Revisiting art as an investment

October 2010

The international art market is worth over $3 trillion and has an annual turnover of $50 billion. Investing in art and design can provide impressive returns - but an even greater reward can be derived from an individual's passion to acquire objects of great beauty. 2009-2010 has seen a solid recovery in the art market. Major works are now once again appearing for sale signalling the emergence of the high end from a relatively short period of hibernation.

Giacometti's "Walking Man I" ($104,327,006; February 2010) and Picasso's "Nude, Green Leaves and Bust" ($106,482,500; May 2010) are world record-breaking prices from earlier this year.

Investing in art has multiple benefits, including a low correlation with other asset classes. Economists have predicted that over the coming years a concern about future inflation or the return to financial instability may drive individuals towards increasing their portfolio allocation to art as an inflation hedge. The competition for art works also adds to the inherent scarcity making art a desirable asset for investment purposes. Whilst anomalies can exist in the art market (as it can in any market), record prices, strong returns and increased institutional buying have sparked significant interest in art as an asset class.

Looking at art and design as an investment can provide both financial and emotional returns. However, buyers and sellers should seek advice from an independent and impartial art advisor. The HSBC Private Bank Art & Design Advisory Team provide independent and impartial advise and undertake thorough due diligence at all stages of the transaction process. With an unregulated market, inflated prices and counterfeit works, a good advisor will help clients avoid the many pitfalls and potentially unpleasant surprises.

To learn more about the HSBC PB Art & Design Advisory service please contact the dedicated helpdesk on:

T: + 44 207 692 4884
E: hsbcpb@1858ltd.com