An Investment Tip from Europe:

Fine Art Becoming Accessible To A Wider Audience

By David W. Streets

Photos by Maxine Picard

All the worries of a lagging economy are put to rest when looking at the current art market, especially the American art market. There are more Americans collecting art than ever before, and they're competing aggressively to own the best works. As the world's leading art business, with global auction sales that totaled $6.3 billion last year, Christie's broke records for the highest total in company history and in art auction history overall.

Last May, Christie’s “2008 Important American Paintings, Drawings, and Sculpture” sales totaled $72.6 million. That was the highest total for an American art sale in the auction giant’s history. It also broke records for 19th-century American art and American modernism and it was the highest combined total for American Western art at $41.47 million.

With the sale this week of the 50 year art collection of clothing designer Yves Saint Laurent, a new boom in the art market is being felt. His conservative, main stream collection of Masters set new world records with the total sale of art reaching over $260 million dollars. It is interesting to point out that over 60% of the works were sold to Americans. Laurent’s partner reports that the collection’s return on their investment in most cases was 300-1000% over the long term.

Recently, a Los Angeles client asked me to come and appraise an original Paul Klee drawing he had purchased in the 1950’s in Beverly Hills for roughly $20,000. Since he had purchased the Klee, it had increased over 10 times in value. Recently, he sold the work in excess of $400,000 to replenish cash lost in the stock market downturn.

Collecting art used to be the hobby of a select, wealthy few…those with assets of $100 million or more who were largely insulated from most downturns in our nation's economy. But now, ordinary investors are looking toward investing in fine art as returns from traditional asset classes flounder.

Art is an asset class. It's a place you can put your money as an alternative to other assets like stocks, bonds, publicly held businesses, or whatever it may be. Among aristocratic circles in Europe, that's an old idea. They often put their assets in art, among other places. But in recent times, it's become much more broadly based, this notion that it's not only valid but even desirable in some cases to put some of their assets in art. That's what's fueling a lot of the marketplace as well.

In light of current market conditions, art seems to have become a safe option for investment. Art experts feel that, besides gold, it is the only commodity that gives steady returns. Like a blue-chip stock held for years, art can make its own money over a period of time.

The result: My wealthiest clients and now my first time collectors are putting money into the art market at levels that I haven't seen before and that's driving these record prices that we see in many categories. It certainly is driving prices in the American market.

Alongside this activity, fine-art funds -- a rather recent development -- are reporting a boom in interest since the start of the liquidity crisis. Looking to diversify their portfolios, investors are finding that art can be an attractive option because, like real estate, it is a real, tangible asset. Indeed, interest has become so strong that some art-world insiders are predicting annual turnover in the global art market to more than triple over the next four years, from $30 billion to $100 billion.

With an eye to the future, New York University, which already offers certificates in Arts Administration and Art Appraisal, has just launched a new one-year certificate in Art Business, promising to give professionals the skills to work at art galleries and auction houses, or as wealth managers, financial planners or advisers to high-net-worth individuals, according to the course description.

The No. 1 factor behind the rising trend in the art market is scholarship. As a fine art advisor and appraiser for almost 25 years I have seen that, now more than ever, collectors are not only looking for beautiful art, but most importantly are looking to be educated and advised. Ultimately, their goal is to identify long term works of art to shelter, preserve and grow their wealth.

David W. Streets is an internationally recognized fine art advisor and appraiser in Beverly Hills. For nearly 25 years, Streets has advised American presidents, royalty, celebrities, captains of business, museums and also first time collectors in all aspects of fine art . For more information visit www.davidstreetsbeverlyhills.com