art break

The Color of Money

jeff coons
Will it burst or will the art market keep on growing? Jeff Koons.
  • Why it matters

    Why it matters

    As investors have fewer ways to place their money profitably, they increasingly turning to the risky world of art.

  • Facts

    Facts

    • Christie’s recently presided over a record art auction, which generated $853 million.
    • German art lovers were outraged on Thursday when two works by Andy Warhol were sold by Christie’s for $82 million and $69.6 million; they were originally bought by a casino for $185,000.
    • Artists in high demand among investors include Andy Warhol, Jeff Koons, Gerhard Richter and Jean-Michel Basquiat.
  • Audio

    Audio

  • Pdf

Some say art can save your soul, apparently it can save your body, too.

More and more people are turning to art as an investment as other possibilities fade away. Savings accounts barely provide any interest, Germany’s ten-year government bonds come with a 0.79 percent yield and Japanese government bonds only generate 0.49 percent.

Art is looking increasingly attractive – and it goes beyond the aesthetics. Paintings, sculptures and photography are becoming an alternative currency. In New York, Christie’s auctioned paintings for $853 million on Thursday – a new world record.

“Demand is increasing among our customers for art,” Peter Raskin, director of private banking at Berenberg told Handelsblatt. “They value the emotional connection in this form of investment.”

“There’s also barely any other way to earn money on the capital markets these days,” he said.

Investors hope that by buying valuable artworks, the value will increase significantly. In Germany, a casino sold “Triple Elvis” by Andy Warhol for $82 million and his “Four Marlons” for $69.6 million. Despite outrage in the art world at the loss of these works to the German public, the profits are a significant increase on an initial investment of $185,000 for two pictures at the end of the 1970s.

“The prices are high but I don’t see the market overheating for now,” Mr. Raskin said.

As more and more investors flee to the art market, works by artists with the equivalent status of blue chips are gaining value, such as Mark Rothko, Jean-Michel Basquiat, Gerhard Richter and Jeff Koons.

But investors need to have the right touch. “Buying a work of art as an investment is still a risk,” said Walter Sommer, who is head of Grossbötzl, Schmitz & Partner, a property management firm.

Between 2006 and 2008, paintings associated with the New Leipzig School in Germany were worth huge sums – collectors paid $580,000 for a work by Matthias Weischer – but now Sotheby’s no longer include his works in its prestige auctions. Yet a work by another Leipzig painter, Neo Rauch, was sold for $1.4 million at a Christie’s auction last February.

The amount of money auctions generate for art has risen dramatically and observers see more potential ahead. Christie’s record $853 million sale, which welcomed bidders from 43 countries, is a sign of trust, according to Brett Gorvy, the auctioneer’s president for contemporary art. “These bidding wars show faith in a market that can keep offering more new exciting masterworks.”

Now, high earners consider whether to park $200,000 in a savings account with virtually no interest or buy a work by Oscar Murillo. Others, believing the stock market is too risky, might opt to pay $8 million for a Christopher Wool painting.

The auctioneers are responding by powering up their publicity departments, publicizing record sales and inviting high profile guests to preview works; and buyers are following their guidance like herds.

As on the stock market, the art market is all about psychology.

 

Post-War and Contemporay Art Evening Sale-01

 

Susanne Schreiber heads Handelsblatt’s art section; Susanne Schier covers business topics for Handelsblatt. To contact the authors: Schreiber@handelsblatt.com and schier@handelsblatt.com 

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!