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November 28, 2018

The growth of the art market is tightly linked to tax regulations. Policies relating to import VAT, tax incentives and artists’ resale rights have a profound effect on the art trade.

According to cultural economist Clare McAndrew, there is a growing perception that Europe has become an expensive and complex place to transact. This explains why, after the 2009 economic contraction, the recovery in the UK has been slower than in the US. The looming possibility of a no-deal Brexit will have further impact.

In a report on private art museums, the US and Germany boast, respectively, 48 and 45 private museums out of 350 worldwide in 46 countries. The art market knowledge company Larry’s List points to favourable tax breaks in both countries that encourage collectors to build museums and share their art with the public.

The US tax regime also favours private donations to museums. Collectors can deduct from their income tax the fair market value of an artwork at the time of a donation without hav...

July 18, 2018

We’re often asked what the artworks that attract top prices are and what can explain the figures that reach stratospheric heights. To date, the most expensive piece of art is Leonardo da Vinci’s Salvator Mundi which sold in November last year for USD450 million at Christie’s in New York. King Louis XII of France commissioned the 44 x 66 cm painting in 1605. Next comes Interchange, an abstract canvas painted by Willem de Kooning in 1955. It was sold privately in 2015 for USD300 million, the highest price ever paid in a private sale for an artwork. The third highest price goes to Paul Cézanne’s The Card Players, painted in 1892, which was bought for USD250 million by the Royal Family of Qatar in a private sale in 2011.

Art existed well before money, as evidenced by prehistoric rock art. Like currency, the financial value of art is based on a collective agreement. Nowadays, increasingly wealthy buyers compete for instantly recognisable artist names. As a result, the art market announces on...

June 18, 2018

Art economist Clare McAndrew’s 2018 total art market report was published by Art Basel and UBS in March. She found that the art economy in 2017 reached $63.7 billion in total global sales, a rise of 12% since the previous year. Private and gallery sales were estimated at $35.2 billion, with auction sales contributing $28.5 billion. The staggering $450 million paid for Leonardo da Vinci’s Salvator Mundi in November 2017 at Christie’s in New York made up 11% of the auction market figure.

This year, the strong growing trend of the art market seems unstoppable. Global art buyers spent almost $3 billion on art sold in New York over a two-week period in May. Christie’s’ turnover amounted to $1.79bn, of which $833 million was raised from the collection of the late David and Peggy Rockefeller. This impressive collection broke the previous record of $484 million raised for the Yves Saint Laurent and Pierre Berge’s private collection. During the auction twenty-two world records were also set and...

May 21, 2018

E-commerce has long revolutionised music and books but its impact on the art market is more recent. It was only a matter of time though. Over the past 10 years, the move online has been one of the biggest trends in the art market, second to the inexorable rise of the art fairs. ‘The biggest driver is the wider acceptance of e-commerce. This is how collectors buy everything else, so why not art?’ says cultural economist Clare McAndrew.

The online art market has matured and buyers have a number of options. Traditional auction houses offer timed auctions where the bidding takes place online only and over a period of time, as opposed to live auctions. Early adopters like Sotheby’s launched their online formats as early as 2004. Next to this bricks-and-clicks business model are online-only auctioneers of the likes of Paddle8 or Heritage Auctions, the largest online platform for art and collectibles.

Online marketplaces, such as online galleries and aggregators that offer fixed price options,...

March 19, 2018

Last month the Investec Cape Town Art Fair invited our art advisory to moderate a talk about investing in art and the kind of returns collectors can expect. The panellists, who included the founder of Artnaka, a London-based members club focused on contemporary African art, the CEO of Business and Arts South Africa (BASA) and the joint head of Wealth and Investments at Investec Cape Town, engaged in a stimulating conversation to explore the wide-ranging rewards that can be associated with investments in art. The discussion was particularly centered on contemporary African art and the continent.

Investing in art is about investing in value. It is about investing in the potential of artists and the potential of artworks. Art has dual values; a financial one, from which collectors can make healthy profits when they buy right, and an intangible one. The latter generally refers to the aesthetic value and cultural economists have coined the term psychic returns to describe the aesthetic pleas...

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