A new era of value for Old Masters Art?

Nov 14, 2023

The appeal of Old Masters in the art world is enduring, with coveted works continuing to command prices in the multi-millions. However, a small number of high-profile sales have concealed a wider decline in artworks predating 1850 at auction, signalling a shift in collector’s taste from the old to the new. In response, sellers of European Old Masters have worked hard to revitalise the genre. Can they win the battle between the past and the present?

Appreciation for the Old Masters is nothing new. Many highly desirable works still consistently break records at auction. The world’s most expensive artwork remains Leonardo da Vinci’s Salvator Mundi (Savior Of The World), which sold for USD450.3 million in 2017.

However, the enduring value of the most famous names in art history has hidden a bigger trend. Paintings from before 1850 – once a bedrock of the market – have accounted for a smaller percentage of auction sales in recent years.

In response, sellers of European Old Masters have spent several years trying to enliven the genre for a new generation of collectors. Have their efforts begun to pay off?

A renaissance of Old Masters

The term “Old Masters” generally refers to the most recognised European artists – mostly painters – working between the Renaissance and 1800.

It spans a rich tapestry of artists, from the likes of Leonardo da Vinci, Michelangelo, Caravaggio, and Rembrandt, and art movements, including Gothic Art, the Early, High, and Northern Renaissance, Mannerism, Baroque, the Dutch “Golden Age,” Rococo, Neoclassicism, and Romanticism.

“People buy art because they have a real passion for it, but they invest in it because its qualities and characteristics make people think that it’s going to go up in value,” says Gary Edwards, Managing Director, Head of Credit Advisory at HSBC Global Private Banking.

People buy art because they have a real passion for it, but they invest in it because its qualities and characteristics make people think that it’s going to go up in value,” says Gary Edwards, Managing Director, Head of Credit Advisory at HSBC Global Private Banking.

“Uniquely, these pieces are totally one-of-a-kind. Unlike limited edition watches or cars, there’s never another one of them out there. This means prospective buyers can’t simply shop around and find another one of what they’re looking for – they need to wait for someone to sell.

“If you combine those elements of absolute uniqueness and grandeur, and then add in history and fame, you can see why the Old Masters were a favoured target market for so long. They are, to state the obvious, no longer being produced. This essentially leaves people to fight over what’s left. Old Masters are slightly less subjective than more contemporary art, too. Plus, their popularity and value is very well established.”

If you combine those elements of absolute uniqueness and grandeur, and then add in history and fame, you can see why the Old Masters were a favoured target market for so long. They are, to state the obvious, no longer being produced. This essentially leaves people to fight over what’s left. Old Masters are slightly less subjective than more contemporary art, too. Plus, their popularity and value is very well established.

That being said, owing at least in part to this shrinking supply of works, today, sales of Old Masters make up only a small part of the overall art market at auction. In fact, in 2021, European Old Masters represented just 4 per cent of the world’s USD26.3 billion art auction sales. This makes the market a starkly different one to how it was just half a century ago, when this category was a very dominant one.¹

A shift in tastes to the contemporary

There’s a wealth of reasons that Old Masters started to fall out of fashion. Tastes shifted towards the contemporary and, according to The Art Newspaper, “big money preferred the post-war hits.”²

It also appears that people were struggling to relate to Old Master’s religious and mythological subjects, and that buyers were being put off by doubts around condition.³

Add into the equation that there are very few in circulation and it’s easy to see why buyers and investors started to look elsewhere.

Provenance is also a very real issue when it comes to art of this age – so much so that even the world’s most expensive painting isn’t immune. The Salvator Mundi, which was originally discovered at a yard sale in New Orleans⁴, has been denounced by many as a fake – and has vanished from view entirely. In fact, even ahead of its record-breaking sale, some experts had pointed out that the painting did not resemble any other works by da Vinci.

Back in style

But today, despite all of these problems, the Old Masters seem to be having a renaissance of their own.

