Art, A safe haven in times of crisis?
Updated: Dec 2, 2020
At the time of writing, I’m not sure whether you will be reading this article sitting on a terrace, at the restaurant during your lunch break or... in confinement at home. Indeed, this last quarter of 2020 is characterised by uncertainty: regarding our mobility perspectives, which rules of protection to adopt, with a consequent impact on the economy and the functioning of its markets. This is a hard assessment after an already complicated year. Nevertheless, some sectors are less affected than others, such as the Arts. We invite you to identify potential opportunities in this nebula.
Art as a safe haven in times of crisis
In an article in l'Obs, Thierry Ehrmann founder of the Artprice platform, explains that the art market is the first market to have gone global.
“Depending on the economic context, the market evolves and sometimes refocuses itself on certain corners of the world, but in the end there is always a balance. A Chagall remains a Chagall whether you are in South America, Atlanta, Johannesburg or Kiev, it is always worth the same price.”
The art market is back up and has risen sharply in recent years. The number of collectors is now in the millions and continues to grow.
As we illustrated in our article from last September, contemporary artists continue to produce works and since the beginning of the confinement, online art sales have grown steadily. As a result, the art market is rather spared from the irrationality that affects the stocks or real estate markets, and thus helps to set it apart. It is therefore a question of knowing the codes and how they work, in the interest of having all the cards in hand to make the right choices.
Contemporary art, pleasure and investment
More than a simple market value, an artwork has before all an aesthetic value. Determining its market value is similar to other investments: the law of supply and demand, with the difference that subjective elements are added.
The main players in the valuation of works of art are on the one hand the cultural institutions, which include major collectors, museums and art critics, and on the other hand the financial institutions, which are made up of art dealers, gallery owners, brokers and other auctioneers.
Today, especially with the growth of social networks, the popularity of artists is very likely to influence the growth of their ratings, as demonstrated by the evolution of Alec Monopoly's rating in recent years.
When it comes to investing, the objective is therefore to anticipate future trends but also to know the artist's environment (his team, his patrons), his projects, his perspectives, in order to then pick or commission the works which will be important in the future and will generate an important return on investment.
An advantageous tax system dedicated to artworks buyers: professionals and private individuals
Each country has its own legislation which confers advantages according to each individual's financial situation.
For example, in France, companies subject to corporation tax or income tax can benefit from a tax deduction calculated based on their turnover. Some of the conditions stipulate that the artwork must be created by a living artist at the time of purchase and must be exhibited on the company's premises or loaned to a cultural institution, where it shall be accessible for 5 years. At the end of this period, if the company realizes a gain on the resale of the artwork, the taxation is also advantageous.
As a result, it is truly possible to stand out from the competition, to establish a brand image by acquiring a particular artwork, to promote an artist and support culture while making a profit.
Of course, there are conditions to be met on the one hand, and on the other hand a judicious selection of artworks to be made. Nevertheless, it is indeed a win-win (and fun/exciting!) opportunity for everyone.
Art as an investment opportunity
Depending on each person’s approach, positioning or investment, the acquisition of an artwork is a way of diversifying one's wealth.
To make an investment, the choice of a masterpiece is particularly important. Indeed, as explained above, it is a consensus of professionals who value artworks, essentially the masterpieces: Picasso, Chagall, Van Gogh... For these works of great cultural, patrimonial and financial value, the circuits are short and the risk limited given the international reputation of the work, nevertheless the entry ticket is reserved for the wealthiest among us.
For seven months now, the world has been experiencing a health crisis that is having an anxiety-provoking impact on markets, in our cities, in our countries and at home. Everyone is trying to find the resources to preserve their economic security but also to take the best possible care of their physical and mental health. Art in all its forms is a possible response on every level.