Art as an Investment Vehicle

The world’s super-rich are buying art to gain status and for the attractive investment. Currently, approximately 3% of the world’s wealthy now own art though that number is expected to grow to 30-40% in the next decade.

Art as a high-end investment has been fueled by the dramatic increase of millionaires world-wide. According to the British firm, Wealth Insight, the number of millionaires in China grew 90% between 2007-2012, their number of billionaires grew 400% from 2008-20012.

In the Asia-Pacific region high net-worth individuals grew 29% between 2007-2011.

In Mexico, the number of millionaires grew 32% between 2007-2012, with 145,000 millionaires in Mexico by the end of 2012, holding $736 billion (as per Wealth Insight).

Art as an investment has three attributes: price appreciation, social status, and personal enjoyment. The art market is opaque; many deals are done in private with public auctions as the only way to gauge value. Art has a different return on investment cycles with a low correlation to equities.

“From 1987 to 2012, the Mei Moses World All Art index showed an average annual return of 5%, while the Standard & Poor’s 500 index added 9.6%. Over 60 years, the art index showed average annual returns of 9.5%, while the S&P was up 10.3%.”

For more information please see complete article, “New wealth taking art market to new heights,” by Alana Semuels, LATimes.com.

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