Navigating the intersection
of art and finance

The art market has long been a feature of the wider investment universe, especially to diversify returns that are not correlated with traditional asset classes. Art can hold or increase its value when equities prices decline, while it may stall while traditional investments surge or form a bubble.

Investors may see the present as an interesting time to explore the world of art investing following a three-year market correction. While it remains too early to tell if 2025 will be a turnaround year, certain regions of the world, and some types of art, are showing promising potential.

At the same time, the art market itself has changed dramatically since COVID forced many transactions online, and collectors’ preference for private transactions, instead of public auctions, became more prominent. The advent of digital art, with its popularity among the Bitcoin community, has modernised the art world, but not without conflict as many artists are concerned about copyright abuse through the involvement of artificial intelligence.

This report will investigate these changes in the art market and how investing in the asset class has developed and adapted to become more inclusive and accessible.

Notwithstanding wider economic and geopolitical volatility, the global art market is showing early signs of a revival, especially in private sales and certain sectors of the market, after three years of weak performance, according to experts.

The value of the global art market fell in each of the three years from 2022 to 2024, and to date public prices in 2025 have shown little change. However, private transactions and sentiment are showing signs of renewed confidence in the sector, after the boom during COVID was followed by steep declines and a period of inactivity. This year may therefore be a good time for investors to consider art as an alternative investment.

“There has been a healthy correction in prices over the last two years. Collectors and investors are buying now, though with greater sensitivity to prices and through different channels”, said Aude Lemogne, Director at LINK Management, an art and wealth manager based in Luxembourg.

Ms Lemogne said that one of the biggest differences is a shift away from public transactions at auction towards private sales. “A private sale avoids public scrutiny while giving more time to market a work carefully, so that the right buyer can be found.”

On the other hand, galleries and other collectors’ agents arrange private sales. In a private sale, someone representing the seller will directly contact collectors known to be active in a work’s period, genre, or in the specific artist to gauge their interest. Individual discussions about the value of other works that have recently changed hands follow, to narrow the field of potential buyers until one purchases the piece.

Data from the Art Basel and UBS Survey of Global Collecting 2024 shows that this trend of private sale preference was underway in 2024 with 49% of total art expenditure in private sales, the highest of any channel. In the first half of 2024, 88% of high-net-worth individuals [HNWI] surveyed had bought privately, up 2% year on year, while auction transactions accounted for 20% of total spend.

“Private sales recently have been record breaking”, said Philip Hoffman, Chief Executive and Founder of the Fine Art Group, an art advisory firm in London. He added that this is happening while the volume of art sold at public auction is declining sharply. “In the old days, an auction was the way to get the highest price for a work of art. Now it has almost completely reversed, with auctions sometimes selling with only one bidder, and works selling for 10-20% below their estimates”, he added.

Mr Hoffman, who worked at Christie’s for 13 years, believes that the auction houses’ business model is becoming obsolete, noting that the auction houses themselves also hold private sales.

The decline of the dominance of auction houses, or of auctions as the most popular way to sell and buy art, can be traced back to the 2010s, driven mostly by collectors’ preference for private negotiation. The trend was gaining momentum before COVID but accelerated as online platforms made gains because investors were searching from home while auction houses could not fill rooms physically with bidders.

“We anticipate continued art enthusiasm, driven by both seasoned collectors and new entrants to the market. This is supported by early indicators of market activity, including sustained spending in Mainland China, interest in new and emerging artists, and consistent gallery and art fair attendance”, said the Art Basel and UBS Survey of Global Collecting 2024.

Experts agree that certain macroeconomic factors have subdued activity in the art market since a surge in prices during the pandemic. UBS’s report cited “the persistent backdrop of geopolitical tensions, trade fragmentation, higher-for-longer interest rates”, as factors continuing to weigh on investors.

While the upper end of the market is becoming more liquid, works in the middle and lower ranges are becoming accessible to retail investors and collectors through platforms that allow the purchase of shares, or fractions, of artworks.

One of these platforms, Masterworks, was founded in 2017 and claims to be the first and the largest organisation offering art investment to retail investors. “Fractional ownership of art became more popular recently, and Masterworks did well for its shareholders when the market was bullish”, said Ms Cromwell. People investing in this way are not collecting art as traditional collectors do. “Owning art is a long-term commitment to ownership, which is different, but it is now possible to invest in the market, without being a billionaire.”

