Art Basel: opportunity to suggest alternative investments for super-rich

The 2017 edition of Art Basel is a welcome distraction from the doom and gloom that has dominated the headlines throughout Europe and the world in recent months.  The art world’s elite collectors were reaching deeper into their pockets this year than they have for at least the past two editions of the fair. Just hours into Tuesday’s VIP preview, many dealers were reporting multiple sales in the seven- and eight-figure range—a welcome reappearance of a phenomenon that had been rare at art fairs since the market’s most recent peak in 2014.

“People are in the mood to buy,” said Eleanor Acquavella, as the ink dried on a sale of Jean-Michel Basquiat's Three Delegates (1982) for between $15 million and $20 million.

She was one of a number of dealers showing paintings by the newly sought-after artist, following last month’s record-breaking sale of an untitled 1982 painting at Sotheby’s for $110.5 million to Japanese billionaire Yusaku Maezawa.

UBS’s president of wealth management Jürg Zeltner agreed that art is still a relatively attractive investment as long as interest rates are low.

“I don't know if art is an asset class,” he said. “What I do know is that money is worth less due to central bank interventions. And it does look to me that a lot of private investors are also looking to invest money in art. They have a passion for it, and if you see the thousands of clients we bring to this platform, you can see that this is a trend here to stay.”

The Global Art Market Report, produced by UBS, Art Basel’s lead partner, points to a healthy demand for art among the super rich. According to their findings, 12% of US-based HNWIs had spent over US$50,000 on art and antiques in the past two years, with 3% spending over US$1million. Sales at art fairs specifically were estimated to have reached US$13.3 billion in 2016, up 5% year-on-year and an increase of 57% since 2010.

Art Basel’s global director Marc Spiegler said more than 90 Netjets flights were scheduled to land at Basel’s EuroAirport this week, despite what he called politically and economically “volatile times.”

“It’s a time where it becomes harder for many galleries to work through and continue to support their artists,” Spiegler said. “Our role this week is to help our galleries succeed, to help them find new patrons from all over the world.”

The wide-ranging success of the fair highlights the multiple spheres of influence and taste profiles that are currently supporting the market, an evolution from the U.S.- and Europe-centered industry of the past. That diversification, as in an investment portfolio, tends to strengthen the market and leave it less vulnerable toward flash-in-the-pan trends and swings in the market. That’s a hopeful sign for more sustainable and significant growth in the future.