The global art market had a record-breaking year in 2021, both in terms of total auction turnover and number of works sold. The most popular artist among buyers was Pablo Picasso, reaching $671,513,270 in total auction revenue for the year, according to artprice.com.
One of Picasso’s most well-known series is the “Musketeers” series he created towards the end of his life. Top auction records for Musketeer paintings have achieved prices over $20 million, led by “Mousquetaire à la Pipe” (1969), which sold for $30,965,000.
Shares of a painting from this series titled “Homme à la Pipe” (1968) are now being offered to investors through the Masterworks platform. Similar works by Picasso have seen an average historical price appreciation of 11.2%.
The painting will be securely stored and insured until Masterworks identifies the best opportunity to sell the painting and distribute proceeds to the shareholders. Investors also have the option to sell their shares in the secondary market after a minimum holding period.
While investors have been able to realize significant price gains through the secondary market, most have achieved the greatest returns by holding. Most recently, the platform sold Albert Oehlen “Doppelbild” producing a net IRR of 33.8% for shareholders.
Benzinga’s Take: The art market is still foreign to most retail investors. This is mainly because works that produce the most reliable returns have price tags of over $1 million and the major auctions have traditionally been in-person events, both of which have made it difficult for the average investor to gain access to this asset class.
However, the major auction houses made a digital transformation because of the COVID-19 pandemic. This didn’t just allow the auctions to continue through the shutdowns, but also increased overall participation. When you take an already strong market and open it up to a virtually unlimited number of investors, it’s bound to reach a new level.
Increased activity can also result in increased volatility as trends shift in terms of the most popular artists and styles. However, even if that turns out to be the case, I see Pablo Picasso as being the “blue-chip” artist in this market. He’s easily the most well known 20th-century artist, so demand should remain high for his works. This is evident when looking at the 43.7% price increase in 2021 for Pablo Picasso's Price Index.
Photo: Courtesy of Masterworks
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