An Important Message for Art Buyers –

An Important Message for Art Buyers –

buying-artIf you take a close look at the available data, information, opinions, analysis and reviews that relate to the art market you will find that a very large majority come from art market professionals. The same art market professionals whose livelihood depends on the ability to profit from the sale of art. Very little of what you read about the art market contains any sort of reference to the sentiment of art buyers which is rather unfortunate considering it is the buyers who ultimately decide the fate of the market. Because the primary sources that the media use for the articles that they publish on the art market are art market professionals, the majority of what is currently being written about the art market has a decidedly negative tone. This is obviously due to the fact that the art market professionals who rely on the ability to profit from the sale of art have been hit hard by the financial crisis. Buyers, on the other hand, stand to benefit greatly from the reduction in prices yet there are very few column inches dedicated to this, and other positive effects of the art market correction.

Although it is true that the value of works purchased prior to the correction may decline there is the question of what, if any, effects this will have on the buyers which I will address later on. There is no doubt that the lack of positive press is partly because doom and gloom attracts far more readers and also because those in the industry are far easier to obtain information and opinions from than the buyers. So what is the current state of play for art buyers I hear you ask. Well, to fully understand the current state of the art market from a buyers point of view one needs to first take a look at the different types of art buyers and their motives. The reason that the different types of buyers are important is because not all art buyers are motivated by the same things, have the same attitude towards art buying or are affected by market fluctuations in the same way. In my opinion there are five distinctively different types of art buyers (excluding dealers) which are:

Collectors: True art collectors are usually middle class professionals who have a passion for art that is accompanied by an interest in a specific period, era, movement, theme etc. The motivation for wanting to build a collection varies from collector to collector and will usually have very little, if anything, to do with financial gain. Most collectors have a specific goal that helps determine the progression of the collection. Because a true art collector invests so much time and effort into the creation of an art collection it is quite likely that they will never sell the collection but will instead donate the collection to a museum or other institution where the collection can be preserved and remain intact.

Decorators: A decorator decides buy an artwork based on aesthetic appeal and also whether the work will complement the decor of the intended location of the work. The future value of the work is unlikely to be of any great concern to the decorator.

Investors: A true investor has a long term strategy that takes into account the fact that fluctuations on the value of works in their portfolio are almost guaranteed. An investor’s portfolio should include a diverse range of works that spreads the risk so that a reduction in market value of a particular medium, artist, movement etc. doesn’t affect the investor’s whole portfolio. It is also recommended that are should make up no more than 10 percent of the value of an investment portfolio so that the whole portfolio isn’t affected by the negative movements of one particular market. Smaller gains over a longer period of time is the aim of the true investor with the average required holding period for an investment portfolio being 5-7 years. A longer holding period may be required if the market experiences a downturn but the true investor is unlikely to find themselves in a position where they have to sell their art while the market is experiencing a downturn.

Opportunists (speculators): Opportunists take advantage of a hyper-inflated art market that offers the potential for easy short term financial gain achieved by “flipping” works of art. Opportunists are only interested in the financial gain that can be achieved during the height of an art market boom and will retreat from the art market and stop buying and selling art once the ability to make fast easy profits no longer exists.

Egotists: Interested in impressing other people in their socio-economic circle by purchasing expensive works of art by the world’s top artists. Egotists are motivated by a desire to outdo the other art buying egotists and a desire to acquire trophies that show off how wealth they are.

Having excluded dealers and other people whose livelihood relies on the art market it becomes quite clear that an art market correction is not going to have that much of an effect on those people who are buying art. From the analysis of the different types of art buyers above we can see that:
-collectors are not focused on financial gain and unlikely to want to sell works from their collection
-decorators are not concerned with financial gain
-opportunists usually exit the market once the potential for quick easy profits disappears
-investors have a long term strategy and can ride out the downturn
-egotists are likely to be extremely wealthy individuals who will not be affected by the reduction in market value of their works as they only bought them as trophies. The biggest concern for the egotists is whether the reduction in market value of their trophy artwork has an effect on it’s ability to induce jealousy, envy or admiration from others.

The only people that the art market correction is likely to have a major effect in the short term on are those that are forced to sell to cover debt or because of financial hardship. In the long term there may be some investors who experience a permanent reduction in the value of one or some works in their portfolio but a well structured portfolio should include a range of works to spread the risk and avoid a more widespread permanent reduction in portfolio value. What is most important to recognise is that art buyers actually stand to benefit from the art market correction because of the inevitable lowering of prices. Collectors that have previously been priced out of the market by speculators will be able now re-enter the market and take advantage of the reduced prices to fill gaps in their collection. Investors will have the opportunity to add to their portfolios and all the decorators can get better value for money.

The reason that I wrote this post is because a large majority of information and data that is published about the art market is geared towards the art market professionals who live off the art market. All the doom and gloom that the art dealers are promoting can have a negative effect on all the other art buyers that I have discussed in the post who are not relying on the art market to make a living. I wanted to show that the art market correction is actually not such a bad thing and can actually be a positive thing for those that don’t have to make a profit from the sale of art to put food on the table. What art buyers should be doing is embracing the art market correction and taking advantage of the lower prices because the lower prices won’t last forever.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

3 Responses

  1. […] be properly preserved and shared in a museum or library.  They buy art because they want to.  An excellent article at describes the various types of people who purchase art.  These range from […]

  2. As a professional artist for over twenty-five years, this is the worst downturn I have ever seen. However, I agree that it won’t last forever and some of us are fortunate enough to internet sites that sell and auction our work.
    John Cogan

  3. Couldnt agree more John

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