classes.

 

Red Eight Gallery has echoed that trend, delivering an average return of 24 per cent across 2020 for our investors. According to the Citi report, the biggest losers over that same period were commodities (-22.1 per cent), real estate (-14.5%) and private equity (-5.9%).

 

Contemporary art has held its value during the pandemic thanks to its status as a highly covetable luxury asset. Investment-grade art tends to be little affected by wider market factors such as macroeconomic and political drivers. Prices are largely determined by an artist’s reputation and the size of their following, meaning that it’s important to select artworks with their future performance in mind.

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Request your free Art Market Report to find out how you could profit from this rewarding alternative asset.

Sponsored by Red Eight Gallery
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