Major rediscoveries contributed to this boom, including a 15th-century sketch of a nude male by Michelangelo, which set an auction record for a drawing when it sold for USD24.3 million. Meanwhile, The Man of Sorrows – an oil on panel which was once thought to be by Botticelli’s workshop – was reattributed to the artist himself.⁵ As a result, it went on to be sold for USD45.4 million.⁶

Another reason for a spike in interest might be down to the interests of a younger clientele. Auction house Christie’s hosted a ‘Classic Week’ sale in London earlier this year, attracting new, younger registrants; 36 per cent were aged between 27 and 41 years. Similarly, at Sotheby’s, the buyer of the first two lots at its Old Masters evening auction was also in their thirties.⁷

Revitalised galleries following the trend

According to Freize, commercial galleries are also sensing a shift. In London, Saatchi Yates – co-founded by Phoebe Saatchi Yates, whose father is the famed contemporary art collector and market-maker Charles Saatchi – was set up in 2020 to show some of the most emerging and experimental artists on the scene. Just three years later, the gallery took on Joseph Friedman, a long-time expert in Old Masters, in a bid to start up a new division called Saatchi Yates Masters.⁸

What’s more, this year’s most popular museum show has been ‘Vermeer’ at Amsterdam’s Rijksmuseum. It recorded 650,000 visitors – making it the institution’s most successful exhibition ever. London’s V&A and Paris’s the Louvre also hosted exhibitions that featured Old Masters – attracting visitors from far and wide.

And when London’s National Portrait Gallery reopened this year, it included a re-vamped Tudor gallery, while in Liverpool, the Walker has reopened its Medieval, Renaissance and Baroque galleries.⁹

The hidden costs of keeping art

Edwards points out that there’s a very good reason that the majority of ultra-famous pieces are housed in museums and galleries, not private collections. “The insurance alone can set you back a huge amount, and then there’s storage. You might want to keep it at home – many people do – but then your insurance is going to be even higher. If it’s in storage, then the space will have to be climate controlled and extremely secure. For non-income producing assets, these are really quite big expenditures.

“While the world had flat interest rates, people looked for other ways to make money,” Edwards continues. “But when interest rates spike, people tend to take a step back and look at their asset base. They think about selling their buy-to-lets because they aren’t making the same money out of them that they were.

“Some people might therefore look at selling their art because keeping it isn’t worth their while anymore – but that in turn creates an opportunity for somebody else.”

For others, another route to value creation is to opt to borrow against their art. “They will then use that money to invest in something else that will make even more money – such as private companies, private equity or property. What they’re doing here is extracting equity value out of one asset to invest in another.

“The same thing might happen with buyers. They might see a brilliant opportunity to buy a piece of art that someone needs to sell but they themselves can’t find the necessary cash. So they might need to borrow to buy it.”

Utilising your art in the best way

“Art isn’t an asset class you go into to make money quickly,” cautions Edwards. “It’s something you have to think very seriously about.

“When you're looking at rates of returns and are doing a health check of your financial affairs, it's really important to consider if you’re utilising any art you might have in the best way. It might generate you a capital growth but if it’s not also generating a return, are you thinking about it and holding it in the right way?

For those looking to get into art, what does he suggest? “Seek a professional opinion from an expert – such as an auction house – and be sure to ask about turnover and appetite. Fraud can be a huge problem in this space too. There will only be one genuine version of a piece, but there could be replicas or fakes out there, too. All of this is why proper support is so important.”

The top ten most expensive paintings ever sold

Salvator Mundi by Leonardo da Vinci (USD450 million in 2017)
Interchange by Willem de Kooning (USD300 million in 2015)
The Card Players by Paul Cézanne (USD250 million 2011)
Nafea Faa Ipoipo? by Paul Gauguin (USD210 million in 2015)
Number 17A by Jackson Pollock (USD200 million in 2015)
The Standard-Bearer by Rembrandt (USD198 million in 2022)
Shot Sage Blue Marilyn by Andy Warhol (USD195 million in 2022)
No. 6 (Violet, Green and Red) by Mark Rothko (USD186 million in 2014)
Portraits of Maerten Soolmans and Oopjen Coppit by Rembrandt van Rijn (USD180 million in 2016)
Water Serpents II by Gustav Klimt (USD170 million in 2017)¹⁰