Blank Canvas A Guide to Investing in Art

Personal questions are traditionally off-limits during a job interview. Nevertheless, I can never help asking the following two: “What is your sign of the zodiac?” and “What animal would you choose to be?” Why? Because it takes people from all signs of the zodiac to make a company great and all species of creatures to make the animal kingdom magical. I am a Scorpio, and if I could choose to be any animal, it would be an eagle. I interpret this as being linked to my unquenchable thirst for freedom and altitude. An eagle can, of course, “zoom in”—as in when it spots its prey, darts down at speed, catches it . . . then immediately ascends to where the air is thinner—but is otherwise never bogged down by details.

The Quest for the Holy Grail

Having been an art-obsessed auctioneer for half a century now, I have always been in search of the very finest and rarest works. You never know if and when you’re going to come across one, but when you do, you know immediately—and it is like finding the Holy Grail. Very few individuals are prepared to spend $100 million-plus on a single work of art, which makes the air thin at that altitude of the art market; and yet, activity at that height has an impact all the way down to ground level, where hundreds of millions of people acquire objects of desire in what might be thought of as a global flea market. Those who spend the most on artworks define the market— and as such, become tastemakers.

Opposite page: Swiss auctioneer, dealer and collector Simon de Pury. Right: Caspar David Friedrich’s Wanderer above the Sea of Fog.

As recently as five years ago, art-market professionals predicted that the combined income of the main global auction houses—Christie’s, Sotheby’s and Phillips—would, during their peak New York auction weeks in May and November, exceed $1 billion. And then, in mid-2022, in the wake of the Covid crisis, the Macklowe Collection sold at Sotheby’s for not that much short of $1 billion.

As the world of sports shows us, records are meant to be broken; and, just one year after the Macklowe sale, an auction of paintings and sculptures from the collection of Microsoft cofounder Paul Allen fetched $1.6 billion over two days (four works alone went for in excess of $100 million).

The highest price ever achieved at auction for a single artwork was when Salvator Mundi, the last work attributed to Leonardo da Vinci in private hands, sold at Christie’s for $450 million. There are other works rumored to have been sold privately for around the same amount. The day when an individual work of art will hit $1 billion surely can’t be too far away.

Changing Tastes

Documentary evidence for prices paid for works of art goes back only as far as the middle of the 19th century. Analysis of the art market since then shows it rising and rising in value, bar a few occasional short pauses. Why? Because of a continuous growth in human wealth, paired with a diminishing number of highly desirable artworks available for sale.

Meanwhile, a graph with a continuously upward trajectory doesn’t tell the full story: Considerable fluctuations within the market occur due to the constant evolution of taste. In recent years, collectors’ buying patterns have been akin to that of fashionistas, especially in the red-hot emerging sector, where some artists’ work has climbed up in value pretty much vertically for 12 to 18 months, only to plummet back down again after just one or two auction seasons.

In the field of decorative arts, tastes have changed fundamentally over the course of my career. The superrich in the 1970s were furnishing their homes with opulent, ormolu-mounted furniture from 18th-century France. With the exception of the kind of pieces that, for instance, once (provenly) belonged to Marie Antoinette, the bulk of that type of furniture now sells for far less, in real terms. Today, French or Italian mid-20thcentury furniture by the likes of Jean Royère, Jean Prouvé, Carlo Mollino or Gio Ponti is all the rage among the most affluent.

The vast middle segment of the market is also not immune to fluctuations in taste. When a wide consensus has developed over the importance of a certain artist, geographically speaking, the risk of their work’s value going down significantly is more limited: The entry level is financially higher, but the risk is lower.

A Collective Approach

An ever-growing number of participants is pushing the market up. A relatively recent phenomenon is fractional ownership, Masterworks being a pioneering company in that area. Tens of thousands of small investors can now dip their toes into the art market by buying tiny fractions of blue-chip works. This widens the market significantly: The number of people following the major auctions live, online, has risen to the millions. Finally, art is accessible to all in a way that once only music was.

The nearly unlimited number of participants at the bottom end of the pyramid can also have an influence upward. The tiny group of players at the top of the pile is not immune to the buzz that can be created by the groundswell of people interested in art.

Which is why, while passion could be a crucial cog in the engine when collecting art, a few purely rational criteria should also apply to make sure that you invest intelligently. Keeping a close eye on the evolution of taste is certainly one of them.

The very finest and rarest works of art, though—those that are timeless, immune to fluctuations in taste—are the “trophy” finds. It is when you acquire these that you find yourself cruising at an altitude above the rest and set to leave behind a meaningful legacy.

History shows that the only truly lasting legacy results from cultural achievements. This will come as no surprise to VistaJet customers, who are used to living life at high altitude. (German Romantic artist Caspar David Friedrich’s 1818 work Wanderer above the Sea of Fog, shown on page 49, springs to mind.) To invest at altitude, one must view things from an eagle’s perspective.