Since the time of the great patrons of the Renaissance, art and millionaires have been closely linked. This isn't surprising given that back then, only the wealthiest had the purchasing power to cover the artists’ expenses amid constant power struggles.
Over the past few centuries, however, billionaires’ appreciation of art has shifted from a sign of power and prestige to a highly profitable and discreet form of investment. Still, it hasn’t always been the best business.
Jeff Bezos, the Discreet Art Collector
One of the best examples of this shift is Jeff Bezos. While it's common knowledge that Bezos owns a large yacht and several mansions in the most exclusive areas of Miami, not everyone knows about his investments in art.
If his recent acquisitions are any indication, Bezos isn't afraid to spend big. In 2019, the prestigious Christie’s London house offered Hurting the Word Radio # 2 in one of its art auction lots. This work, which belongs to the series of text paintings by the avant-garde artist Ed Rusha, fetched $52.5 million, a record price for an artwork by the painter.
That same year, Sotheby’s sold Kerry James Marshall’s Vignette 19 to an anonymous buyer for $18.5 million, making it the second most expensive work ever sold by the artist. As reported in Artnews, the discreet shadow of Bezos seems to be behind both purchases.
It Doesn’t Matter if It’s Pretty. The Only Thing That Matters Is Whether It's Profitable
Bezos isn’t the only ultra-rich person to invest in art. This is a growing trend among the ultra-wealthy because of the advantages buying art gives them over other goods.
As highlighted by Ars Magazine, 2022 was a year of records, demonstrating that art has become a very profitable form of investment and a tool to fight inflation. Works by famous and recognized artists like Pablo Picasso and Jean-Michel Basquiat fetch the highest prices. In fact, their works are constantly bid up in terms of purchase value, consolidating them as assets with long-term value.
Performance data for various luxury investments. Source | Knight Frank
According to a report by the consulting firm Knight Frank, the performance of art as an investment is among the most interesting. Art investments increased by up to 30% in 12 months and by up to 109% for long-term investments of more than a decade.
On the other hand, investors with a very technological profile, such as Bezos, find in art a way to diversify their investments. It's a way of taking some eggs out of the main basket to ensure that, in case of bad luck in the volatile future of technology, they maintain the value of their investments.
Finally, unlike what happens with the buyers of stocks, yachts, or mansions, the art world traditionally keeps the identities of buyers and collectors a secret. This creates a wall of privacy that allows many of the ultra-rich to feel comfortable spending huge amounts of money on works of art without being exposed to public scrutiny.
Millionaire Collections to Decorate Mansions
According to the UBS Billionaires Ambitions Report 2022, 30% of billionaires own art collections with an average value of $300 million. The 2023 edition of the same report shows that 11% of these billionaires intend to continue adding acquisitions to their art collections, while 80% have no plans to sell or reduce their collections in the short-term.
Those numbers indicate the excellent safe-haven value that art has become for the wealthy. Paintings and other works of art have become much more than just an ornament to decorate the walls of the mansions or yachts for the world’s one percent.
Images | Wikimedia Commons (LAAFBSMSC) | Ed Rusha