Artificial intelligence is another trend finding its feet in the art world. In February, Christie’s launched the first auction of exclusively AI-generated art, in which the auction house accepted cryptocurrency as one of the methods of payment.

“The future of AI in art is a huge subject, with questions about the AI being trained on copyrighted work without a license, and some artists feeding their work into AI to make sure that it has some relevance in the culture of AI”, said Ms Lemogne.

The beginning of this trend was clearly marked by overheated speculation and a collapse, but experts believe that the use of AI in art will continue, possibly with more regulation.

The US share of global billionaires in 2024 dwarfed that of all other regions at 40%, with Mainland China and Hong Kong having the next largest share at 12%, according to the Art Basel and UBS Survey of Global Collecting 2024. Grouping European countries together only accounted for 23% of the global share of billionaires.

While experts agree that the art market is truly global with stable valuations across continents, it remains the case that art collectors and specialists from the US still have more influence over what international collectors buy, and which artists or periods are in the limelight, given their financial clout.

“The Americans are the tastemakers because they have the most collecting and buying power”, said Ms Lemogne. She added that having a work of art in a New York or Los Angeles gallery will maintain or strengthen its value more consistently than in other art capitals.

According to estimates by Cerulli and Associates, approximately $84.4 trillion in assets will be transferred over the next 20 years in the US in what has become known as the ‘great wealth transfer,’ with around $72.6 trillion likely to transfer to heirs, and the remaining $11.9 trillion to charity.

While most of the buyers are in the US, sellers are concentrated in Europe, said Mr Hoffman, who added that Asia is also a strong buyer along with the Middle East, including Saudi Arabia and Qatar. Both Asian and Middle Eastern buyers are increasingly influential in higher value segments of the art market, such as contemporary and post war.

In 2022 the Art Basel and UBS Survey of Global Collecting reported that 33% of global art market sales by value came from Asia, with China second only to the US in sales. At the same time, the Artprice Annual Market Report, which tracks collector trends and auction values globally, found that 40% of global auction revenue came from Asia, again primarily from China. The art fair Art Basel Hong Kong returned to its pre pandemic levels in 2024, while spending on art in 2024, and in 2023, was highest among HNWI from Mainland China at a median of $97,000, double the amount spent by HNWIs in the next highest spending region.

Cheung Kong Graduate School of Business, which is based in Beijing and publishes indices on Chinese art, says the increasing interest in art in China is driven by the rapid increase in individual wealth over the last twenty years, with many Chinese collectors focusing on art by Chinese artists. Chinese art carries both high returns and high risk, while being largely uncorrelated with other financial asset classes, according to a study published in Finance Research Letters in 2023. The authors found that art investors from China were more likely than other nationalities to focus on the financial returns of artworks, as opposed to art’s other benefits.

Middle Eastern investors have increasingly been interested in participating in the global art market, as wealth in the region has advanced in recent years. In 2023 Art Dubai, one of the Middle East’s art fairs, reported a 25% increase in attendance year on year. “Collectors from Saudi Arabia, Qatar, and the UAE are driving demand for both regional and international art, with a notable increase in purchases of high value art”, said a report from Art Dubai.

Saudi Arabia’s Vision 2030 is a government initiative launched in 2016 to increase cultural and economic diversity in the country. Funding from this initiative contributed to the establishment of the Misk Art Institute in 2017, while the Diriyah Biennale Foundation is another pillar of the Middle East’s drive to focus on art. It was founded in 2020 to support growing creative expression and appreciation for culture. “The Foundation aspires to be a catalyst for lifelong learning and serves Saudi Arabia’s communities by offering opportunities to engage with the burgeoning local art scene”, the foundation says on its website. The Art Newspaper reported in 2023 that Qatar had spent over $1bn on art in recent years, led by buying from the Qatar Museums Authority.

Sotheby’s modern and contemporary South Asian sale in New York on March 17th this year achieved a total sale value of $16.8m, which was more than triple its low estimate of $4.9m.

Many new investors make a first mistake or two buying in a high-end part of a capital of art, like Rodeo Drive in Beverly Hills, or London’s Bond Street. Advisors cite early bad experiences as among the most frequent reasons that clients sought their services.

