BWAD presents: The Global Art Market

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BWAD presentsThe Global Art Market

• Art as an alternative investment vehicle
• by Serge Tiroche
• February 21, 1999

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Contents

• Scope
• Market Structure
• Key Players
• Oligopoly ?
• Art as an investment
• Who should buy Art ?
• How to buy Art ?
• Recommendations
• Conclusion

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Scope

• Vast Market
• Focus on Market for Impressionist, Modern and
  Contemporary Paintings and Sculpture (i.e.
  1860-1960)
• But same reasoning applies to all types of
  Collectible Art, Furniture, Vintage cars,
  Carpets, etc...

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The Market - Players Structure

• Artists
• Collectors
• Gallerists
• Dealers
• Consultants
• Museums / Trusts / Institutions
• Auction Houses
• Art Fairs
• Internet

5
Market trends

• Growth (, of players, new segments)
• Concentration (in Auction Houses)
• Major trend Disappearance of retail
• Cyclicality and correlation
• Consolidation (eg. France)
• Sophistication
• More players
• More products (Art Credit, Packaged deals,
  Guaranteed Minimum with advances)
• Internet (On-line auctions, Prices, Virtual
  Galleries, Brokers, Access to information)

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Oligopoly or free market ?

• Free market develops into oligopoly
• Reasons Supplier Cost, Buyer Price

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Art as an investment

• Basic economics apply Return vs. Risk
• But, not a commodity, prices flexible
• Less efficient - i.e. opportunity
• Less liquid - i.e. time lag
• Diversification benefit
• Enjoyable investment
• Other benefits (e.g. cultural image)

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Who should buy Art?

• First and foremost, must enjoy Art
• Home owners (decorative purposes)
• Patrons (supporting young artists)
• Those looking for a new hobby/passion
• Status seekers
• Private Investors/Collectors
• Have a mix of the above profiles
• Seek diversification of invested capital
• Optimists (every piece is unique)

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How to buy Art ?

• By yourself
• Requires extensive research
• Cheaper but riskier
• (Authenticity, Condition, Valuation)
• With Professional Advice (for higher value)
• Added value ?
• (Market knowledge, contacts experience)
• Where to get advice
• Banks
• Auction Houses
• Independent Consultants, Galleries Dealers

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Recommendations

• Start by discovering your tastes (theoretical
  knowledge helps a lot)
• Its a passion - invest in what you love !
• Take your time, build collection slowly
• As tastes evolve, replace old with new
• Diversify, buy young and established
• Dont get carried away - extra cash only
• Take an advisor you trust

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Conclusion

• Art is an alternative investment vehicle
• Risks and rewards
• Must have strategy basic knowledge
• Avoid short-termism and speculation
• Good advice has real added value
• Patience builds good collections
• Can start today !
• Enjoy, enjoy, enjoy