Fine Art: A Symbol Of Prestige, Taste, And A Very Good Investment

Mme Matisse: Madras Rouge (The Red Madras Headress)
Henri Matisse, 1907. Barnes Foundation, Merion, PA.

Throughout history art has been a status symbol of prestige, wealth, and luxury. Today fine art continues to retain its position as one of the most popular investments of passion. Buying, selling, and collecting artwork has become an esteemed luxury pastime. Art is valuable for its aesthetic appeal; its brand, that is to say whether it carries the name of a famous artist; and its price. Despite recent global market fluctuations, the art market is one of the prime luxury segments that has been slow to fall. Whether due to the influx of wealth in emerging countries or a re-vitalized interest in art investment, auction houses have recently had some of their biggest sales even amid the presence of an uncertain financial market.

The corporate world in particular has become aware of the investment power of a great piece of art. Deutsche Bank has now assembled the world’s biggest corporate collection that today is comprised of 50,000 works of art displayed in 1,000 branches and exhibitions around the world. French bank Société Générale launched its contemporary art collection after the construction of the Société Générale tower in 1995. Today the collection constitutes over a hundred and seventy works of art and offers a wide range of plastic creations from the 1970s to the present.

Demand for fine art in 2007 was strong in both mature and emerging markets. As in past years more Europeans (22%) and Latin Americans (21%) invested in Fine Art over 2007 compared with their counterparts in North America (11%), the Middle East (10%), and Asia (13%). Ultra-high-net worth individuals (UHNWIs) allocated more to fine art than any other luxury class. The expanding Russian economy in particular served to be a new source of revenue for Christie’s International and Sotheby’s, their combined Russian sales totaled US$324.9 million-a 45% increase from their US$223.6 million total in 2006.

Christie’s International sold $3.5 billion in fine and decorative art during the first half of 2007, a 7.7% increase from the same period during 2006. Such a statement proves that the art market is healthy even as the collectors of contemporary art pull back from their previous shopping spree. What has been selling recently is modern and impressionist art. Impressionist master Claude Monet sold at least $121.8 million. During the first half of 2007 Christie’s sold 12.6% from 2006 sales in Modern and Impressionist art. Postwar and contemporary sales were down 12.4% from the previous year except for the fact that contemporary-art painter Francis Bacon sold $114 million.

In addition, the Yves Saint Laurent and Pierre Bergé Art Collection will soon be sold by Christie’s. Comprised of the likes of Goya, Mondrian, Matisse, and Léger, the sale is said to be one of the most spectacular of the season to be held in late February 2009-an event that will honor the great taste of YSL and Bergé as well as a celebrate Yves Saint Laurent’s magnificent contributions to the world of fashion and art. Half of the proceeds will go to Pierre Bergé and the other half will go to the Pierre Bergé Foundation.

The art market, like many luxury market segments, is often a latecomer to economic downturns. Historically, investments in art, private planes, luxury automobiles, and other luxury collectibles have been immune to market turmoil. Some analysts have predicted the possibility of a weakening art market due to the current financial instability. The impressive sales at Christie’s and the increasing art acquisitions by major world banks testifies that the art market is very much healthy and growing in appreciation, prestige, and wealth.