Four Pandemic Recovery Opportunities for Art Collectors

I think we can all agree we are moving through 2021 this with mixed emotions. While we are optimistic about a recovery, we are also skeptical asking ourselves “is this really happening?” We could liken it to hermit crabs coming out of our shells!

As the art world “re-opens,” we all are looking for a return to “normal.” However, the question is – what is the new normal? The answer is still evolving, but there is no denying that the pandemic created some permanent changes for both seasoned and budding art collectors. But not all change is bad. Wasn’t it Picasso who said “all great change is preceded by chaos”?

With that, here are 5 pandemic recovery opportunities that all art collectors should be aware of and potentially capitalize on if they can.

NFT’s – Non Fungible Tokens – Empowering the Digital Art World 

We could write dozens of blogs on this exciting trend. Investors and artists alike are capitalizing on this and it is safe to say that the pandemic certainly accelerated its growth. Digital tokens are tied to assets that can be bought, sold or traded. Digital artists have often been unpaid for their creations as there has never really been an official platform to sell their work. With NFTs, digital artists can sign their work up on the market and validate their information by uploading it on a blockchain. According to the tracker, $200 million was spent on NFT based artwork in March 2021 compared to $250 million in all of 2020. Michael Winkelmann, the artist known as Beeple, famously sold a digital piece at Christie’s in March for a record $69 million, creating more NFT credibility with conventional art collectors. Right now one could speculate that this phenomenon is a bubble, but it is most certainly a post pandemic opportunity that has created permanent change and opportunities. 

Historically Low Interest Rates

The Fed has indicated that it will aim for achieving an inflation rate of 2% to help temper the negative economic effect of the coronavirus. Many collectors took advantage of the low interest rates of 2020 and monetized their collection to borrow against it. In other words, the cost of borrowing against a high value piece of art or an art collection lowers. This has given collectors the opportunity to monetize their art for various purposes while keeping it on their walls. 
*Note that obtaining an art appraisal during the art lending transaction is essential. Clients should hire an accredited appraiser for this process and also ensure that they are obtaining the correct value for their needs (fair market value, auction estimates, marketable cash value or retail replacement value).

Art Values Remain Steady

Lower interest rates and a decrease in inventory for buyers have kept values steady. While there was a 30-40% decrease in overall transactions in 2020[1], this also disrupted the supply chain increasing demand and as a result, retaining overall values. 

Opportunities for New Collectors

The art world can be notoriously opaque. This can be frustrating for new or rising collectors, often causing them to abandon collecting altogether. Covid and post Covid adjustments has made the art world more accessible, primarily with the historic increase in on-line auctions. According to Art News, Christie’s alone held over 100 online auctions between March and June 2020 and new buyers made up 30% of each auction. This is an unprecedented jump in new activity. Both auction houses and galleries have dramatically shifted to online sales making the shopping and buying process much less intimidating and more efficient for new collectors. And this phenomenon does not exclude ultra-high valued lots. In 2020, Sotheby’s famously sold Jean-Michel Basquiat’s Untiled (Head) for $15.2 million – the highest amount ever paid by an online bidder.

Galleries & Auction Houses

In addition, galleries and auction houses have also expanded their physical reach. Due to travel restrictions and more people working from home, many have relocated permanently or temporarily, shifting the nucleus of the client pool dramatically. Gallery and auction pop ups in spots like Aspen and West Palm bring the service to the client, making buying that much more accessible for new and seasoned collectors.

The world is constantly changing and there is always room for opportunity so seize the moment!

Carrie Baker
President, Veritas Art Appraisals and Consulting LLC

Top 10 artists at auction in 2020 (by value)

Pablo Picasso$196.4 million
Sanyu$155.3 million
Zao Wou-Ki$143.0 million
David Hockney$125.2 million
Jean-Michel Basquiat$111.0 million
Francis Bacon$106.0 million
René Magritte$104.7 million
Gerhard Richter$87.8 million
Roy Lichtenstein$87.6 million
Andy Warhol$77.7 million

Source: ARTBnk, 2021.
1. Art market 2020: the year of cancel culture and bricks-and-clicks, November 25, 2020