Art as an Asset

Bloomberg is reporting that art by both Andy Warhol and Damien Hirst  out performed the Standards and Poors index over the past 10 years.  The information was gathered from new measurements by Artnet. In these uncertain economic times we are seeing more collectors and investor look at art as an asset class.  Additionally, over the past several years we have seen more sophisticated and complex tracking mechanisms which show the strong return on investments in quality art.  It is now more than anecdotal, but proven through quantitative analysis and constant tracking of sales.

The emergence of art as an asset class can certainly bolster the need for quality and qualified appraisal reports and valuations to assist investors and banks.

Bloomberg reports

Since 2002, Hirst’s prices have increased almost threefold, though they had risen fivefold through 2007 and have since fallen, according to a graph compiled by Artnet using its new product. Warhol has performed even better, with prices gaining fourfold and almost returning to peak 2007 levels this year. The S&P 500 has risen about 7 percent in the decade.

Art is gaining ground as an alternative investment, with many new collectors coming from the financial industry and from emerging markets, Hans Neuendorf, the Chief Executive Officer of Artnet, said in an interview in Berlin. The company’s new product is designed to help investors compare value.

“This makes investing in art much more reliable,” Neuendorf said. “Art has been a good investment over the past 10 years, but there are big differences in performance among artists. It’s more interesting to look at individual artists, in the same way that you look at stock-market segments, or individual companies.”

The art market has sustained its boom as stocks and bonds collapsed this year. While the S&P has fallen 1.3 percent, annual sales of contemporary art rose 35 percent from the previous year at the main 2011 auctions at Sotheby’s (BID) and Christie’s International, according to Bloomberg News calculations. New buyers from the U.S., Russia, Asia and the Middle East raised the bidding.

Source: Bloomberg, click HERE to read the full article.