The UBS annual art market report released last week (6 December 2017) has recorded that despite high-profile sales; art collectors were largely driven by legacy and love, not investment and profit.
Art collectors are largely driven by legacy and love
Many wealthy art enthusiasts are disinterested in parting with works, choosing instead to pass down collections to heirs. New UBS Investor Watch Pulse Report, “For the love of art,” offers insights on US-based collectors’ behaviours and buying trends.
Key Findings:
1) 65% of those surveyed have never sold any works of art/objects from their collection
2) 88% of collectors do not have an art advisor to guide their purchases
3) 26% of art collectors have purchased art online, sight unseen
4) 87% of wealthy collectors plan to leave their collection to heirs,
5) 57% have not taken steps to educate them on how to manage, appraise and sell their collection
Among those surveyed, Art Basel in Miami Beach is the top art event attended by collectors in the US. The new report shows a majority of collectors of fine art view their art collections as a pursuit of passion rather than as an investment. In a special Investor Watch Pulse Report, released during Art Basel in Miami Beach, UBS studied the attitudes and behaviours of fine art collectors. The report, titled “For the love of art,” found that despite recent high profile sales of fine art at auction houses this year, such as Leonardo da Vinci’s, “Salvator Mundi, c. 1500” and Basquiat’s “Untitled, 1982,” 65% of investors noted they have never sold a piece from their collection, and 41% confessed they have never had their collection appraised.
Art collectors opt for passion over investment. When it comes to collecting behaviours, art collectors find themselves driven by an appreciation for beauty (71%), a desire to follow their passions (54%) and a wish to support and nurture artists (32%). Moreover, one-quarter of investors consider their collections to be priceless, further emphasizing the fact that passion, rather than profit, is a motivating factor.
“Collecting is a passion that we share with many of our clients who are developing alternative legacies through their cultural pursuits. Collectors don’t apply the same principles to buying art that they would go to a typical investment portfolio of stocks and bonds,” said John Mathews, Head of Private Wealth Management and Ultra High Net Worth, UBS Americas. “It is important, however, to institute management structures to ensure their legacy remains protected, correctly valued and insured.”
Collectors overwhelmingly seek purchase advice from alternative sources. Eighty-eight percent of collectors do not use an art advisor to guide their purchases. The report found that the collector’s first step in the purchase journey is to seek advice from other sources. Sixty-two percent of collectors cite using galleries to educate themselves on fine art purchases. This is followed by online resources (60%), museums (50%) and magazines (44%). Most surprisingly, one in four collectors admits to purchasing art online, sight unseen. This gravitation toward alternative sources, in particular digital, underscores the evolution of the art buyer’s journey and how the industry will need to adapt to keep pace.
Heirs’ attitudes vary on maintaining a collection’s legacy
The data also presents evidence that passion for art transcends generations, whereas other collections (coins, stamps, jewellery) do not. Collectors of fine art, overwhelmingly, plan to leave their art to heirs rather than sell it (87%). According to the report, 90% of heirs felt “honoured” to inherit an art collection, and 81% intend to keep it. In contrast, only 35% of heirs who received other collectables, including coins, stamps and jewellery, were interested in it, according to a recent Investor Watch Report called “For love, not money,” published November 9, 2017. Despite the interest in maintaining a legacy, 57% of art collectors have not taken steps to educate their heirs on how to manage, appraise and sell their collection.
“We’re seeing sentimental value tends to supersede financial value,” said Sameer Aurora, Head of Client Strategy, UBS Wealth Management Americas. “Collectors do not appear driven by the monetary worth of their art collection, and therefore are often unaware of its true value.” When it comes to collecting, it’s passion for investment. A recent survey of art collectors reveals that they are motivated by an appreciation for beauty, and a desire to follow their passions and nurture artists. Profit is rarely a driving factor. Collectors view art not as an investment, but as a way to pursue their passion. This may explain why two out of three collectors have never sold a work of art, or why 41% have never appraised their collection. While adding to their collection, most collectors follow their counsel, primarily relying on online research, galleries and art magazines. In fact, one in four collectors have purchased art online, sight unseen.
Overwhelmingly, collectors plan to leave their art to heirs rather than sell it. While heirs feel honoured to receive the collection, collectors are not preparing them for ownership. Fewer than half of collectors have educated their heirs on how to manage, appraise or sell works from the collection. Collectors may need to start earlier to instil their love—and knowledge—of art.
Do collectors know the value of their art? 46% have never sold art from their collection and consider their collection priceless. 41% have never appraised their collection. Collectors enjoy the pursuit 88% do not have an art advisor. Where do art collectors find guidance? 62% galleries 60% 26%online have purchased art online, sight unseen 50% museums 44% magazines 26%
Top 5 most attended art events.
1. Art Basel
2. The Armory
3. TEFAF
4. Frieze
5. Venice Biennale
Read Report Here