These developments are becoming increasingly popular in the mainstream press and increasing interest in this market as an area of investment. However, the recent decline of NFTs in the market shows how risky it is to invest such amounts in a market with strong speculative potential.
Assessment and trends
The art market is no exception to the rules of trend; Understanding them creates the profiles of artists to potentially invest in. They concern everything related to the work or its history: period of creation, evaluation of the artist, medium, etc. For example, since 2019 we have observed an appreciation of the works of female artists, whose prices are actually rising quite quickly on the market. Conversely, in the mid-2010s we noticed a decline in interest in contemporary painting, which today is beginning to conquer the hearts of collectors again.
Therefore, it is important to mention that investing in art is a matter of patience. Artransfer, the first platform for the resale of contemporary art works exclusively between private individuals, records an average increase in the price of the works in its catalog of 18% per year. If this value seems very positive, it should be borne in mind that this average value concerns works with very different prices and their developments can be uneven. For example, the strongest growth in the catalog is 190% per year, while another work on the site is experiencing a decline in value of -7% per year. This reflects a key problem with investing in contemporary art: it is a sector where speculation is prevalent and which requires expert advice.
A question of patience
Another problem that arises particularly in the contemporary field is related to the temporality of resale. Many gallery owners agree on this: reselling a work too early is harmful for both the reseller and the artist, as an unsold object runs the risk of having its price drastically reduced. This evaluation is all the more important because the publication of the auction results on platforms such as Artprice makes it public and accessible to everyone. The annual reports on the art market published by Artprice or Art Basel x UBS also show that although the market fluctuates very quickly, it still requires patience before it can make any significant profits. .
This patience is also rewarded by a special tax regime that is specifically tailored to the resale of valuable goods. In fact, according to Articles 150 VI and 150 VM of the General Tax Code; The resale of works of art by an individual resident in France is subject to capital gains tax. There are two models: a flat tax of 6.5% on the sales price or a capital gains regime of 36.2% on the capital gain. The peculiarity of this second regulation is that it decreases by 5% per year from the second year of ownership. It is therefore tax-exempt if the work has been in a collection for 22 years.
Investing in contemporary art therefore seems interesting due to the constant market movements and the possibility of strong profits. However, these fluctuations can lead to a significant loss in value and good expert advice is necessary to make a real profit. Furthermore, it is very rare to make significant profits without investing an equally large sum. Despite its appeal, it is important to remember that buying contemporary art is above all a matter of passion and that investing is not a risk-free affair. It is therefore better to trust your eye and your taste than good market signals: after all, the work is hanging in your home and waiting to be resold! And to help you find the right purchase, you can resort to platforms such as Artransfer, whose range of works varies in both style and price. All contributions are moderated by market professionals who will provide you with advice on your purchases, particularly as part of their tailor-made research service. This allows you to balance the speculative value of a work with its aesthetic value!
Pierre H. Way for Artransfer
