Ladies and gentleman you may have noticed that the art market has done pretty well in the recent years. It is beyond doubt that it has done better than the stocks, shares, and commodities. If you go back 10 years, the worth of modern art market was half of what it is worth today. The prices of some paintings have gone insanely high, sometimes 10, 20 times of what was originally paid for.  Many of you are already buying art that’s one of the reasons the market has grown, but not all of you. Some of you are still shy about spending your strenuously earned millions on arts. You are right to be cautious. Making money out of arts is not as easy as it looks. But there is a way to play and win in this market, just like there is in the financial world. The business may have grown beyond all recognition in the last two decades but the tricks of the trade are as old as time itself.

It is said that art follows money. There are people for whom the work of art is beautiful, but its value is beyond comprehension. But for some, it is an asset. Let’s see what it is about art that makes it an asset.

Until the 19th century, the art market was a trade that just trickled where aristocrats, sports, antiquities and Renaissance mastered. The exception was the 17th century Holland where the urban middle-class drove a bull-market in art, but the European art market only really took off in the mid-18th century, when all the wealthy new entrepreneurs and industrialists caught the collecting bugs for both old masters and what was then being created fresh. Art became a popular passion. Half a million people were attending the Paris salon by the end of the century. The change to see art as a form of profit came in the middle of the 19th century when the art market fell into the hands of middle class into the new big industrial fortunes. The great difference between the king of prints in the land of aristocracy and the new middle class of merchants is that the former buy art to keep while the latter has always kept an eye on a profit. Today’s collectors and dealers tell you that art as an asset is a recent phenomenon. So, you might quite reasonably think that this is a craze that will come and go. But the smart guys in the room across the channel saw the future over a century ago. Back in 1904, a group of collectors under the direction of a private collector decided to put money and buy works of contemporary artists during a period of ten years. They had decided from the beginning that after that period of ten years they would sell the works at an auction. As decided, they sold it and made huge profits.

In today’s world, art is more useful than it ever was; it is a financial instrument in a sophisticated global economy. There are hedge funds investing in arts and finance companies are lending money, taking the art you own as collateral. Increase in the prices has been so steep that many veteran collectors have priced almost tragically out of the market. Art collectors think of art as an asset class, an investment like stocks and shares, gold and currency. Of course, it can be pretty but art is better than a vase of flower or a handbag. There are various avenues of investments that you can make these days in luxury objects like boats, cars where the money goes down but there are some ways where the value can go up. The growth of values that we have seen over the last 15 years in modern art market has encouraged more people to come into the market place. These are the people who want to invest in something that they enjoy.

Let us not deny that many of the wealthiest people of the world buy art for the same reason that they date models — they buy art because they can afford it and because they love how it looks! But there is an army of collectors who quite understandably visit a modern art gallery, buy an artwork and expect their art to do more than just please their eye and mind. For them, Art is an Asset.