Could now be an ideal time to invest in artwork?

• The coronavirus lockdown and Brexit uncertainty undermined the art market
• But Art Market Research – which tracks painting prices – believes now is an opportunity for investors
• Those seeking a fortune shouldn’t just dive in, but from attending auctions to shopping at art college sales, we explain how to brush up on the tips of the trade

The art world was put into hibernation by coronavirus, yet experts believe now could be an ideal time to invest in a work of art. 

With restrictions on sales slowly being lifted you can now attend a live auction if you are willing to wear a face mask.

One of the biggest investment winners in the recent past has been contemporary art. Over the past five years, the most collectable pieces have risen in value by some 160 per cent, according to data compiled by Art Market Research, an arm of estate agent Knight Frank.

Over the past 12 months, this same index has risen in value by just under 5 per cent, yet between the coronavirus shutdown in March and June it fell 7 per cent.

Art Market Research says the market was undermined last year by Brexit uncertainty and China-US trade tensions. These issues were then exacerbated by coronavirus, but it now believes risk-averse investors may see it as an opportunity.

Younger generations, it says, will become keener to collect as the market’s growth is driven by online sales. Anya Zakharova is managing director of the Stellar International Art Foundation which finds art for collectors.

She says: ‘It is not just a new wave of art lovers who are happy to buy online without even visiting a gallery. There are also a number of collectors who need cash and are willing to sell at lower prices than before.’

But she warns against rushing into buying art simply as an investment. She says you must first follow your heart and discover what art you really love.

She adds: ‘The art world can seem daunting and scary from the outside. But if you love art, do not be afraid to take the plunge. Talk to art gallery staff about favourite artists and styles. It is their job to encourage new people to join the market – and not to frighten them away.’

If something catches your eye, the chances are that it will draw in other art fans. But before you buy, it is important to gain an appreciation and an understanding of what makes a piece of good art.

There are numerous books on the subject and you should also visit public galleries as they start reopening. Learn about the work of individual artists you like: where they were schooled and the previous sales prices their work commanded.

Industry magazine Antique Trade Gazette provides details of auctions plus gallery shows – as well as prices you can expect to pay. Contemporary art caters for a full range of budgets – from just a few hundred pounds to £50,000 or more.

As an investor, you are making a bet that someone will be prepared to pay more for the work you have purchased. When collector Charles Saatchi bought a pickled shark off artist Damien Hirst for £50,000 in 1988, most people thought he was crazy. Yet just over a decade later he sold it for £5 million.

A great place to start is an end-of-degree art college sale. This year the market has been thrown into chaos because of coronavirus shutting down courses early. But pieces are still being sold and there are ‘online exhibitions’ on college websites.

Among the colleges for nurturing talent is the Royal College of Art in Kensington, West London – where David Hockney and Tracey Emin studied – and Central Saint Martins College of Art & Design in Central London.

Another marketplace for new talent is the Affordable Art Fair. The next scheduled dates for shows are in London, at Battersea between October 22 and 25 and Hampstead between November 20 and 22. You can pre-register to attend.

It also offers online sales and showcases pieces by art graduates as well as more established painters. Items typically sell for between £100 and £6,000. DegreeArt.com is also a good website to seek out up-and-coming artists. 

Claire Gallagher, of Affordable Art Fair, says: ‘Acquiring art can be a great investment as well as a thrilling pastime if a hunch on a talented artist proves right. But even if a piece does not increase in value, there is an enormous reward to be gained from living with art that inspires you.’

Art brings joy, makes us healthier, and allows us to reflect on life – so now may be the perfect time to buy 

Sadly, the vast majority of artists will never make investors rich. But as Gallagher says, collectors should view their rewards as far more than just being financial.

Unlike with stocks and shares, collectors enjoy awe-inspiring artwork that brings pleasure just by looking at it – and can prove a fabulous asset to a home. Gallagher adds: ‘Art brings joy, makes us healthier, and allows us to reflect on life – so now may be the perfect time to buy.

‘And if you invest in the right piece, it not only has a positive impact on your mood, but can prove a shrewd investment.’

Attending an auction without bidding is not only free, but a fun way to learn the ‘trade’. Major auctioneers such as Christie’s, Bonhams and Sotheby’s have experts to give advice. Auction houses usually also hold open days when you can talk to experts.

Once you have gained enough confidence to bid, it is important to set yourself a maximum price to stop you getting carried away. Remember, you will have to pay a ‘hammer price’ commission that can be as much as 25 per cent on top of the sale price.

Most art investors buy paintings for the long term, keeping pieces for at least ten years. So insurance is a must. 

It may well be covered under your existing household insurance, but should be individually named if worth more than £2,000. Alternatively you can use a specialist insurer such as Hiscox to ensure your artwork is fully covered.

When selling, you must also pay commission to an auction house – which could be as much as 15 per cent of the price.

On top, there could also be an insurance fee for any accidental loss or theft that amounts to 1.5 per cent of the artwork’s value. If the art is particularly valuable, it could be liable to capital gains tax, which kicks in at 20 per cent on gains this tax year of more than £12,300.

toby.walne@mailonsunday.co.uk