14 Factors That Give Value to a Work of Art

Each month in The Hammer, art industry veteran Simon de Pury lifts the curtain on his life as the ultimate art world insider, sharing his celebrity encounters and invaluable insights into the inner workings of the art market.

Simon de Pury is the founder of de PURY, former chairman and chief auctioneer of Phillips de Pury & Company, former chairman and chief auctioneer of Sotheby’s in Europe, former curator of the Thyssen-Bornemisza collection. He is an auctioneer, curator, private dealer, art consultant, photographer and DJ. This is a translation of an article by Simon de Pury published on Artnet.com .

— When I started working in the art world, I think a hundred years ago, the market was dominated by a small group of passionate collectors. When I explained my profession to bankers, the reaction was invariably slightly condescending.

Of course, over the years, things have changed, and today most financial institutions view art as an alternative asset class. The main reason for the skepticism of financial advisors was that collectors’ decisions were considered highly subjective and purely emotional. They were right, as love, passion, and emotion are certainly key factors in our fascination and attraction to art. That is why I chose this profession, and it is what motivates me every day.

Even if you are the most passionate collector, if you spend a lot of money to acquire works of art, you will not get any satisfaction if the financial value of your acquisitions significantly decreases over time. Therefore, before making a decision to buy, it is necessary to conduct a thorough check.

I have compiled a list of 14 criteria by which to determine the financial value of a work of art. While the first point is emotional, the others are all rational. So an investment-minded buyer or seller might want to see how a potential purchase compares to each of these. I have mentioned these criteria at conferences for years, but I have never written them down before.

1. Emotions

Works of art, like us humans, radiate their own energy. From time to time we are madly drawn to a painting, sculpture or object, and we remain confused until our relentless pursuit is rewarded – provided the work of art does not belong in a museum. Attractiveness, of course, depends only on the eye of the beholder and is entirely subjective.

2. Quality

Even the greatest artists have good days and bad days. So there can be significant differences in quality and therefore value between different works by the same artist. For example, Pierre-Auguste Renoir, in addition to his charming best works, which are among the masterpieces of Impressionism, created many rather mediocre works. In the 1980s, the prices of his works rose regardless of their quality. This led to a rude awakening for some buyers. So buy with your eyes, not your ears!

3. Authenticity

A work that turns out to be a fake obviously has zero financial value. Do your due diligence! Check the terms of sale. When you buy from the best auction houses or galleries, you are protected by them, but only for a certain time. Even the most reputable firms or individuals can make mistakes. Of the hundreds of thousands of works sold by leading firms, only an infinitesimal number are fake. Watch Make You Watch: The True Story of a Fake Art, a 2020 Netflix documentary, for a chilling account of how this can happen.

4. Rarity

For a real market to form, an artist’s output must neither be too scarce nor too flooded. Look, Picasso and Warhol have been among the best-selling artists on the international art market for decades. If you told me you wanted to buy a work by either of these artists not now, but in a year, I could tell you with confidence that such works would be available on the open market then. While there are plenty of works by these towering figures, there is enough variety in their careers that you can collect them bit by bit. If all of an artist’s work throughout his career is virtually identical, with no variety or evolution, that is not a positive development.

5. Safety

Art, when it is truly great, is timeless. But even works of art are not immune to ageing and physical change. Whether we are curators, dealers, or collectors, we have a responsibility to properly care for the works entrusted to us so that they can outlive us in the best possible condition.

An artwork that is in pristine condition is generally more valuable than one that has deteriorated over time. Often, the true physical condition of an artwork cannot be determined with the naked eye. Therefore, an auction house or gallery selling an artwork must provide a condition report from a professional conservator.

6. Size

The art market is one of the few areas where bigger doesn’t mean better. Many artists strive to create ever larger works. Unless you own a palace or castle with very high ceilings, you won’t be able to live with your purchase if it’s over 10 feet tall. Length is also a problem unless the work is made up of multiple panels. If you can’t install your purchase in your home, you’ll incur significant storage and shipping costs.

