Suppose you have quite a bit of money left over.
Putting it in your savings account currently yields virtually nothing due to the extremely low interest rates.
Is investing in art a smart alternative at the moment, because works are becoming more valuable?
And if so, how do you approach it?
Corona also leaves deep traces in the art trade.
More than 60 percent of the fairs were cancelled.
Global sales fell by 22 percent in 2020.
The Art Market 2021,
published annually by Art Basel, shows that both galleries and auction houses have taken a huge hit.
“I get people in who say: I have a house, I have shares, I have bought some bitcoins.”
Willem Baars, art connoisseur and gallery owner
Nevertheless, according to Willem Baars, art connoisseur and gallery owner of Willem Baars Projects, the art market is perhaps stronger than ever.
"That is mainly because money is now so cheap. An enormous amount is printed and pumped into the economy by governments, and the art market also benefits from that. I get people who say: I have a house, I have shares, I have bought some bitcoins. And now I want to invest in art."
'Attention mainly goes to purchases that were spectacular'
According to Olav Velthuis, professor of art sociology at the University of Amsterdam, the trend in investing in art is fueled by success stories in the media. "The attention is mainly focused on purchases that turn out to have been spectacular, works that were bought for, for example, 1,000 euros and that are sold at auction for 100,000 euros. It happens, but if you look at the long term, it appears from studies that investing in art is extremely risky."
According to Velthuis, there are several reasons for this.
"It is possible to invest risky, but to compensate for that, there should be a high return. That is not the case."
The value of a work of art develops differently than a share in a company: a company can do well or badly, but art just happens to be 'in' in order to become more valuable.
"In addition, there are high transaction costs for buying and selling art. Think of an auction. Between 10 and 25 percent of the purchase and sale amount. In addition, you have to have that art at home - certainly at expensive art - also consider security and maintenance costs."
See also: Why are tweets and digital artworks suddenly worth millions?
Selling can take a (very) long time
If you want to get rid of a work of art, it usually takes months before it can be auctioned or a dealer finds you a buyer.
Sometimes it even takes years before you can sell.
"If I want to get rid of a share, I can do so within half a second," says Velthuis.
His last point: you can no longer sell a lot of art.
Most artists are like mayflies.
"The turnover rate is high. Flip through an art magazine from twenty years ago and you will see names that have long been forgotten. I made an estimate: The chance that new work by living artists will never make it to the market is 95 percent," according to Velthuis.
“Go for artists who are already hanging in museums, sold at auctions.”
'Buy work you're in love with'
That is why Baars advises to go for works by artists who have proven themselves.
"That starts at a minimum of 10,000 euros. Go for artists who are already hanging in museums, who are sold at auctions; who have penetrated the canon."
There is one big difference with other forms of investment: you can have a lot of fun with a work of art.
Velthuis: "Buy work that you are in love with. Sell it when you need money and it has increased in value? Fantastic. If not, you have enjoyed a work of art for years."
Baars fully agrees: "Art can excite you."
Although there has been a lot of money involved recently, he would therefore not quickly invest in a digital work of art (a 'non-fungible token', NFT for short).
"That's a sheet with a code on it. I personally don't get excited about that."
It seems like everyone is investing.
Are you also considering it?
Independer explains what it entails (and what the risks are).Keywords: