1. What is the art market? (Who are the players in the art market and how do they differ?)

A market is a place (physical or imaginary) where a work is sold, bought, exhibited or otherwise circulated. The art market is divided into primary and secondary: 

  • In the primary art market, works are bought or sold for the first time, meaning there is no prior ownership. Often, purchases are made directly from the artist’s workshop, although this method of purchase distorts the art market due to non-public transactions and is not recommended. In the primary art market, there are art galleries that sell works that do not have previous intermediate owners, represent artists and sell works by heirs. Art fairs are often associated with the primary market but in fact act as a platform for galleries. In these cases, whether a work’s transaction enters the primary or secondary market will depend on the history of the owners.
  •  Works sold in the secondary market have a sales history. Such art objects are sold by auction houses, art dealers or galleries specializing in the secondary market. Often these are time-tested works, rarely found by young, emerging authors in the art world. Collectors or museums also enter the secondary art market environment as they have already become intermediate owners of the work of art.

Most often, specific terms accompany the secondary art market, most of which are found in art auctions:

Certificate of work – an official document for a work of art, indicating the name of the object, author, time and place of creation, as well as technique and materials, dimensions, condition, signatures and other data important for the identification of the object.

Condition Report (CR) – documents where the condition of a work of art is described in detail and signed by specialists.

Signature – identification marks, initials etc. of the author of the work. Often (not necessarily) found on the lower right side of a work of fine art.

Provenance – the history of the former owner or owners of a work.

Lot – a work of art or works auctioned as a single object with a single number and price in the auction house catalogue.

Starting price (at the auction) – the first price that is announced during the auction when beginning the sale of a specific lot.

Reserve price (at the auction) – a confidential amount (higher than the initial price indicated in the catalogue). If the auction is not reached, the work is considered unsold.

Accepted price (“hammer price”) – the highest price offered by auction participants for a work of art during the auction, recorded with a hammer blow. This is the purchase price of the work without auction fees.

Estimation – naming the price of the auction object, indicated with a range; for example, ‘the price from 500 to 700 EUR’.


  • Middle and upper-income individuals who purchase individual works of art or collect them amateurly. This group includes the largest share of art buyers.
  • Art enthusiasts who professionally form a personal art collection. They devote more financial resources and effort to collecting works of art than the average buyer.
  • Investors in works of art. After assessing the risk and profitability potential, investors choose for themselves (or with the help of a professional advisor) which art object to buy. Investors often do not exhibit their works in public or private spaces, but choose to keep them in storage or in “free ports”. Of course, art collecting and the desire to reliably invest in your property may co-exist, but in such cases, works of art are less likely to leave the collection or are sold for profit.
  • Less than 1% of all buyers in the art market are made up of extremely wealthy individuals (Art Basel & UBS, 2020) who focus on the costliest paintings, sculptures or other works of art and compete for them in the secondary market.

Legal entities:

  • Gallery owners. They usually acquire works of art in the primary market, form partnerships with artists and represent them.
  • Museums. Museum curators are looking for works that could complement their existing collections. Purchased works can be lent to other art museums, institutions or exhibitions.
  • Banks, corporations, hotels, etc. Such buyers may acquire art for a number of reasons: the desire to exhibit works on their premises and to activate social engagement (for both employees and customers), to communicate corporate identity through art, or for investment purposes. By lending their accumulated works or even collections to exhibitions in museums, corporations and banks make their name known, creating a positive image in society. Some banks, family offices, and mutual funds provide art investment advice and other related services.

Works of art are generally considered to be a credible alternative investment, and there are a few supporting features: 

  • Works of art – an investment superior to conventional financial instruments in that it is not directly affected by changes in the value of money, such as stocks, bonds or other financial market instruments during an economic downturn, monetary depreciation or currency devaluation.
  •  The value of works of art does not fluctuate significantly compared to other investment vehicles, it remains relatively stable in critical cases of the global economy and grows steadily over time.
  •  The return on investment of works of art is high – the annual value growth is on average 8–10 per cent, in some cases it can reach as much as 30–50 per cent. There are very successful cases where the amount increases several dozen times, for example, if the artist wins a prestigious award, the author of an unsigned work is found out, and so on. 

Depending on the group of buyers and the set goals, the strategy of acquiring works of art may differ, but there are several basic principles: • The most valuable are single original works. Before purchasing a work, it is recommended to make sure that the work has a signature, passport or other documentation confirming its authenticity and origin.

  •  The author’s reputation, notoriety, popularity, context of creative works (rarity, period, etc.) may affect the current value of the chosen work of art and its value in the future. This aspect is especially important when buying art for investment purposes and is worth remembering as tastes change and there may be a desire to replace an existing work of art with a new one. 
  • Investors or legal entities are more likely to perform in-depth analysis of the art market through experts or official annual art market reports, auction, art fund performance data, and other sources based on calculations and research. Meanwhile, amateurs follow the art market news in cultural publications, subscribe to newsletters or watch contemporary artists on online channels. In any case, an interest in the art market or attending art events and exhibitions before purchasing a work helps to make a decision that will delight you for a long time.
  • Consultations from trusted art market professionals can be especially valuable, especially if the work is purchased from an unofficial source (not recommended), or if there are doubts about the authenticity of the work, the author or the fairness of the price. 
  • When starting to form a collection, it is worth developing artistic taste by analysing works of art, as well as gathering information about the art market from reliable sources.
  • A work of art can cost as little as a few tens or hundreds of euros, so the buyer should define a budget for collecting the artwork. It would then be useful to choose an acceptable collection strategy based on a tolerable level of risk. The riskier group of works of art with the highest possible return on investment includes works by young authors – these are cheaper at the beginning of the artist’s career and have a high potential for value growth. Demanding or extremely popular works of classical art can cost much more.
  • If you start collecting on a very small budget, you can choose to save money for a time and only then buy a work or cheaper original prints of graphics and photography, which are equally considered high quality works of art as many prioritized paintings.

A work of art combines both of these qualities as it can be both beautiful and a good investment. An in-depth interest in art develops a sense of quality artwork and aesthetics, but preference is given to works of a certain style or period. Very often, when continuously looking at works (and especially spending time at visual arts events) the current taste changes and beautiful works are considered naive or “sweet”, so it is always worth keeping in mind that there will be a desire to change the work – and in this case to earn. It is advisable to buy such works that are charming, although not typically beautiful – this may indicate the impending aesthetic change that always occurs.

 There are many aspects that add value to a work, such as its historical significance, technique, provenance, and so on. Among other things, the option of collective investment can be chosen. In these instances, high-quality works for investment are selected by professionals who take care of the liquidity, security, potential return and other aspects of the work. 

Works of art are not necessarily acquired for life, there can be many reasons to resell them. Very often, over time the buyer’s taste changes with the acquired knowledge and experience, so the change of works in the collection is natural. According to Basel and UBS research, in 2019, most art collectors and investors sold their purchased artwork less than five years later. This is most often due to flattering tastes, as well as a change in the direction of the art collection (period, objects, authors, etc.).

A work of art is not necessarily a luxury item, but it is associated with cultural literacy and status. Much like a personal library that holds great books, a work of art, especially a collection, can say a lot about a person, their tastes, hobbies, etc., but the collection should by no means consist of invaluable masterpieces of art. On the contrary, selectively curated subtle works of art, the history of their origin or interrelationships (curatorial part) hide many more interesting layers than a collection of individual luxurious works. Keep in mind that most works of art on the secondary market, in luxury global auction houses such as Sotheby’s or Christie’s, cost less than $ 3,000, and some are available for just a few dozen euros.

a)      The art market is for the elite or millionaires only. The price of most paintings sold in the art market, according to the Artprice network following auction house deals, does not exceed 3,000 euros, which can be affordable for a person with a lower income. It is the majority of such buyers who purchase works in the art world. 

b)     It is best to buy works of art in London, Paris or New York, where they are of the highest quality. Promising artists and their quality works can be found locally. According to research (Basel & UBS 2020), people are more likely to collect the works of the country in which they live, making it easier to sell works by local authors on the market when the need arises. Meanwhile, to invest in the works of foreign artists, it is not necessary to go far. Choose reliable online platforms or visit art fairs, which bring together dozens or even hundreds of galleries presenting art from various countries.

 c)      Collecting works of art requires a lot of space at home. It is possible to start collecting works with very little wall space. The works can be combined with each other and exhibited next to each other, not only on walls, but tables or chests of drawers, shelves, and decorative easels. All suitable for smaller format objects. 

d)     Only experts know what art is good for. Knowing the subtleties of art history or investing has its pluses, but most people feel the urge to have a work of art because of the emotional connection they have made. Although there is no need for higher artistic education to develop a specific taste, in the long run, as you become more interested in art, your knowledge will deepen. Increasing your participation in the art market creates valuable acquaintances, and if necessary, experienced market professionals are happy to advise.


