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- Rich millennials are more likely than previous generations to buy art as an investment.
- Some of them are turning to "art flipping" — buying art with the hopes of quickly reselling it.
- But millennials, who are often drawn to contemporary art, are also motivated by aesthetics and the desire to extend their "personal brand," according to one expert.
- As millennials participate more in the art market, they’re also more likely to buy online, which is changing the world of art.
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Forget real estate and stocks — millennials are seeking out art as their latest investment.
While expensive art is no new concept for the elite, rich millennials are being more strategic with high-end art purchases than previous generations were.
"Millennials are more likely than other generations to see art as a financial asset and as part of a comprehensive wealth-building strategy," wrote Amelia Kennedy of the Art Market Guru.
In fact, millennials are twice as likely to view art as a financial asset, Kennedy wrote, citing 2018 data from Bank of America’s US Trust Insights on Wealth and Worth report. And, according to the report, 85% of millennials said they were very or somewhat likely to sell in the next year, whereas only 41% of Gen X collectors and 24% of baby boomers said the same.
Kennedy calls this "art flipping" — buying with the hopes of quickly reselling. But profit isn’t always the key motivator — some buyers reinvest profits in more art as a way to curate a better collection, according to Kennedy.
Art flipping isn’t a new idea, reported Lorne Manly and Robin Pogrebin of The New York Times. It’s a widely debated practice, as some see art flipping as a way to devalue the artist and the work, they wrote.
Millennial art investors are just bringing art flipping to the forefront. They’re more likely than other generations to contemplate a work’s value and the overall market rather than the aesthetics of the piece before deciding to buy, according to Kennedy.
Art flipping can certainly reap a profit — the price of Jean-Michel Basquiat’s "Warrior" increased by 450% from 2005 to 2012, during which it was sold three times; by its third selling, it was worth almost $9 million, according to Manly and Pogrebin.
But, as with real estate, art flipping doesn’t always result in a profit. Art dealer and collector Niels Kantor of Kantor Gallery paid $100,000 in 2014 for a Hugh Scott-Douglas abstract canvas with the intent to flip. Two years later, he sold it for $20,000, an 80% price cut, according to Katya Kazakina of Bloomberg.
Millennials are more likely to buy art online
But art flipping isn’t the only motivator for millennial art buyers. They’re also motivated by passion, aesthetic appreciation, and desire for personal fulfillment when it comes to collecting art, wrote Kennedy: "Art collecting both fulfills the collector’s sense of creative passion and is also a strategic move in today’s world of personal ‘branding.’"
She cited a quote by Alexander Gilkes, founder of online art platform Paddle8, who told W Magazine, "Our generation has become somewhat stripped of identity by the homogenizing effect of technology. So, more than ever, people want to project their own individuality. What you collect is the ultimate impartation of who you are. It’s the archive of your identity — it’s what you leave behind."
Millennials are particularly attracted to contemporary art — more than 90% of young collectors, defined as those under age 40, are interested in contemporary pieces, wrote Kennedy, citing data from an AXA Art Survey.
Consider the "millennials in hoodies," who purchased $28 million worth of art inspired by the Simpsons TV show at a recent Sotheby’s auction in Hong Kong, according to Frederik Balfour and Katya Kazakina of Bloomberg.
But extending their personal brand isn’t the only way millennials are diverging from their parents when it comes to the art world.
"High-net-worth millennials are becoming far more active in all parts of the art market, and they’re far more willing to buy art online," said reporter Rosalind Chin of Bloomberg TV in a TicToc broadcast, citing stats from The Art Market Report. According to Chin, 17% of millennials from the report said they spent $100,000 or more buying a piece of artwork online, and 4% said they spent $1 million doing so.
Instagram is serving as a tool for both emerging artists and millennial collectors, Adweek reported. According to the publication, social media influencers are heightening the art market and creating "social media icons" in the process.
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Source: Business Insider – hhoffower@businessinsider.com (Hillary Hoffower)