It's 1884. On the occasion of the upcoming Easter, Tsar Alexander III set a unique task for his goldsmith Peter Carl Fabergé.
His goal was to make a unique gift for the wife of the ruler — Maria. The result of his efforts was a beautifully made egg, which, however, cannot be compared to any folk Easter egg. Fabergé's work was made of gold, silver and rubies, among others. The tsarist couple liked the gift so much that it became an annual tradition that survived Alexander's death and was cultivated by his son Nicholas II.
130 years later, a scrap dealer in the United States came across a gold egg with a watch inside while shopping in the antique market. He decided to buy it and sell it quickly. The initial lack of buyers forced him to obtain information about the newly acquired item. It only took a few moments spent on the internet for the American to realize that he probably gained tsarist property for just $14,000. He turned to London's Wartsky for help, which confirmed the originality of the item, bought it from the man and almost immediately found a willing petitioner. No one officially gave the price to buy or sell the historical treasure. However, from unofficial information it is known that the value of the most expensive bought egg is: 18.5 million dollars, which means that the buyer of scrap metal on his investment certainly didn’t lose.
There are several Fabergé eggs not found in the world. You can count on a miracle and search the garage or the yard for a golden egg. On the other hand, you can consciously start being interested in the art market, which turns out to be one of the best places to invest our money.
There is a common belief that real estate is a fairly obvious investment for capital. However, this market is currently very narrow, with a high entry threshold, and as history shows, it is not always as stable as it may seem. The situation with the art market looks completely different. According to the Artinfo.pl report from 2018, the auction houses recorded a record sales of PLN 252 million (in the first half of 2017 it was PLN 86.3 million) as well as a record number of 302 auctions. However, this is not a one-off explosion, but a permanent process. The latest report from the newly ended year 2019 indicates a consistent increase in sales of all auction houses. Turnover increased by around 17 percent (from 252 million to 294.9 million), and the number of auctions increased by 35! This year, the largest transaction in the history of the Polish auction market was also carried out, 20 bronze figures by Magdalena Abakanowicz were sold for PLN 8,024,000. As Artinfo.pl writes: “These are the absolute heights of our market, and at the same time a demonstration of its incredible strength.”.
The numbers and statistics are overwhelming. Do they mean that the investment in art is also reserved for people with a very high financial status? Of course not. Beginner collectors who are looking for safe investments can place their savings in the works of living artists of the middle generation, awarded and not creating mass. According to Gazeta Bankowa: “Their works can be purchased from as little as PLN 5,000, and the value of these works can grow by as much as 10-15% per year.”.
Going further, it turns out that the law regulates the sale of works of art in a very convenient way for investment. Polish legislation — unlike, for example, French — treats paintings and sculptures as chattel. This means that after 6 months from the purchase of the work, its sale is not subject to income tax, of course, if the sales contract is undoubtedly private.
What is the situation in the world? According to a report by the Art Basel portal, the art market in 2017 achieved total sales estimated at USD 63.7 billion, an increase of 12% compared to the previous year. In 2019, the same portal reports that the turnover of this market amounted to USD 64.1 billion. The 2017 report also draws attention to the huge increase in the share of online auctions in the market. He says that over the past five years (since 2017), the online art market has grown by 72%, reaching about $5.4 billion. In 2019, it reached USD 5.9 billion. The United States, China and the United Kingdom remain one of the biggest giants of this market.
Art is one of the safest property carriers. Its market is an independent market and is also the largest segment of alternative investments (ahead of the market of e.g. wines, diamonds or autographs), which began to develop strongly since 2007 (when the financial crisis began). The value of works is not based on actions, bonds or raw materials, but on the artist's recognition and history of his work, which is known to always be unique. Art is also a safer "place" in times of other broadly understood crises than financial. Compared to real estate, it is possible to conveniently transport works, which in the case of the former is impossible. Purchased works can also be exported abroad (in Poland this is regulated by the Act on the protection of monuments and the care of monuments; in the case of older works and of greater value, the law requires a permit to transport them across the border, but it still gives the opportunity to transport investments which cannot be said about e.g. real estate, transport must be well planned but it is possible), to countries that do not suffer any drastic ailments and sell the work even more profitably.
There are many other reasons why you should invest in art. Demand for it is always greater than supply, because it is not produced to satisfy the market and the needs of consumers (in other words, it is not affected by typical market mechanisms). Works of art are referred to as objects of admiration. Let's not be afraid to say that in the world of quick and superficial decisions, it is also a prestigious attribute of people who have intuition and are able to spin their assets. It is enough to mention respected personalities from the world of art and business who place their savings in this alternative investment segment; these include: musician Eric Clapton, actor Brad Pitt, François-Henri Pinault president of the Kering group and Bernard Arnault, president of the LVMH group.The owners of works of art are also contemporary monarchs, e.g. from Arab culture. David Rockefeller in his collection had paintings including Claude Monet or Pablo Picasso. The Beckham marriage created their collection for 8 years, without disclosing this fact to the world of media. This shows very well that the collecting art by wealthy people from various industries can not be simply called a whim, it is rather the result of the mystery of art that absorbs its lovers. Additionally systematic participation in auctions and sinking in the meanders of this market can also enable the acquisition of many new business contacts that will be able to further increase our profits and experience.
Collecting works of art is also becoming profitable. Creating your own collection can become not only a beautifying element of our living space, but also a source of income. Many times collectors make their collections available to museums and galleries, of course also making profits from it. It is also worth subjecting the collection to marketing activities. Reasonable collection management can positively influence the interest of all industry institutions.
Art has always been associated with beauty, so when we invest, we should not ignore its aesthetic aspects. A well-thought-out collection becomes an eye-catching attribute of our apartment or workplace. Catalogs related to interior architecture, very often in their projects reach for art, making it an essential element of decor. Research "Calm and collected" made by Art Found shows that people who interact with art have a better mood and are more satisfied with their lives. Using the offer of cultural institutions filled with works of art also brings other benefits, such as broadening knowledge, peace, reducing stress and reason for reflection.
So what kind of art is it worth investing in? In Poland, young art definitely dominates the market. According to the above mentioned Artinfo.pl report, between 2018 and 2019, young art scored a 17.6 percent increase in sales. According to the Art Basel report, post-war and contemporary art was once again the largest sector on the global market — its share in 2019 was 53%.
Passion is very important in getting involved in this market. Professional advisers confirm that the work we are buying should be liked and excited by us. To sum up, investing in art requires tremendous knowledge and patience, but the effects can not only enrich us financially, but also develop our sensitivity to culture. It can become not only a hen laying golden eggs, but also a new way of being.