financia’s insiders #1: art as an investment

Welcome to the new financia's insiders series where we interview experts from various fields of the personal finance space. In this first article, we're meeting with Alexis Laurant, art investment advisor at Imperium SA. He gives us a quick introduction to art as a viable way of investing.
Grégory Leclercq

Grégory Leclercq

Alexis Laurant, Art Investment Advisor at Imperium SA

Hello Alexis, can you introduce yourself and what you do in a few lines? How did you get into the art market?

Hello Grégory, For the record, I help individuals and SMEs invest in the art market, from the investment to the capital gain. A few years ago, I was looking for a better way to manage the money that was sleeping in my bank account. I wanted to make it work for me. At the time, I chose to diversify in various asset classes such as the stock market, state bonds and cryptocurrencies. 

During my research, I met a collector that was doing very good by collecting Banksy’s art pieces. He introduced me to invest in the art market. I started to collect small pieces,  but when I understood the clear value and possibilities of this market, I decided to drastically increase my investments and move on to work in this market. I can now say that I have a very precise understanding of why a painting could be valued in millions regarding the fact that years ago it was only thousands. 

Nowadays, I am a partner at Imperium S.A., a company that helps private investors and small and medium enterprises diversify in the art market. We select paintings for our clients, we help them insure and/or store their art, and in the end, we sell it back for them to maximize their capital gain. It is a full service.

Can you tell us a bit more about art as an investment? 

Art has always been considered an investment by wealthy individuals because they understand the prestigious value of a unique piece of art. Over the last few decades, it has now been perceived as a viable investment opportunity by a broader number of people. Indeed, when you see that a Basquiat was bought for 4 million in 2003, and sold back for 85 million in 2022, you cannot ignore the fact that it was a good move, financially. 

Trust me, the initial collector did not spend this amount of money only to decorate his living room. 

The particularity of art as an investment is that you own something tangible, prestigious and unique, this means that other people may want to pay a higher price to possess it.

How is art different from other asset classes?

Art is an asset that has similarities and differences with other assets. In terms of similarities, the value will be simply handled by the ever-present mechanisms of supply and demand. If an artist is increasingly more demanded by collectors and his production is limited each year, the value will increase, sometimes dramatically.

The main difference however might be liquidity. A piece of art is less liquid than a stock option for example. You cannot sell it in a split second. This lower liquidity is a very good point to avoid panic selling and decreasing value in a few days as we have seen recently in the stock market. Generally, the more an artist is established, the less volatility you will have. This means that the risk of devaluation is becoming closer to none. 

Regarding the example of the Basquiat, I can tell you that even the buyer in 2022 had a bargain and will sell it back with added value in the future. Remember that an asset with less liquidity is a huge advantage in volatile periods.

An art gallery.

Is it true that you need large investment pockets to start investing in art? 

No, you can start relatively small in this market. I personally started with around 10.000 euros and the pieces I bought are now valued more than double, only in the space of a few years.

What is the ideal budget to consider investing?

The ideal budget depends on each individual. You need to invest money that you will not need for a few years. The art investor needs to have a mid-to-long-term timeframe to enjoy nice returns. Do not expect to gain value in a few hours like you would with cryptocurrency.

Typically, as an uninitiated investor, I would allocate no more than 10% to 20% of my portfolio to art. This would allow me to diversify properly. As a more advanced investor, I could invest from 10% to 30% of my portfolio because you can rapidly take advantage of the potential and flexibility of this very profitable market.

Who should—according to you—look into investing in art? Who shouldn’t?

In my personal opinion, An advanced or diversified investor can’t afford not to own art anymore. Why so? Because of current inflation, the health crisis and the recession we may face for a few years, there will be long term volatility in the general markets. That is why safer mid-to-long term investments will attract huge interest in the coming years. Art is one of these.

Investors that are looking for returns in a very short amount of time should definitely avoid the art market.

My advice would be to start collecting young! This will prevent your money from disappearing into unnecessary liabilities or risky Investments.

What tips would you give to any newcomer in the art market? What should one look out for, what should one avoid?

It can be difficult to think about it as a newcomer, you may have preconceived ideas such as “It is only luck if your artist is increasing in value” or “you need millions to afford the luxury of art pieces”. 

For each market you want to invest in, I believe you should either start to become very aware of what happens in the market or ask professionals to guide you. The first option is time-consuming and riskier in terms of collecting good and consistent knowledge. The second option will help you get key summarised information that will prevent you from making mistakes as a newcomer. 

For example, personally, I do not know a lot about the housing market. Two of my best friends are professionals in the market and I will surely rely on their expertise to make decisions for future investments. I do the same for the stock market, I enjoy the help of two of my friends who are professional traders.

You should avoid being too emotional in your decision, the value of an art piece is not based on the fact that you like it or not. The best is to combine the useful and the pleasant. An art piece that you like and which will increase in value. Again, ask professionals to guide you through valuable art pieces and choose the one you like from their selection.

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