Financial Times Exclusive: Banking On Banksy

Red Eight Gallery’s very own Julian Usher recently spoke to the FT Adviser about the merits of contemporary art investment:

“After “Great British Spraycation” put Banksy back in the spotlight over the summer, demand for the iconic street artist’s work shows no signs of abating. During H1 2021 a total of 27 Banksy originals sold at auction for more than US$80 million worth according to the website “Banksy Explained”.

That’s the highest total ever achieved by Banksy to date, with the top performer being “Game Changer” which sold at Christie’s London in March 2021 for £16,758,000.

These big sums might sound impressive, but does this mean that investors and FAs should seriously consider including contemporary art in their portfolios? Let’s consider the main pros and cons of art investment from the perspective of the retail investor.

Impact Of COVID-19

Before the COVID-19 pandemic, Deloitte’s 2019 Art & Finance Report estimated the total value of the art and collectibles market at US$1.7 trillion, with projections to reach US$2.1 trillion by 2023. While there’s no question the pandemic has impacted auction and gallery sales, the market is expected to recover promptly according to the latest Art Basel and UBS Global Art Market Report:

“Global sales of art and antiques fell from $62 billion in 2008 to $39.5 billion in 2009 but returned to its pre-crisis levels by 2010. The bounce-back was fuelled by a stimulative fiscal and monetary response similar to what we’ve seen this year. We expect the art market to take a similar path forward.”

Interestingly, the report also found that the pandemic had actually increased 66% HNW individuals’ desire to collect fine art, with 33% reporting a significant increase. Banks and other big corporate collectors did reduce their expenditure, but still 78% of the International Association of Corporate Collections of Contemporary Art (IACCCA)’s 56 members have continued to acquire art during the pandemic.”