Growth in the International Art Market

The LA Times has an interesting article on the growth of the international art market as well as interest in art as an investment.  Much of the growth in the art market has come from the BRIC nations, as the number of millionaires and billionaires grow.  With the growth in weatly, comes additional interest in real estate, fine art and luxury goods.  The article now notes the global art market is now worth nearly $60 billion.

The LA Times reports

Art as an investment really didn't come into vogue until the British Rail Pension Fund, which had begun acquiring art in the 1970s, began to divest of its artworks, said Barbara Guggenheim, of the art consultancy Guggenheim Asher Associates. The sales, which mostly occurred in the 1980s and 1990s, netted tens of millions of dollars for the fund, leading to an 11% return.

"For the very first time, Wall Street had something very concrete to look at as a model," she said. "And Wall Street loves graphs."

The global art market is now worth about $60 billion.

These days, though, it's not just art. Wary of losing wealth in the shaky stock market, the super wealthy are also putting money into alternative investments, such as classic cars, wine, gems and watches. Sotheby's sold a giant flawless pink diamond for $83 million in Geneva last month, the highest ever paid for a gemstone at auction.

But as sales of other luxuries including high-end condos boom, art can go hand in hand, said Martin Friedrichs, assistant director of the Hollis Taggart galleries on New York's Upper East Side.

"There's a boom of high-end condos here, and people need something to put on their walls," he said. "It's much nicer to hang a piece of art than a printout from your online brokerage account."

These kinds of high-end investments have been surging as the number of millionaires around the world has increased dramatically in recent years.

According to Wealth Insight, a British firm that tracks global wealth, the number of millionaires in China grew 90% between 2007 and 2012. The number of billionaires in that country grew 400% from 2008 to 2012. And the number of high-net-worth individuals in the Asia-Pacific region grew 29% between 2007 and 2011.

Chinese buyers bid heavily for modern art: Picassos, for example. But Hoffman said they've also begun to invest in Chinese antiquities.

Growing wealth among the rich in Mexico has led to more competition for Mexican and other Latin American art, as collectors with more money begin to buy works by artists from multiple countries.

In Mexico, the number of millionaires grew 32% between 2007 and 2012, according to WealthInsight. There were 145,000 millionaires in that country by the end of 2012, holding $736 billion.

"We've seen in the past five to seven years clients who did not exist before who are buying quite heavily," said Gabriela Lobo, director of Christie's Mexico.

Source: LA Times