“Salespeople in galleries are notoriously charming, apparently professional, and convincing”, said Mr Hoffman.

Beyond a simple screen of protection for new entrants into the market, advisors help their clients decide whether to keep and build on an inherited collection, or if planning to divest, how and where to find credible buyers.

They also advise on and arrange transportation and installation and include taxes particular to individual countries in their estimates of a piece’s value to an individual client.

“For instance, shipping a recently purchased work of art to Brazil can come with a 40% import tax”, said Mr Hoffman, who said it is not unheard-of that an unadvised client could get caught up in the excitement of a purchase and miss a key detail.

Several advisors said that buying art for more than €100k merits professional advice.

“There is a shift to more responsible buying to support a non-mainstream narrative, and especially art as a force for social good, even in the context of an investment”, said Ms Lemogne. She said that buying works to increase awareness of conflicts and humanitarian crises is on the rise. Advisors are skilled in finding works that address such specific concerns, while also keeping an eye on the investment potential for the client. “Having an advisor gives collectors access to education and to an express lane as they refine their focus”, said Ms Cromwell. “Some people have experience and would like help accessing examples of a particular artist, while others are looking to learn the full scope of what is available”, she added.

Most advisors will work with a buying or selling collector and will evaluate an entire collection to establish its value. Advisors help to locate institutions who are likely to want to borrow or acquire a piece from a client’s collection. Advisors will never facilitate the sale of one client’s holding to another client, because of the potential for a conflict of interest. Advisors never take a financial position themselves.

The services of an art advisor can be seen like those of a lawyer or architect; they will examine a planned purchase or sale and explain the potential risks to their clients. Occasionally verification of a work’s origin or condition may be necessary.

“Many people want to live with nice art that will hold its value, while others are more ambitious and strategic”, said Ms Cromwell.

Collectors and investors may simply admire their holdings, or they may want to lend them to museums and galleries. A careful program of lending can support or increase a collection’s, or a particular work’s, value.

“If a work is in the New York Museum of Modern Art, or another Tier One museum, it can raise its pedigree. Being deemed relevant and interesting enough by curators for exhibitions in those museums certainly enhances value, but there is also an element of pride in having your work featured”, said Ms Lemogne. She added that lending is not without risks as some artwork is delicate and that transportation and installation can cause damage.

“You can imagine that someone would feel pride in saying ‘One of my pieces is in the Canaletto show”, said Mr Hoffman.

While a work is on loan the storage and insurance costs are covered by the museum.

Art advisors use their networks to build a strategy of lending for their clients that will give their collection exposure and progressively build its value. A sharp advisor will know museums well enough to spot an opportunity to lend a client’s work, by seeing a gap in an exhibition in time periods, or media, for example.

The museums are happy that the loans are beneficial for collectors. “Sometimes people lend out of generosity, sometimes more because they would like to promote a particular artist. Having an artwork in an exhibition’s publications serves to validate the work”, said Ms Malloy.

Specialist platforms catering to retail or less experienced investors began to grow in 2017 and 2018, with a move towards the democratisation of the art market.

The trend took off powerfully in the US and then faltered, according to Mr Hoffman. “Platforms like Masterworks offer a pure form of retail investing, a chance to own $2k worth of a Richter for example, but it is not an investment with a clear return because when you want to cash out, it can become a disaster”, he said.

Masterworks acquires high-value art from auctions, on behalf of its investors. It places them each in an individual holding company, where it promotes them and sells them, ideally at a profit. In the US, each holding company is registered with the Securities and Exchange Commission so it can issue tradeable shares to investors.

For instance, Masterworks generally holds pieces for three to ten years, during which time investors can trade their shares on its platform, then selling pieces when its managers feel the market conditions are best. Masterworks then distribute profits to shareholders according to their holdings. Take another example, Artex is a platform based in Paris, Luxembourg and Vaduz, Liechtenstein, and offers a multilateral trading facility to provide a secure secondary market for trading shares. Like Masterworks, when an artwork is sold, Artex distributes profits to fractional owners.

For example, Artex lent a triptych of portraits Three Studies for Portraits of George Dyer by Francis Bacon to the Nationalmusée um Fëschmaart in Luxembourg for two years, in July 2024.