Artistic value, emotional fodder, and investment potential are some of the criteria that distinguish works of art from other potential home decor items. The menu is admired for different reasons, but only art has a unique aspect of human creativity / genius, and the holder of art has status and intelligence.

 There are, however, some disadvantages. The works have to be taken care of / restored if they are extremely old or damaged. Some paintings may be sensitive to light, such as watercolours, pastels or drawings. Often art objects must be insured against theft or damage.

Partly, yes (in all cases comparing only authors / works of the same level). A larger format work by the same author is likely to be more expensive as it requires more materials, tools, time and effort to create.

The works of black women authors such as Faith Ringgold and Calida Garcia Rawles, as well as stories revealing the lives of black people (Henry Taylor, Kehinde Wiley), have recently become very popular in the art world. Most often, contemporary artists respond and interpret news and events in the world through the prism of their beliefs. Today’s events captured in art will become historic in the future, and paintings, photographs, or other works of art can gain increasing value over time. 

Figurative works have regained popularity since 2000, as they were preceded by conceptual and abstract art (according to Art Analytics). Of course, abstractions remain relevant, the more transcendent works of their performance technique hanging above the painted narratives are very popular with buyers (Mark Rothko, Gerhard Richter, etc.). The art world has also experienced a rise in the popularity of African, Chinese and feminist art. 

The most relevant trends in contemporary art are presented at art fairs and biennials / triennials. One of the most authoritative in the world – the Venice Biennale, which takes place in Italy every two years – displays many different art projects and works from different countries. Collectors are usually interested in a certain style, period, genre or motif of their works, often prioritizing the work of one or more authors, so fashion and trends have a relatively small effect on art buying habits.

The top ten most expensive officially sold works of art in the world consist of oil-painted paintings on canvas. Of course, a work is not as much a work as an artist is an artist, as the notoriety and popularity of this greatly influences the demand for their work in the art market. There is no doubt that even small-format graphic works by authors revered in the art world will be many times more valuable than a canvas painted by a young artist of local significance.

The works of young artists are much cheaper, but have a higher potential for value growth than the works of classics established in the art market. Usually, as the artist’s career accelerates, the prices of their works can jump several or even dozens of times, depending on the artist’s achievements and their popularity. Although risky, such an investment is attractive not only from the perspective of monetary return, but also for buyers who are driven by the desire to support a young author.

Both wine, real estate and works of art fall into the alternative investment sector. Each of them has the specifics and distinctiveness of valuation that make these investment instruments valuable. In general, the liquidity of alternative investment vehicles is lower than that of conventional investment instruments, i.e. securities, commodities or futures. Another common feature is that the more mature the wine, the more valuable it is – the value of a work of art also grows over time in most cases. Both works of art and real estate can be rented, although renting the latter is more common. The real estate and art markets are tightly managed and regulated, while investment wines are treated as a consumer good and their market is not regulated, so buyers are not fully protected. 

In terms of return on investment and a comparison of the world’s leading indices of alternative investment vehicles, it is clear that investment wine and art market indices outperform the real estate index. The liv-ex Fine Wine 1000 indices (representing the investment wine market) and the global art price index (tracking global art-related sales) tend to outperform the S&P 500 (Standard & Poor 500 index, reflecting 500 leading companies in key U.S. sectors; considered one of the most important U.S. stock market indicators), while MSCI World, when analysing the real estate market, often lags behind the S&P 500. (Based on Deloitte, YSTAT, liv-ex data).

 As we are faced with an infinite number of nuances and rules dictated by these different investment instruments, it is worth choosing to collect what is close to your heart, because the knowledge gained with curiosity and zeal will be beneficial when choosing the best and most suitable specimens for your collection.