The artworks market

“When bankers get toghether for dinner, they discuss art.
When artists get toghether for dinner, they discuss money”

Oscar Wilde

The artwork market is very complex and it is difficult here to try to summarize it in just a few lines, as Art is perhaps the most complicated safe-haven-asset to evaluate, not only in economic terms.

However, to evaluate a work of art, it is important to keep in mind the following differences:

Historicized or contemporary artworks
All the artworks, that can be framed in a specific historical period (for example, classical art or modern art), are called “historicized”, while all the other works of art, that are not historicized yet by the art critics, are therefore still “contemporary” to the period in which we live.
This difference is very important in the process of pricing the artwork, since in the first case we are faced with works already accepted as masterpieces and whose price, now stable, should generally tend to grow over the time, while in the second case we are still in a phase where the artwork must be definitively accepted by critics and whose price fluctuations can be wide in both directions.

Public or private market
The public market refers to the Auctions, which represent a place where the formation of the price of the artworks takes place through a transparent clearing between supply and demand. The auctions, among other things, are still the most objective system for measuring the exchange prices of artworks, thanks to the transparency of the system.
On the other hand, private market means a sale between private individuals, althrough the intermediation of a third party. However, in this case the exchange price does not have the same transparency and verifiability typical of a public market, indeed very often it is not even known.

Primary or secondary market
In the first case, the sale of the work takes place directly between the producer / artist and the buyer (for example a gallery owner or the Client), while in the second case there are subsequent transactions between buyers.
Usually in the first case the artist is still alive (and maybe little known) and the sales negotiation is generally private, while in the second case it may be that the artist is dead (and maybe already famous) and the sale is very often public.

Conrat Meit - Giuditta con la testa di Oloferne
Conrat Meit – Giuditta con la testa di Oloferne

Historicized or contemporary artworks
All the artworks, that can be framed in a specific historical period (for example, classical art or modern art), are called “historicized”, while all the other works of art, that are not historicized yet by the art critics, are therefore still “contemporary” to the period in which we live.
This difference is very important in the process of pricing the artwork, since in the first case we are faced with works already accepted as masterpieces and whose price, now stable, should generally tend to grow over the time, while in the second case we are still in a phase where the artwork must be definitively accepted by critics and whose price fluctuations can be wide in both directions.

Public or private market
The public market refers to the Auctions, which represent a place where the formation of the price of the artworks takes place through a transparent clearing between supply and demand. The auctions, among other things, are still the most objective system for measuring the exchange prices of artworks, thanks to the transparency of the system.
On the other hand, private market means a sale between private individuals, althrough the intermediation of a third party. However, in this case the exchange price does not have the same transparency and verifiability typical of a public market, indeed very often it is not even known.

Primary or secondary market
In the first case, the sale of the work takes place directly between the producer / artist and the buyer (for example a gallery owner or the Client), while in the second case there are subsequent transactions between buyers.
Usually in the first case the artist is still alive (and maybe little known) and the sales negotiation is generally private, while in the second case it may be that the artist is dead (and maybe already famous) and the sale is very often public.

Conrat Meit - Giuditta con la testa di Oloferne
Conrat Meit – Giuditta con la testa di Oloferne

The evaluation of an artwork

Evaluating an artwork is complicated and you need professionals with experience and expertise not only related to art in general, but also related to the type of work that you want to evaluate (for example with a specific knowledge of the artist or of the historical period in which the artwork was made).

In principle, however, we can say that, to evaluate an artwork, it is necessary to take into consideration at least the following aspects:

DIMENSION

Indeed, as the size of the artwork increases, its value grows. However, few persons know that art is measured in linear meters and not in square meters or in cubic meters (for example a canvas 55cm long x 75cm high means a canvas of 1.3 linear meters or a statuette contained in a parallelepiped 50cm high x 15cm deep x 60cm high means a work of about 1.25 meters linear).

Maria Uhden - Donna con uccello
Maria Uhden - Woman with bird

ARTIST’S FAME

Generally this parameter is represented by a coefficient (ie a number) that depends on several factors.
For example, if the artist’s works have been included in important international exhibitions; if an important gallery have these works in exclusive way; if the artist produces works regularly and if such works are immediately recognizable or not; if the works are original and, above all, if and how much collectors are willing to pay to have such works.

Abbott Handerson Thayer - Una fanciulla
Abbott Handerson Thayer - A maiden

AESTHETICS OF THE ARTWORK

It is perhaps the most subjective aspect in the evaluation of an artwork, the least rational one to quantify. It depends on the emotions that the artist’s work knows how to inspire and it is this aspect ultimately, more than any other aspect, pushes buyers to buy .

Pavel Aleksandrovič Svedomskij - Fulvia con la testa di Cicerone
Pavel Aleksandrovič Svedomskij - Fulvia with the head of Cicero

OWNERSHIP CHANGES

This aspect is much more important than a person might think, since 2 works made by the same artist, almost perfectly identical, can arrive at very different evaluations, depending on the number of owners they have had.
In general, if it is possible to accurately reconstruct all the changes of ownership of an artwork from the artist to the last purchaser and each owner is considered a reliable and well known subject (for example important art collections), the price of the artwork will not tend to depreciate.

Alexandre Falguiere - Vincitore della corsa
Alexandre Falguiere - Winner of the race

STATE OF CONSERVATION

This last aspect is the most controversial and often generates misunderstandings in the evaluation of an artwork, as it is very important to distinguish a work that has been lived and its history from a work of poor quality or poorly preserved.
It is obvious, for example, that an artwork that has more than a century shows signs of wear due to the time or place where it has been preserved, but it is also true that artworks made with solid materials and with mastery resist over the time, while younger and perfectly intact artworks may require enormous maintenance interventions in the coming years, the costs of which should obviously be discounted from the evaluation’s price.

Giovanni Boldini - Signora In Rosa
Giovanni Boldini - Lady In Pink

Purchase artworks already historicized of well-known artists and with a background of succesfull sales in secondary public markets, through which it is possible to accurately reconstruct both the changes of ownership and the price’s evolution over the time, can be considered a safe way for protecting the Wealth in the medium to long term.