WHY BUY ART IN AUSTRALIA - The top FIVE reasons
Why buy art? Investing in Art can be a great way to diversify your portfolio and potentially earn a return on investment. Here are the top five reasons to invest in fine art in Australia.
1. Strong market: The Australian fine art market has been steadily growing in recent years, with record-breaking sales and increasing demand for Australian artists. This makes it an attractive market for investors.
If Australia is any reflection of the global market, we can look at the Mei Moses All Art Index published by Sotheby’s. This is considered the benchmark global index, that tracks the repeat sale prices of fine art over time, particularly the repeat sale prices of individual works of art. From 1950 - 2021 the trajectory of demand for the overall market has delivered a compound annual growth rate of 8.5%.
2. Tax incentives: The Australian government offers tax incentives for art collectors, including deductions for purchase and maintenance of artworks, including ability to purchase art through a Self-managed super fund.
Capital gains tax can be reduced if the artwork is held for over twelve months or purchased through a SMSF. It important to note, Art that is purchased through a SMSF cannot be housed in the home, however you are allowed to lease these artworks to galleries, this must be in accordance with arm’s length terms. This allows for the investment to increase return through leasing as another revenue stream and an alternative way to add to your super.
Source: Lyon’s Gallery Investment Guide
3. Diversification: Fine art can be a great way to diversify your investment portfolio. It is not as directly affected by stock market performance, so it can provide a buffer against market volatility.
In the 2022 Douglas Elliman Wealth Report it was stated that investing in art is becoming increasingly popular among high net worth individuals, as art is seen as a stable and tangible asset in a time of economic uncertainty. The report highlights the trend of art being used as an alternative investment, and noted that the art market has shown resilience even during economic downturns.
As you can see over the last 10 years art has convincingly outperformed other luxury assets such as wine, jewellery, watches, stocks and shares.
4. Emotional gratification: Investing in art can be an emotionally gratifying experience because it allows you to own a piece of something beautiful and meaningful to you. Yes your art won't yield an income as it's a capital growth orientated investment, however your dividend is the ability to enjoy your piece of art by living with it in your interior spaces.
5. Support local artists: Investing in art in Australia allows you to support local artists, which can be a fulfilling experience. By buying artworks, you are not only investing in a potential asset you are also supporting the culture and history of our country.
Cover Image: Ultra Matte ‘fade’ #004 by Henryk X Amelia Collab - Concrete, Polymer, Pigment on board 68 x 53 cm
Note: As with any investment it is important to conduct your own thorough research before making a decision. It is also advisable to consult with a professional advisor to that you can educate yourself to the potential risks and returns of fine art investment in Australia.
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