Art investment and ownership is changing, as new generations emerge and demographic trends move in different directions from those seen in the past. What was once seen as the preserve of wealthy speculators has developed into an exciting and attractive asset class. As investing in shares of contemporary art introduces new, more accessible dynamics, investors from new demographic groups are expected to lead the change.
Art investment through the generations
From Baby Boomers to Generations X and Y, different generations have approached the art investment market in differing ways. With periods such as Pop Art’s rebellion and the emergence of street artists such as Banksy, the market has reflected changing attitudes and social habits.
As the investible assets of under-40s have increased over a decade of unprecedented stock market returns led by the technology sector, cash from the newly wealthy is finding its way into the art market.
According to the latest UBS Art Report (Art Basel and UBS: The Art Market 2021), Millennials accounted for 52% of the 2,569 high net worth art collectors who responded to the bank’s survey in 2020, while members of Gen X made up 32% of the sample. The average age across all art investment markets was 39, with the average age per nationality ranging from 37 in Mexico to 44 in Italy.
Citi’s Global Art Market and COVID-19 report, meanwhile, notes that under-40s made up 25% of online bidders and 15% of live bidders between January and November 2020.
Unsurprisingly, new and younger contemporary art investors are increasingly buying over the internet. As Generation Z and Millennials switch on to the possibilities of becoming more active in art investments, the mainstream market is also moving rapidly online, helped of course by cancellations and postponements of major art fairs due to COVID-19.
The UBS report shows aggregate global online sales doubling to a record $12.4bn in 2020, despite a contraction in overall transactions. The proportion of sales transacted online increased from 9% to 25%, representing the first time that e-commerce has beaten general retail sales. In the dealer sector, including art fairs, the share of online sales tripled to 39%. In the fine art auction sector, 22% of the lots sold in 2020 were in online-only sales – double the proportion from 2019.
In addition, 90% of high-net-worth art collectors visited an art fair or gallery online or through virtual reality in 2020. Despite this, the UBS report found that works priced at more than $1m accounted for only 6% of total online-only values in 2020, compared to 58% for offline sales. In a survey published as part of the report, 94% of auction houses said they expected online art sales to rise over the next five years.
Citi’s report finds that 29% of Millennials said they preferred buying art online in 2019 – double the 14% preference rate in 2015. Since then, responses to the pandemic have quickened the pace of this change, with many dealers expecting the art market to change forever as a result.
A perfect moment
Buoyed by recent investment trends in more sophisticated forms of finance, art is being bought by investors with expectations of stronger returns than previous generations anticipated.
Investing in shares of contemporary art continues the current trends of younger buyers acquiring art and art purchasing moving online. Moreover, it lowers the access point, with the minimum investment amount reduced to £2,500.
The inflation of house prices increasingly limits the number of people able invest in their first home. The new buying mechanism that Mintus offers provides a way for younger generations to invest in high-value physical assets with a historic track record through an online medium. As it becomes more widely known, it has the potential to further change investment strategies in the rapidly evolving international art market.