Hirst, Warhol Prices Outperform S&P 500 in Art-Investment Index

Hans Neuendorf
Hans Neuendorf, the Chief Executive Office of Artnet AG, in his company's office in Berlin. Artnet has launched a new measure of art as an investment, allowing collectors to check the development of artists over a period of years, and compare with stocks or commodities. Photographer: Anna Jockisch/Artnet via Bloomberg

Art by Damien Hirst and Andy Warhol outperformed the Standard & Poor’s 500 index over the past 10 years, according to a new measure by Artnet AG designed to rank the performance of art as an asset.

Since 2002, Hirst’s prices have increased almost threefold, though they had risen fivefold through 2007 and have since fallen, according to a graph compiled by Artnet using its new product. Warhol has performed even better, with prices gaining fourfold and almost returning to peak 2007 levels this year. The S&P 500 has risen about 7 percent in the decade.

Art is gaining ground as an alternative investment, with many new collectors coming from the financial industry and from emerging markets, Hans Neuendorf, the Chief Executive Officer of Artnet, said in an interview in Berlin. The company’s new product is designed to help investors compare value.

“This makes investing in art much more reliable,” Neuendorf said. “Art has been a good investment over the past 10 years, but there are big differences in performance among artists. It’s more interesting to look at individual artists, in the same way that you look at stock-market segments, or individual companies.”

The art market has sustained its boom as stocks and bonds collapsed this year. While the S&P has fallen 1.3 percent, annual sales of contemporary art rose 35 percent from the previous year at the main 2011 auctions at Sotheby’s and Christie’s International, according to Bloomberg News calculations. New buyers from the U.S., Russia, Asia and the Middle East raised the bidding.

Lichtenstein, Richter

Records were set for painters including Roy Lichtenstein, L.S. Lowry, Clyfford Still and Gerhard Richter.

“There are more and more collectors, and people will pay more and more for art,” Neuendorf said. “Art as an investment form has only really been discovered in the last years.”

Hirst underperformed in Artnet’s index of the top 50 contemporary artists, which more than tripled over the decade. His prices peaked in 2007, with an average sale price of $901,214, Artnet data shows. That was a year before his “Beautiful Inside My Head For Ever” auction in London, which took $126.6 million with fees on Sept. 15, 2008, the day Lehman Brothers Holdings Inc. filed the biggest bankruptcy in history.

Thomas Galbraith, head of analytics at Artnet, said he wants eventually to refine the data even further so that investors can “compare the performance of Warhol’s Elvises versus his Marilyns,” he said. Artnet also plans to be able to compare the price of an artist’s works by medium, he said. The market reports can be purchased individually for $50.

‘Insane’ Prices

Neuendorf, who is 74, said he doesn’t see current art prices as unsustainable, even if they are “insane.” Having led Artnet through the collapse of the Neuer Markt, a German stock exchange that specialized in technology stocks and lost its last member in 2003, he has some experience of bubbles.

“The banks have now been rescued and these people who earn several million still will earn millions, and they are often the same people who buy art at high prices,” said Neuendorf, who also co-founded Art Cologne in 1967.

“There is enough money for art, and there is a lot of cash sloshing around the world looking for places to invest,” he said. “The absolute value and the quality of the art doesn’t play a role -- just the relative value. It’s a competition among people who see art as a status symbol.”

Artnet operates a website comprising a database of prices of art sold at auction and an online art auction site, which Neuendorf said he expects to expand after the business grew 25 percent in 2010.

Warhol Online

The highest price so far paid at an Artnet online auction was $1.3 million for a Warhol. The average price per artwork is about $10,000, Neuendorf said.

“People want to buy art online because it is fast, simple and the transaction costs are very small,” Neuendorf said. “The auction business is growing very fast -- it will continue. It takes a while to grow trust.

“The other auction houses have taken 250 years to get established,” he said. “Perhaps we will take 10.”

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