Continuing with our series on investing in the Art Market - I came across a great article “This isn’t the best time to sell arts” by Nalini Malaviya in the Economic Times. She suggests strategies for people looking to sell their Art in the current hostile market. Her article is given below.
During a financial crunch, people like to have the option of selling a part of their assets to obtain liquidity. In the recent past, art had been promoted aggressively as an alternate asset class and many buyers invested large amounts in it in the hope of receiving good returns.
However, most people who had invested in art without sufficient knowledge of the art market dynamics are now struggling to resell their works. Although, many galleries began offering buy-back guarantees on the works they sold, this often came with clauses regarding timeframe, returns and valid for only select artists.
Now that investors are facing major problems in reselling art, many of them are disappointed and disillusioned with art as an investment option. It is important to understand that investing in art is an altogether different ball game as compared to investing in traditional assets such as stocks, real estate or gold.
At this point in time, there are a large number of people looking to exit but unfortunately given the financial constraints permeating all sectors, it is a difficult option. Many of these investors had bought art hoping for quick and high returns, and while this did happen during the boom period it is an extremely unlikely scenario at the moment.
Still, if an investor needs to exit now, he could either sell directly to a private buyer, or through a gallery or dealer. Rare or high quality works can also be sold through an auction house and you may want to consider that also as an option. As art prices have dropped recently. If you are selling now, you should be realistic about the price. Ideally, this is not a good time to exit unless you are forced to. If possible, hold on to the work for at least another two to three years.
I hope that our series on the art market will be of use to you. Do send us your feedback by commenting below.
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Informative piece for all those who blindly jumped on to the bandwagon when the market was on fire…
Well done Yameer!