Tips on Investing in Art and Insuring It

Art as an investment is not for everyone, and there is no simple recipe for success as there is investing in established financial markets where, despite short-term risks, you’re almost guaranteed of making a positive return over the long term.

There’s also the question of being able to distinguish between investable art, or art which at least has potential as an investment, and art that might look good on your living room wall but holds little value on the art market. You need to have a good knowledge of and eye for art or at least use a broker who does.

Another drawback is liquidity, or lack thereof. If you need to sell investments in a hurry, artworks should not be among them – it can take time to find the right buyer at the right price.

On the positive side, there’s the thrill of buying a work by an up-and-coming artist and witnessing a surge in demand for that artist as he or she becomes increasingly famous and sought-after. This may be likened to a venture capitalist spotting a potentially profitable start-up and enjoying the satisfaction of seeing the company prosper.

Marelize van Zyl, CEO of Aspire Art auctioneers in Cape Town, says the global art market was valued at US$552 billion in 2024 and is projected to grow to US$945 billion by 2033. The market is dominated by high-net-worth individuals seeking to include art in their investment portfolios alongside traditional assets like stocks, bonds and real estate.

However, investing in art is not exclusive to the wealthy, Van Zyl says. “Aspiring collectors can enter the market by acquiring more affordable pieces from emerging and up-and-coming artists.”

Tips for aspiring collectors

• Understand the factors that influence value. Van Zyl says these include the artist’s status and biography; an artwork’s provenance, or record of ownership; a work’s artistic significance regarding its place in an artist’s career or broader art movement; and market trends.

• Explore emerging artists. “While investing in blue-chip artists is a secure way to preserve capital, identifying promising emerging artists can be an exciting and lucrative endeavour,” Van Zyl says.

• Seek expert advice. “Consulting specialists who understand market trends and artist trajectories can differentiate a purchase that holds its value from one that significantly appreciates,” she says.

• Consider online auctions. “For new collectors, online art auctions are an effective way to enter the market, offering exposure to a variety of artworks and pricing,” Van Zyl says.

• Have a long-term strategy. “Investing in art is a long-term commitment. While some works appreciate rapidly, others take years or even decades,” she says.

• Take advantage of buyers’ markets. “Market conditions that favour buyers are opportune times to invest. With careful selection and strategic acquisitions, investors can lay a strong foundation for future appreciation.”

Insuring your collection

Marius Kemp, Head of Personal Underwriting at Santam, says that safeguarding your fine art pieces or collection is a complex process with many considerations.

Deciding on the right type of insurance is important. Certain insurers will make provision for fine art pieces in home contents cover. However, you will need to check the level of cover as well as the exclusions.

For works by prominent artists, Kemp says it may be worthwhile taking out a specialist policy tailor-made for your collection. This would likely include cover for your artworks outside the home environment.

He suggests having all your artworks appraised and then creating an inventory of the details, including the name of the work and artist as well as the value. “Share this with your insurer or broker to make sure that your artworks are insured at the right value and that your insurer is well aware of the extent of the collection,” says Kemp.