As mortgage rates rise at the fastest pace in a decade & millions of people can’t aﬀord to pay their rent a question looms over potential risks in investment markets. Are there any safe spaces left to store value?
Following a tough 2020, there are a few good reasons why the art market is resurgent overall.
Interestingly certain investment classes are proving to be some of the best stores of value despite the economic downturn. Having had fingers proverbially burnt by terrible bank rates few are willing to leave their hard-earned cash sitting in an account depreciating at a terrifying speed.
Many opt to put their money where they can see it – in tangible assets potentially hanging on the wall or comfortably sitting in their wardrobe.
Sotheby’s has reported a 30% rise in luxury investment categories such as shoes, handbags, jewellery, wine and cars as well as art. Current figures show that 80% of bidding goes to win objects under £21,000. Sotheby’s CEO Charles Stewart commented:
“Our clients aren’t just looking for the best Van Gogh—they’re buying things across 70 diﬀerent categories in the 500 sales we hold each year, at all price ranges.”.
When asked about the current buoyant art market and why it doesn’t seem to be aﬀected by inflation in the UK and US Stewart said:
“Art is priced globally, and people bid in whatever currency they use. You may own an object and think about it in dollars, but the bidders trying to win it might be thinking in euros or Swiss francs. Inflation can accompany currency weakness, but art is valued at a globally determined price, so it can be a good hedge against inflation made worse by currency weaknesses.”.
The move to digital platforms for the major auction houses was also an essential factor in ensuring that the various auctions were live-streamed globally and bidders were able to part with cash from the comfort of their respective homes from every continent. This reduction of barriers created a conduit upon which an already burgeoning market could flourish even further. The result of this was that we saw huge Asian market bidding activity and that the market had expanded massively to include buyers at all levels, not just blue-chip trophy pieces.
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