7. Provenance (confirmed history)

Every work of art has its own life and its own story. Its history is like a biographical note for us humans. Although it does not change the appearance of a painting, sculpture or object, the personality of its previous owners can have a significant impact on its financial value.

The lower the intrinsic monetary value of a work of art, the greater the multiplication factor due to its prestigious provenance. The astronomical prices achieved for Andy Warhol’s biscuit tins or the Duke of Windsor’s cufflinks are proof of this phenomenon.

8. Taste

Taste is constantly evolving. What we consider most desirable today is nothing like what we considered most desirable 50 years ago, and it certainly won’t be anything like what we will consider most desirable 50 years from now. When I started in this business, most wealthy people bought 18th-century French ormolus-adorned furniture to go with their Impressionist and Post-Impressionist pieces. Today, the super-rich hang their post-war paintings above 1950s French furniture by the likes of Royer, Prouvé, and Perriand. There is an accelerated change in taste in contemporary art. From an investment perspective, you ignore the evolution of taste at your peril.

9. Agents of influence

The owners of the best galleries are undoubtedly connoisseurs of taste. The creators of more than half of all contemporary art sold at Sotheby’s, Christie’s and Phillips are represented by Gagosian. This makes Larry Gagosian the daddy of taste in the art world.

Often, the key tastemakers have no direct connection to the art market. Charles Saatchi, Pharrell Williams, Benedikt Taschen or the K-pop star Choi Seung-hyun, better known as TOP, are all tastemakers. Bernard Arnault, the founder, chairman and CEO of LVMH, runs a marketing machine that surpasses anything the art market professionals can do. This makes him a god of taste worldwide.

10. Marketing Dominants

The biggest spender in any area becomes the “market maker.” The biggest cultural projects of the 21st century are taking place in the Middle East. Sheikha Al-Mayassa bint Hamad Al Thani is leading Qatar’s phenomenal movement in this area. Her influence is comparable to that of historical figures such as Catherine the Great.

The rulers of Abu Dhabi and Saudi Arabia have the vision, the means, and the determination to at least match or surpass them. As a result, the region will be a must-see for art lovers for hundreds of years to come.

11. Local, national, continental or global market

In the early stages, galleries determine the size and geography of future markets for the emerging artists they represent. It can be tempting to sell all the work to a local clientele. However, it is important to ensure strategic sales to buyers from different parts of the world from the very beginning.

Consider these examples from Switzerland and Russia: Alberto Giacometti’s works are represented in the finest public and private collections around the world. His best works sell for over $100 million apiece. The vast majority of works by Ferdinand Hodler, a Swiss contemporary of Gustav Klimt and Egon Schiele, are in Switzerland. His best works sell for around $10 million. His price level and fame will never match that of an artist whose work is widely distributed around the world. Marc Chagall, a native of Russia, is a household name in the art world, while the equally brilliant Pavel Filonov is known only to a small circle of connoisseurs, since most of his works are in the Russian Museum in St. Petersburg and the Tretyakov Gallery in Moscow.

12. Legislation

Some countries, such as Italy, Spain or France, have restrictive laws. If a work is declared a national treasure that cannot be exported, it instantly loses a huge percentage of its value. This is very close to nationalization or confiscation of private property.

13. Advertising

When I started in the art market, I naively believed that a great masterpiece needed no advertising and that its quality would ensure a record price. The more buying power a person or institution has, the more it is courted left, right and centre. So only marketing, both personalised and general, can ensure that the best potential buyer is, if not in the auction room, then at least at the computer terminal or on the other end of the phone.

14. Auctioneer

Although it is impossible to prove, I am convinced that if the same work were sold by three different auctioneers — that is, not different auction companies, but three different people holding the gavel — you would get three different prices. Auctioneers, like artists, have good days and bad days. On a good day, a good auctioneer will be able to coax at least one additional bid beyond the mental ceiling each bidder has set for themselves.