What’s The Better Art Investment?
A client recently asked us “what’s the better investment?:”
Artwork A: A $4,000,000 secondary work by a name brand artist, or:
Artwork B: A $75,000 by a lesser known artist from a reputable NY gallery.
Here is a breakdown of our answer:
Artwork A is by a name brand artist. But, it’s available on the secondary market through someone who knows someone who knows the seller. Sales with multiple middle men come with risk. Provenance and condition, two huge cost drivers, also need to be assessed. There can be serious authentication questions with many secondary sales that impact resale value.
There is an allure to buying an artist with an established secondary market. However, the secondary market is more volatile than the primary market, so resale values are hardly guaranteed. They can be significantly more, or less, than price paid.
Artwork B is a primary market piece available through a reputable NY gallery that heavily controls the artist’s market. It has a lower acquisition price and a different risk profile.
There is no established public secondary market for Artwork B. Work by this artist is resold privately, through galleries, rather than through public auction. The artwork value is therefore more likely to hold over time rather than skyrocket or plummet on a dime.
Artwork B is by an artist who is not yet considered to be part of the canon of art history. That said, the gallery is laying the groundwork for that through solo shows, international exposure, and institutional support. In this way, the current price can be seen as a bargain.
There is no crystal ball for artwork sales, and neither investment is good or bad. They are simply different.
We hope this sheds light on the different factors to consider, and here’s more information on the cost drivers for art. What’s also important to note is that art is a highly illiquid investment. We never recommend buying it solely for financial gain and always advocate for our clients to collect art they connect with on a personal level; this type of work will yield emotional dividends in the long term.
Janaina Tschäpe and Jeremy Guy in a client’s entryway.