Investment in art can act as hedge against rising inflation: official

 10 Jan 2017 - 20:59

Investment in art can act as hedge against rising inflation: official
Yale University Art Gallery in New Haven Connecticut shows impressionist painter Vincent van Goghs' 1888 oil on canvas "The Night Cafe" (AFP /Yale University Art Gallery)

The Peninsula

Art can act as a hedge against inflation, because of it being a store of value and wealth preservation. It is a real, tangible asset that often draws comparison with the highly intangible stock market.
"Art is a real asset that enjoys a negative correlation with traditional assets, and therefore acts as a hedge against inflation. A valuable collection can start with as little as five or six very rare, museum quality pieces," said Salma Shaheem,  Joint Venture Partner and Head of Middle Eastern Markets at The Fine Art Group.
The art market is very opaque, and this is one of the primary reasons collectors work with art advisors. Seeking advice from people that are reputable and well versed in their area of the market, can be extremely beneficial. Working with professionals helps collectors save time and effort otherwise spent on research and due diligence, although this can be a very fruitful experience for the collector they may not have the luxury of time.  
“From a consumer and academic perspective, research is probably the most important aspect of the art industry. Alongside reading, this entails visiting galleries, fairs and museums, viewing the art in the flesh (it's a very different experience than looking at a high-resolution image). Art advisors spend hours researching artworks, artists, art fairs and conducting primary research through their network of industry professionals,” said Shaheem. There are many different sectors of the art market and that they all behave differently. There is an element of risk in every investment transaction, in every industry. “Knowledge is key and if you have appointed the correct professionals, namely your advisor, to help you build a diversified art portfolio, there is great potential for long term capital growth,” added Shaheem.