Is art collecting only for the rich?

Let’s be honest, you’re not going to be collecting art if you’re worried about paying rent.

But does that mean art collecting is only for the rich? I’m not an art expert neither am I rich. So I decided to ask someone who was both: Elie Khouri, chairman of Omnicom Media Group and avid art collector.

“Buying art doesn’t have to be for the rich,” he tells me on my business talk show Greenback. “You don’t have to have a lot of money to buy art. You start small – you can buy print editions by young artists that are completely young and that can over time become known and established.

“So it’s not for the rich for sure,” he says, albeit, that’s easy for a rich person to say [sorry, Elie].

I do agree, however, that anyone can collect art. It just won’t make you any money, which takes me to my second point – that while art collecting is not just for the rich, art investing is.

Why? Because art is a bad investment. And who has the luxury to make bad investments? The rich, of course. Art is an unregulated, illiquid, costly and volatile asset that produces no income. For once, Khouri agrees with me.

“A lot of people are fooled by this notion that you get into art because it’s a good investment. It’s not a good investment if you think about it. If you own, on average, a bunch of artworks, you’d get 8 or 9 per cent return if you hold them for long term but a lot of people buy artworks and sell them at a loss,” he says.

His personal art collection represents 5-10 per cent of his wealth and is split into three buckets: artworks by young and emerging artists, mid-career artists, and “a few” blue chips, he tells me casually.

Blue chips are the most expensive category of artwork created by recognised artists and can be worth millions. Unlike other categories, they’re considered a safe investment because their value either remains stable or increases over time, regardless of economic market conditions.

But to actually invest in blue chip art, you need to start a fund of at least £5,000 ($6,800), so it’s not exactly accessible. And not only is it expensive to buy art, it’s also expensive to manage and maintain it. In fact maintenance fees for shipping, installation, insurance and framing can range from 1 per cent to up to 20 per cent of the overall value of a collection, according to experts.

To make art more inclusive, Khouri is planning to set up an art foundation dedicated to making it more accessible for young people.

“Art is very complex and intimidating as a craft and it could be daunting for young people to get into collecting. So my idea is, how do you make it more simple, more accessible and bring art collecting to everyone so that everybody embraces art collecting?” he says.

According to figures, however, more young people are buying art today. Millennials in particular now make up nearly half (49 per cent) of collectors around the world, according to economist Clare McAndrew’s The Art Market 2020 report.

Despite claiming they bought art for “passion,” the report shows 71 per cent of millennial collectors resold their works after just four years on average, meaning they initially bought it not to collect necessarily, but as an investment.

Khouri says: “You should never buy art as investment. It should be something you want to live with, something you appreciate and which adds depth to your life, and something you want to share with future generations as well.”

But I disagree. I say if you’re buying art, you might as well try to make money out of it. You don’t have to like the art piece if you plan on selling it. You can even save the cost of framing by not hanging it. That way, you don’t ever have to see it. I know, I’m such a millennial. There’s no shame in my game. Even if Elie Khouri doesn’t see it that way…

Lubna Hamdan hosts the Greenback show every week on Downtown Dubai TV