Investments in the contemporary art are increasingly attracting the attention of people from different spheres wishing to preserve and increase their capital as one of the alternative investment options. As experience shows it is really an effective investment of money on condition of a thorough analysis of the factors affecting the price of objects and the popularity of the artist.
It is worth mentioning, that sometimes it happens that an artist or an art dealer unreasonably overprice an artwork. The following are the factors affecting the cost of a work.
Pricing in the world of art has its own laws. For a beginner, working in an already existing genre and style the cost of a work depends on the techniques, material, size, quality. As he advances the cost depends on his participation in exhibitions, purchasing of his works by museums and private collectors, thus the prices for his works are growing.
If an artist creates a new style or movement, the pricing depends on the following factors:
- The uniqueness/originality of the style or the movement of the artist
- The background of the artist in the form of:
- participation in international exhibitions and projects;
- holding solo exhibitions and publications in reputable catalogues;
- recognition by critics and reputable persons in the art market;
- the acquisition of the author’s works by museums and distinguished collectors.
- The number of works which the artist has created (constant work of an artist is an indicator of his relevance and ability to meet the market demands concerning the amount of works)
Also the price of an artist is influenced by a gallery or an art dealer who promote him. Introducing a certain artist a gallery provides its quality assurance which is confirmed by its reputation and name. If the gallery is promoting this artist (organizes exhibitions and media exposure of his works) - it is a guarantee that the artist will not sink into oblivion and the price of his works will grow.
In this case an artist can be compared with a brand. If you believe that he will develop (by himself or with a help of a gallery) - then his works will become a profitable investment.
Attractiveness of investments in the contemporary art can be explained by the following factors:
- The art market is not directly dependent on the securities market, and thus allows preserving and increasing capital even in times of crisis. Such times, in contrast, have an overall positive impact on the general dynamics of the art market.
- This market is opened for investors with any start-up capital (from a few hundreds to millions of euros).
- High yield compared with other alternative investments.
The art market has its own index: Artprice Global Index summarizes the data on the results of auctions with reference to conditional US$ 100.
The disadvantage of this method of investments is low liquidity. To find a buyer for a painting or a collection often takes time. It is necessary to consider this fact when purchasing a piece of art. So investing in art should be considered as medium- or long-term investments.
For a person not familiar with the art market at the early stages it is better to listen to advice of professionals. The more experience in this area you have, the less is a possibility to buy an overpriced work.