For investors with serious cash lying around – think five, six, seven, even eight figures – buying a work of art outright is a legitimate option. Fancy a plate by Picasso? Yours for $5,000. An oil painting of his mistress? More like $155 million.
The process of buying and selling high-value art tends to be centered around a few big auction houses which hold regular public events as well as organizing private sales – Christie’s and Sotheby’s are two of the best known.
They act as brokers, and so get paid a double commission (from the buyer and seller) on any sale, just as if an investor bought or sold a company’s stock. But unlike stock market brokers, there’s not as much competition to keep fees low: in the UK, Christie’s charges buyers a fee of around 20% for its services.
Once investors have their artwork, they can display it at home or put it into storage for safe keeping. But some savvy investors might loan their art to a gallery. Sure, they risk damage (remember what Mr Bean did to Whistler’s Mother? 😂) or theft (which is less likely than Hollywood would have you believe), but having it on display is a constant reminder of the art’s value – and might help it sell on for a higher price in the future.
If the above seems a bit beyond your reach (at least right now), don’t worry. Thanks to advances in technology – including blockchain – these days, investors who don’t have millions going spare can invest in fine art, too.
Just as robo-advisors have helped to democratize access to financial advice and portfolio-based investing, there are platforms that allow investors who aren’t filthy rich to own a share of an artwork and enjoy access to its investment potential for only a few hundred or thousand dollars.
By and large, art investment platforms work in fairly similar ways. Some buy an individual artwork themselves, then create and list shares that other investors can buy – making money by charging a fee for managing the process, as well as for storing and insuring the art on investors’ behalf.
When the piece is eventually sold, platforms tend to take a share of any profit, too. Other platforms may not buy art directly, instead connecting investors with owners who might want to sell a fraction of their artworks.
There are also platforms focused on allowing investors to buy and trade works by as-yet-undiscovered contemporary artists. Artists can sell shares of their works and thereafter distribute income from any fees received if the pieces are loaned out to galleries or sold outright.
Should the art become more valuable over time, investors who got in early can paint the town red with their profits.