When starting out, many young collectors want a crystal ball. Of course, many simply want to collect art that they believe in and that moves them, but others want to put money into something that will offer future returns, and want to know which artists are going to show an escalating value in the market.
The first thing to say is that there is a major difference between the primary market, which comprises dealers and galleries, and the secondary market, which is mainly fine art auction houses. Value in the secondary market is largely derived from precedent at prior auctions, while primary market value resides in the artist’s reputation, comprising factors like which work by that artist is selected for top exhibitions and group shows, is bought by prestigious collections, and so on. The rarity of a work, for example in a small edition of prints or sculptures, or a singular work that has not appeared before on the market, can have an effect on pricing and escalating value. It is not normally the case that an artist’s death creates a posthumous value for their work, though we have seen, for example, the value of work by New York-based artist Jean-Michel Basquiat, who died in the 1980s, multiply in value hundreds of times in subsequent years at auction.
When gauging whether to invest in artwork for future returns versus one’s collecting tastes, it’s easy to be seduced by such potentially massive returns in what is generally a buoyant market for collectors, with global auction turnover up by 18%. The picture can be skewed by the very top end of the market, where prices of over $50 million are not uncommon, but these prices are only achievable by a small elite of high-net-worth individuals.
While much rides on the performance of these works at auction, it also detracts from the fact that healthy growth exists at lower price points, which in turn points to a resilience in the market for investing in art.
This can be easily seen if we look at South Africa’s most significant living artist, William Kentridge. While there is no doubt that, overall, if one had invested in Kentridge’s work early on in his career, you would be in an attractive position for returns right now. His reputation is cemented as one of the most significant of contemporary global multimedia artists, nowhere better demonstrated than by his recent invitation to stage a massive performance piece at the Tate Modern in London for the centenary of the end of World War I.
Kentridge has, however, been prolific in many different mediums and artforms since starting out as a theatre designer, director and actor in the 1970s. Early work in the form of prints and works on paper will gain significant returns today if they were acquired at the time, since those acquisitions would have been at reasonable price points. In other parts of his extensive multimedia output, the initial outlay will have been substantial, but, as the graph demonstrates, returns on Kentridge’s work are still significant at the top end of his market.