Summarize

The Art Market is undergoing substantial changes. Rapid evolution of digital solutions, Covid-19 pandemic, geo-political situation – these are only few factors that Art market is to reflect. ArtLaw.club is having an honour to discuss the latest trends in Art Market, ArtTech solutions and investment opportunities with the practising Art&Finance specialist from Switzerland Irina Resch

- Irina, we know that your company – Farnoe - contributes into development of AI technologies for classification and recognition of images. How these solutions can help art market practitioners?

Irina Resch: Nowadays, such techniques are used quite widely to be able to establish the authenticity of the works, especially of those with disputed attribution. Based on the most extensive databank of images, trained machines can recognize and to identify the style of the artist, his/her brushstroke, lots of small but important details, which can be invisible to a human. This can be influential for the appraisal and the security while concluding a purchase, or for the attribution of newly discovered artworks. However, there are still many things to do in this field, when considering not only the appearance of a work, but taking a set of parameters as a complex. This should help art historians and connoisseurs, although it doesn’t replace their work.

More widely implemented, AI can help in learning process as well, in archiving the works of art, creating catalogues raisonné and much more which is still to be revealed. 

- What are, in your opinion, the other necessary/usable IT solutions in the art market field and why?

Irina Resch: Art should become even more accessible to people, however less in a traditional way (like visiting museums), but in a way adopted to our realities and growing demands.  Might it be an interactive smartphone application for learning, or a significant media setting which offers a complete new art experience.  Although there are already some realized ideas in the market, the room for creativity is still very spacious and the possibilities are not exhausted at all. Even though the travel restrictions have been lifted so far, our habits have changed, we have discovered new possibilities and new lifestyles. On one hand, it is practical and easy to have a digital solution for entertainment or buying a piece of art or design, regardless of location; on the other—people need to be able to get an entirely new enhanced experience, immersive and involving. For these purposes, VR, AR (augmented reality), multimedia offer various opportunities. 

- There have been a lot of information recently about the inflow of NFT projects. How would you evaluate the size of the market segment currently covered by these digital tools? What to expect in the future?

Irina Resch: The NFT topic has arisen and surged within a very short time, and this dynamics is going to continue for a while, with over 50% market growth per year. Interestingly, many art experts have been quite sceptical about blockchain and artificial intelligence still a few years ago.  However, the market dictates its own rules and high profits and popularity couldn’t be neglected. Those who made fortunes with cryptocurrencies lately naturally want to invest also in crypto art. Nowadays, all the major auction houses started to be involved, there are lectures at the Art universities about NFT’s, galleries pop up, social media is full of it and barely anyone has never heard about it.

At the same time, it’s a quite vulnerable market. There are several risk factors that can disturb it significantly, such as government restrictions, failures of the platforms, trend change etc. Furthermore, it’s still unclear how the impending energy crisis will impact the cryptocurrencies. Currently, such developments are hardly predictable.

- How do you see a good (optimal) art-investment portfolio? How to make a right choice?

The best art portfolio, same as a financial one, should be well-balanced and diversified. Same like buying equity shares, there should be a rationale behind a decision to buy a piece of art.

There are numerous strategies, based on various reasons, depending also on the purpose of the investment and a time horizon.  For a long-term investment, even “burnt” works would fit well—the ones that have been offered for sale too many times within a short period; therefore they can be bought discounted and need at least 5-10 years to recover their value. For a short-term investment (less than 3 years) this makes no sense; then arising, contemporary artists would be a perfect solution, but only those whose works are being acquired by significant collectors and those who are represented by significant galleries.

There are many other factors which can influence the investment perspective, like predictable demand for certain segments, as well as undervalued period or undervalued historical significance of a particular artist whose recognition is on the rise, and more.

This is, of course, a purely financial look. Many collectors buy what they really have a passion for, and it turns to be the best collections.

- How does the latest geo-political situation impact the art market (globally and in particular relating to Russian old and modern masters)?

Irina Resch: It takes some time when the art market starts to react to a crisis. The major auction houses still post impressive results, the economic impact hasn’t come into a power so far. However, if the economic situation will get worse, and it will affect corporations and their owners, it will naturally pull down also the art market, as it happened in 2008. So, the art market is somehow correlated to the financial market.

Concerning the Russian Art, while Christie's, Sotheby's and Bonhams have cancelled sales of Russian Art in London in June, and certain restrictions have been applied, many collectors refrain from any transactions currently, neither buying nor selling. Some deals have become impossible technically. 

There will always be a market for strong pieces though, globally and also for the Russian art. Major auction houses used to attract a significant number of passionate collectors from across the globe. Art lovers do understand that cultural heritage has nothing to do with politics. There is a segment of works which is always sought after and when the political aspect will lose its influence, the true values will be highly appreciated.

- What would you recommend to the investors - newcomers to the art field? What to focus on?

Irina Resch: First, it is important to understand what is really close to your heart. The trends and fashions pass by, there is no guarantee that what is on hype presently, will have more value later on. But at least if you possess the work of art which you truly like, you can enjoy it and share with others. It also depends on the risk level. The golden rule is to never invest “all in”, but to diversify in different works. Furthermore, to remember that digital art, although being on the rise currently, can still be quite risky. Normally, investments in art can make around 5% of the owned capital, unless you are a really passionate collector and see no sense to buy anything else.

There are treasures which will be appreciated all the time, mostly belonging to modern art or impressionism, but they might not make beat faster the heart of a young person, moreover they might be already too expensive.

Walking through galleries and art fairs, discovering new artists, talking to gallerists and like-minded people could be a useful and affordable way to start with first collections. Then you will find Your Art.