An old school way of thinking that I often hear is that art is an illiquid asset, but the same can be said about real-estate. The fact is, a shrewd investor doesn’t buy and sell real-estate, they hold onto their property and use their real estate asset as collateral to borrow against when they need liquid funds.
Today most countries with developed financial sectors offer financial options for art-collectors who wish to use their art-works as collateral against a loan. My understanding of an investment is something that a person invests in with a long-term vision.
Short-term buying and selling cannot be considered an investment, but rather as speculation. Over the years art has proven to be a solid investment that can hedge against inflation, and with more financial institutions following the bandwagon of accepting art as collateral, the old school thinking of art as an illiquid asset does not hold water any more.
A recent example of art as an investment is the auction of the Lehman Brothers art portfolio, where most of the art-works achieved record and fetched over $12 million. For those who still believe that art is an illiquid asset, the reasons could be that they are not knowledgeable about financial options that are now on offer, or they confuse investments with speculation. The reality is art possess all the features for it to be deemed an asset class.
Mónica Arias
December 4, 2011
Hi Michael! You are absolutely right! Art was considered illiquid for many years but now, given the global crisis and the sudden upcoming of more uncertainty as a result, Art has become not just the desire to get a crafted beauty but a future “financial anchor” for years to come.
I love your article! Best,
Michael T. Kanyuchi
December 4, 2011
Hi Monica,
Today art is being taken as an serious solid investment.The beauty of art is that beside the monetary side it also a passion investment for the soul.Personally i tell first time art collectors to invest in what they love as its all about ones taste and preference.So with an investment in art one gets to enjoy the best of both worlds.
Mónica Arias
December 4, 2011
Yes…definitely Michael. Art is joy, beauty and subtle experiences that wrap us up with magical emotions…Best,
John Neville Cohen
December 20, 2011
Michael, one other aspect that is important, not only is such an investment immensely enjoyable, but there is the added bonus of the possibility of an unexpected, incredibly huge increase in value! Just consider what is currently happening to the market value of 18th century Chinese antique jade carvings – certain high quality pieces have been breaking records, but not by small amounts either, sale prices are as much as six to eight times the previously considered top value!
Michael Kanyuchi
December 21, 2011
John what you explained “the unexpected” is a trend which is currently happening in the art markets.The art market has fast evolved over the past years especially with the emergence of little know art forms into the mainstream art markets .another factor that has influnced the art market is the legions of new art collectors who have a distinct taste and preference
John Neville Cohen
February 22, 2012
This has to be good news! But as an artist (offering very different, original art, much admired, with valued recognition) yet sales are rather slow and it is so difficult to know where and how best to attract these buyers. http://www.artist-john-cohen.net