HNW Collectors Often Bid Without Seeing Art First - UBS

Tom Burroughes Group Editor December 7, 2018

HNW Collectors Often Bid Without Seeing Art First - UBS

The study showed that the use of online and social media channels to follow and acquire fine art is increasing among wealthy collectors in the US.

High net worth investors in fine art – an area continuing to pull in large sums – are often happy to buy paintings, sculptures and other works without seeing them, suggesting investment rather than aesthetic enjoyment is often a driver, a survey from UBS shows.

A study from the Swiss bank, called Art in Motion, found that 58 per cent of fine art collectors have bought a piece of art without ever having seen it in person – a percentage that has more than doubled from last year (26 per cent).

With mainstream markets sometimes offering low yields and investors hunting for the “Holy Grail” of uncorrelated returns, fine art attracts devotees, even though the market is not immune to economic forces. The market has recovered recently. In March, a study, also by UBS, found that the market achieved total sales of an estimated $63.7 billion in 2017, a 12 per cent increase from 2016 to reverse two years of declining figures. The US was the largest market, at 42 per cent of sales by value, with China in second place 21 per cent, and the UK the third largest market with 20 per cent. The Asian market accounted for 23 per cent of global sales in 2017, and Asian buyers accounted for 15 per cent of dealer sales globally, with Chinese buyers representing the majority at 10 per cent, up significantly from just 4 per cent in 2016. The online art market increased substantially in size over the last five years by 72 per cent, at $5.4 billion in 2017.

In its latest analysis, UBS said that 84 per cent of collectors are either always looking or opportunistically looking to add to their collection with 58 per cent planning to add to their collection in 2019. And, perhaps as a reflection of cultural and political trends, 57 per cent said they bought art partly because of the artist’s gender, with 70 per cent expecting to purchase works by women in the next year.

The report studies attitudes and behaviors of fine art collectors in the US with at least $5 million or more of investable assets.

The study said that collectors are increasingly at ease buying art online. The share of those buying via the internet before seeing the work in person has skyrocketed – and 63 per cent of survey respondents used the internet to take part in online sales. They are also using social media: 67 per cent of collectors follow an artist via this route while 65 per cent have seriously considered buying art after first seeing it through their social media platforms.

“The technological trends changing the economy are increasingly changing the art market," Karl Ruppert, market head of Florida Private Wealth Management at UBS Global Wealth Management, said.

"There are potential opportunities presented through future growth of the online art market to attract new buyers at different price levels, which is beneficial to the health of the overall market. For gallerists, fairs, auction houses, artists and collectors, digital tools will be a key area of growth over the next five years.” 

The art market continues to evolve. This publication has interviewed a joint venture of Swiss private bank Pictet and private equity titan Carlyle Group over how it is applying modern financial methods to the art sector. See here for a guest article about the intersection of wealth management and art. 

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