Art comes of age as an investment for the wealthy

International businessman Nicolas Berggruen, the son of a famous art dealer, saw a rare opportunity to expand his father’s renowned Picasso collection during an auction this month, but he was left empty-handed.
Fierce bidding at the New York sale may have sparked a degree of regret, but not surprise. Art lovers and investors from around the globe pumped prices of master works to record heights. Berggruen said soaring prices at auctions and other signs suggest a growing market for art as investment with the very rich seeking tangible assets as the global economy remains “shaky.”

“People have less and less confidence — you can see in what’s happening with the euro right now — in paper money and more confidence in real things that are lasting, art being one of them,” said Berggruen, who ranked No. 158 on the Forbes list of the 400 richest Americans in 2009. Berggruen, who is accumulating works for an expansion of Berlin’s Museum Berggruen, discounted the notion of a bubble forming in the art market. Two days after the auction, he wondered if maybe he should have gone further in bidding.
Asher Edelman, the founder of ArtAssure, Ltd., which guarantees prices on portfolios at auction, said art has never been in greater demand as an investment and is sought after by traditional buyers and those in emerging markets.
“You’re at the beginning of the up-cycle in art,” he said, adding that international buyers are suddenly playing a much larger role. “It’s become an asset class, either subconsciously or consciously, for everybody.”

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