Painting wealth through art

Art is becoming an increasingly attractive investment option due to its ability to provide financial returns while offering personal enjoyment.

The global art market’s price index continues to climb, and many top artists’ works have gained value significantly over time.

The Philippine art market saw a 90% increase in global sales from PHP 737 million in 2014 to PHP 1.4 billion in 2017. According to consulting firm 6Wresearch, the local art and sculpture market is expected to grow at a compound annual growth rate (CAGR) of 4.9% between 2024 and 2030, driven by increasing interest in Filipino art among collectors and galleries in urban areas.

The past decade has seen an increase in privately funded museums and galleries across Metro Manila, reflecting growing institutional support for the arts. Events like annual art fairs and auctions have become more established and continue to attract both local and international buyers.

On Sept. 14, 2024, a painting by National Artist Fernando Amorsolo titled “Under the Mango Tree” (1929) fetched PHP 57,676,800, inclusive of the buyer’s premium. Jose Joya’s “Space Transfiguration” (1959) is by far the highest-sold work in the Philippines at PHP 112,128,000.

Beyond the aesthetic appeal

Art has proven to hold its value over time, even amid economic challenges. Deloitte’s 2023 Art & Finance Report found that 90% of wealth managers now see art and collectibles as integral to wealth management, up from 53% in 2014.

Unlike traditional investments tied to market fluctuations, art’s value sometimes appreciates during economic downturns which allows investors to mitigate risk and improve overall portfolio stability.

The Art Basel and UBS Global 2024 Market Report highlighted how the global art market maintained activity levels despite high interest rates, inflation, and political uncertainties. While there was a slowdown at the top end of the market in 2023, transaction volumes rose overall, and online sales continued to grow.

For instance, during the COVID-19 pandemic, online art sales made up approximately 7.5% of global sales in 2019. In October 2020, Christie’s 20th-century evening art auction sold a near-complete skeleton of a Tyrannosaurus rex for USD 31.8 million, which was four times its estimate, and 280,000 viewers tuned into the virtual sale.

For buyers, the value of art extends beyond monetary returns. The Hiscox Online Art Trade Report 2023 noted that 93% of surveyed art buyers cited emotional satisfaction as a key motivator for purchases. This trend has been consistent in recent years, with passion for art remaining a top driver.

Strategies for investing in art

Art collectors and investors have navigated the intricate market, seeking masterpieces that not only captivate but also appreciate in value. Today, the art market is more structured and globalized, making strategic investing essential for understanding and succeeding in this unique investment space.

Just as with traditional investments, a well-rounded and diversified portfolio can mitigate risks associated with market fluctuations and individual artist performance. This involves spreading investments across different styles, mediums, and artists at various career stages. Contemporary art, often more accessible, tends to appreciate as an artist’s reputation grows. Investing in emerging artists can also be profitable if their work gains recognition.

For individuals who prefer a hands-off approach, art funds provide an opportunity to invest in a diversified portfolio managed by professionals. These funds pool resources from multiple investors to acquire artworks, reducing individual risk while offering exposure to the art market’s growth potential.