Wiktor Szymanowicz/Anadolu Agency via Getty Images
-
Interest in the luxury art market is picking up.
-
For those looking to buy, it’s important to remember that art doesn’t function like a rational investing asset.
-
A senior lending specialist at JPMorgan Private Bank lays out three caveats for art investment.
After a couple of down years, the luxury-art market is coming back for ultra-wealth investors.
Alexandra Levitt Reach, a senior lending specialist at JPMorgan Private Bank, told BI that her firm’s art-financing portfolio has grown 90% over the past three years. Further, a recent report from Art Basel and UBS showed public and private sales rose 6% to $25 billion in 2025, snapping two straight years of declines.
“We’re seeing increased client interest in the luxury art market and in using fine art-backed lending to diversify liquidity sources while staying active in the art market,” Levitt Reach told Business Insider.
In an uncertain market landscape, alternative assets can be an appealing way for ultra-wealthy individuals to guard against macro volatility. To see why, look no further than the fact that several Hermes handbags have been outperforming the S&P 500 for years.
But buying art is more complex than picking a painting you like and hoping it increases in value, markets be darned. To that end, Levitt Reach laid out for BI three key caveats for art investing:
(1) It doesn’t function as a rational investment asset
Levitt Reach said that while art can be a portfolio diversifier, it doesn’t have a reliable correlation with markets, so shouldn’t be viewed as a hedge. After all, there’s no guarantee that the value of artwork won’t decline during an economic shock. The opposite may very well happen.
She also noted that valuations are subjective: “There’s scarcity, the provenance, the quality of the pieces, the collector sentiment that comes into the factor of the value of the art. Whereas public markets are very different.”
(2) High holdings costs
Displaying paintings in your home is often seen as a symbol of wealth and status. But for those buying paintings for investment purposes, keeping them locked away may make more financial sense, although that also comes with costs such as storage and transportation fees.
“When clients purchase art from a gallery or auction, installing it is often a long, expensive process,” an advisor to Citi’s luxury art buying clients told Business Insider.
(3) There’s no income generation
Levitt Reach says it’s important to remember that art investments strictly function as a store of value and should be regarded that way. This contrasts with assets that produce yields, like stocks and bonds.
“If they’re held more for investment purposes you likely have them in storage facilities just to preserve the pieces, but they’re not generating income,” she added. “As an investor, that is also something very important to think about, whereas you have other options for interest dividends from other investments.”
Read the original article on Business Insider