Per week in the past, at Sotheby’s in New York, Maurizio Cattelan’s strong gold bathroom hammered for $10m, a smidge over its gold spot value of $9.8m. A case, then, of an art work actually being price its weight in gold. Or thereabouts.
It’s in all probability one of many solely examples of pricing within the historical past of the artwork market that makes quantifiable sense. Often, artwork valuation is a much more nebulous idea. Take David Shrigley’s piles of outdated rope, that are at present on sale at Stephen Friedman Gallery for £1m. It’s an set up about how we worth artwork past the price of base supplies, about how a lot some outdated rope is price while you consider different parts akin to an artist’s repute, historic context and a way of humour.
On the time of writing, Shrigley’s set up had not but discovered a house, however within the case of Cattelan’s bathroom, the consignor, Steve Cohen, is prone to have made a wholesome revenue—as a lot as $5m in response to calculations by Artnet. Typically you become profitable promoting artwork, however usually you don’t.
Sellers will all the time say collectors ought to solely purchase artwork they need to reside with for a very long time, however why then is a lot it stored in freeports all over the world? The Geneva Freeport alone is estimated to carry $100bn-worth of artwork. Geneva is taken into account the world’s largest storage facility, however there are round 3,500 freeports at present in operation all over the world, which means the size of artwork stored locked behind bolstered doorways might simply outweigh that which is on present in personal museums and houses.
Declining returns
Nonetheless, current analysis would counsel sea change is afoot. A new report from Deloitte and ArtTactic means that contemplating artwork as an asset class is now not a good suggestion—hardly rocket science in a depressed artwork market. Because the report notes: “After greater than 14 years of monitoring long-term efficiency, a transparent pattern has emerged: artwork returns are steadily declining. This makes the case for artwork as a robust standalone funding more and more questionable, with Artnet indices exhibiting constant underperformance in comparison with different main asset lessons.”
The cultural economist Clare McAndrew attracts comparable conclusions within the newest Artwork Basel and UBS Survey of World Amassing, revealed final month. As she notes, a number of papers in recent times have delved into the return historical past of funding in artwork, taking a look at value indices as a means of analyzing the dangers between funding in artwork and different monetary belongings. All persistently spotlight that artwork funding is considerably riskier than actual property, commodities and authorities securities and on par or above that of huge firm shares represented by the S&P 500.
In fact, that hasn’t stopped patrons and sellers over the previous 25 years treating artwork as a monetary asset. First there have been artwork funding funds, among the many most distinguished the Nice Artwork Fund Group arrange by Phillip Hoffman in 2004. Then got here the fractionalisation of artwork works, permitting a number of stakeholders to personal shares in a specific work. In recent times so-called funding galleries emerged, framing artwork as a secure haven for capital in instances of financial uncertainty and claiming the returns on blue-chip works to have persistently outperformed the FTSE 100 share index. A few of these companies are already starting to fall away; Pictorum Advisory, for instance, went into liquidation in September.
Wealth managers seem like much less prepared to advise on artwork as an funding. In accordance with the most recent report by Deloitte, the typical allocation to artwork and collectibles amongst household places of work fell to eight.8% in 2025, down from 13.4% in 2023. Most allocations now fall between 3% and 10%, roughly the vary personal banks contemplate appropriate for “ardour belongings”. Equally, the Artwork Basel/UBS report reveals that high-net-worth people are lowering their publicity to artwork, with common allocations falling to fifteen% in 2024, down from 19% in 2023 and 24% in 2022.
No matter you eat, a $200 lunch or a $2 scorching canine, the outcomes are the identical, toilet-wise
Maurizio Cattelan
At a convention organised by Deloitte in New York on 19 November, Betsy Bickar, the pinnacle of artwork advisory at Citi Wealth, stated artwork ought to be approached as a cultural asset, not a monetary one. “We don’t even use the phrase ‘funding’,” she advised the viewers. Regulatory and operational hurdles have given wealth managers and collectors pause for thought. Rising prices, from charges, transaction prices, insurance coverage, storage, have additionally eaten into returns. The previous hedge fund supervisor and collector Christian Levett notes how his storage prices have mushroomed by 5 instances over the previous six or seven years. “Speak in our workplace now centres on how we are able to get these prices down,” he tells The Artwork Newspaper.
Rates of interest have additionally put a squeeze on the $40bn artwork lending sector; earlier this yr prime lenders together with Sotheby’s and Christie’s issued margin calls, requesting debtors for further collateral or money after the worth of pledged works declined. Nonetheless, within the present local weather, collectors could choose to borrow towards elements of their collections as a means of making liquidity somewhat than promoting their artwork at low costs. Both means, the panorama definitely feels extra nuanced than in recent times.
Journalists and commentators are more and more noting how artwork is being purchased for the love of artwork, whereas artwork advisers and different professionals within the discipline say they’re extra involved with artwork “holding its worth” than pursuing monetary returns. It’s a distinction Cattelan could not take care of. He has stated previously that his gold bathroom satirises super-wealth: “No matter you eat, a $200 lunch or a $2 scorching canine, the outcomes are the identical, toilet-wise.”
Against this, the artwork market will by its very nature all the time be involved with these differentials, even when the thought of artwork as an asset class has lastly fallen out of vogue.