Art can be an important way to diversify an investment portfolio, possibly as part of an allocation to luxury goods.

“Depending on how equities markets are faring, art can be a way to diversify, though this depends on the era of the artwork. For example, contemporary art is more correlated to equity markets, than say modern art or post war which is less so”, said Ms Lemogne. Adding that art is widely seen in the investment community as a hedge against inflation, and that certain segments of the modern art oeuvre are considered defensive holdings in a portfolio.

Mr Hoffman has seen an increase in interest in art to diversify investors’ holdings. “We find that more clients who inherit a collection are asking us to help them add to it and improve it as a way to balance their portfolio, rather than to sell all of the works”, he said. The rekindling of inflation over the last four years has made equity and bond prices more correlated. Correlation reached a peak in 2022 but is still higher than before 2020, making this one of the longest such periods since the 1970s, and increasing the need for alternatives.

“We need to turn to and include other investments, such as private assets, not only to reduce overall portfolio volatility but also as a source of returns decorrelated from other asset classes. Doing so improves the risk-adjusted returns of the portfolios”, said Nicolas Besson, Chief Investment Officer at REYL Intesa Sanpaolo.

For diversification, investors seek established artists and time periods, rather than emerging artists or new media. Sources consulted for this report recommend between 2% and 5% allocation to art at first, while noting that investors with large portfolios often aim as high as 20% to 25%. Holding periods are 15 to 20 years, or more if the art is planned as part of an inheritance.

The Art Basel and UBS Survey of Global Collecting 2024 reported HNWIs allocated 24% in 2022, its highest in nine years, falling to 19% in 2023, and again to 15% in 2024. Investors and collectors with wealth of $50m or more remained at the higher end of the allocation range, investing 25% of their wealth in art.

As mentioned above, since the pandemic private sales have risen in popularity as auction sales have fallen.

Mr Hoffman said that private sales start with the highest possible valuation and look to accept the closest bid to that ceiling, which is the inverse of the auction method of naming a minimum price and watching bidders try to outbid each other.

“In the old days about a third of things sold at auction went over their estimates, and now it is the other way around, and even more like only 10% will sell for above their estimates”, said Mr Hoffman. “In the last two years, more clients see an auction as the option to avoid, unless there is somehow an amazing opportunity”, he added. Usually, fees for a private transaction are below the levels charged for auctions.

“Contemporary art is in focus now, while ten years ago paintings from between 1900 and 1945 were more important”, said Ms Malloy.

“There has been a steady market for modern art, and for various categories of post war between 1945 and 1980, along with contemporary and postmodern, so the 80s forward”, said Ms Cromwell.

A peak in interest in ‘Old Masters’ ended between 2010 and 2012 and shows little sign of returning, said Mr Hoffman.

The young (under 45) or emerging contemporary market has been shrinking since its height in 2022 of $13.9m. In 2024 sales were only $4.9m, according to research from ArtTactic.

Over the last six months, interest in emerging art, especially from collectors in Asia, has further cooled. The market has not disappeared entirely, but following a speculative bubble, it has slowed.

The Art Basel and UBS Survey of Global Collecting 2024 found that many HNWIs had interests in new artists. In 2023 and 2024 just over half of their art spending was for works by new and emerging artists, up from 44% in the previous survey, and more than they spent on mid-career or top tier artists.

“There were some highly publicised works by new artists that sold for between $5k and $15k, and then shortly thereafter sold for $2m. That froth in the market burned away quickly after many more people tried to copy those returns”, said Mr Hoffman.

Female artists have had a surge in popularity among HNWIs according to the Art Basel and UBS Survey of Global Collecting 2024. Share of works by women rose to 44% in 2024, its highest in seven years, and up from 33% in 2018. Spending on women artists’ work was distributed similarly between the genders. At the upper end of spenders, those investing $10m or more in art and antiques in 2024, art by women artists accounted for 52% of collectors’ purchases.

Similarly, AI and digital art experienced a surge during COVID, followed by a steep decline in prices and concerns about speculation and money laundering among the Bitcoin community.

“Bitcoin investors still love digital art, and they are not afraid of it ”, said Ms Cromwell, who added that “more of the work comes direct from the artists in the digital part of the market, and that it carries a totally different process for valuation because there is no clear track record.”