Art can act as a hedge against inflation, being a store of value and wealth preservation. In this day and age it is a real, tangible asset that often draws comparison with the highly intangible stock market.
Salma Shaheem,Joint Venture Partner and Head of Middle Eastern Markets at The Fine Art Group gives a brief insight into the ‘art’ of fine art investment with her top tips:
1. A strong portfolio isn’t always a sizeable one
Art is a real asset that enjoys a negative correlation with traditional assets, and therefore acts as a hedge against inflation. A valuable collection can start with as little as 5 or 6 very rare, museum quality pieces.
2. Time is money
The art market is very opaque, and this is one of the primary reasons collectors work with art advisors. Seeking advice from people that are reputable and well versed in their area of the market, can be extremely beneficial. Working with professionals helps collectors save time and effort otherwise spent on research and due diligence, although this can be a very fruitful experience for the collector they may not have the luxury of time.
3. The art of research
From a consumer and academic perspective, research is probably the most important aspect of the art industry. Alongside reading, this entails visiting galleries/fairs/museums, viewing the art in the flesh (it’s a very different experience than looking at a high-resolution image). Art advisors spend hours researching artworks, artists, art fairs and conducting primary research through their network of industry professionals.
4. All the rules apply
Acknowledge that there are many different sectors of the art market and that they all behave differently.
There is an element of risk in every investment transaction, in every industry. Knowledge is key and if you have appointed the correct professionals, namely your advisor, to help you build a diversified art portfolio, there is great potential for long term capital growth.