"I paint pictures of myself to remind myself that I'm still around." - Andy Warhol Andy Warhol's 1986 self-portrait wearing a fright wig sold for $32 million on the booth of Skarstedt Gallery at Art Basel on June 17. Bloomberg

The main thing that’s driving the growth of the art market was the demand for a good investment for the very rich, art adviser Todd Levin said.

Levin, standing outside the convention centre in Basel, Switzerland, was referring to the brisk sales inside at Art Basel, the world’s largest modern and contemporary art fair.

A self-portrait by Andy Warhol sold for $32 million (R342m) within 15 minutes of the fair’s start on Tuesday.

Other numbers were impressive: $4m for a David Hockney landscape; $3m for a Fernand Leger painting; $250 000 for a towering sculpture by Thomas Houseago.

“It’s about the need of high-net worth investors to park their excess capital,” Levin, the director of Levin Art Group in New York, said.

“They don’t want to keep it in cash in the bank… Art has historically provided the greatest intergenerational return of any asset class.”

The Artnet C50 index, which combines performance data from 50 top contemporary and post-war artists, advanced 434 percent from the start of 2003 through last year, beating asset classes including gold, fine wine and stocks.

Art sales increased 8 percent from 2012 to last year to e47.4 billion (R688.5bn), nearing the high reached in 2007, according to an annual report published by the European Fine Art Foundation in Maastricht, Netherlands.

Auction houses in New York sold a record $2.2bn of modern, Impressionist, post-war and contemporary art last month.

Wealthy art collectors may be a step ahead of other investors.

Multimillionaires have a high allocation to cash, according to a survey released on Friday from US Trust, a unit of Bank of America.

Of respondents, who had at least $3m in investable assets, 60 percent said they had at least 10 percent of their money in cash.

Last year, 56 percent of those surveyed said they had a large amount in cash.

These investors may have taken notice that their parked cash isn’t earning much as central banks globally push down interest rates.

About 17 percent of millionaires had said they planned to move some money out of cash in the next 12 months, the survey said.

In Basel this week, bearish outlooks were a rarity as dealers reported strong sales and broad international attendance.

First time visitors from China, India and the Middle East were among the 86 000 people expected to attend through the fair’s end today, organisers said.

About 284 galleries from 34 countries offered as much as $4bn worth of art, according to an estimate by insurer AXA Art, a sponsor of the fair’s 45th edition.

Alberto Mugrabi, whose family owns one of the largest Warhol collections, routinely buys and sells art, and he wants values to rise.

“The same way an investment banker analyses a company, we analyse a work of art,” he said.

“When you are paying money like that, you have to think about it as an investment.”

During the first two days of Art Basel, Mugrabi stayed away from purchasing Warhol, instead going for a 1981 drawing by Willem de Kooning for $450 000 at Matthew Marks and a 1960s painting by Joan Mitchell for $1.5m at Cheim & Read.

“You see prices of the young guys today and de Kooning looks cheap by comparison,” he said.

“It’s a no-brainer.“

He hasn’t brushed off the “young guys”.

He collects emerging artists with blazing speculative markets including Joe Bradley, Alex Israel and Lucien Smith.

In November, Mugrabi paid $389 000 for Smith’s painting inspired by Winnie the Pooh and made while he was in college.

The price was a record for the 24-year-old artist.

Philip Hoffman, the chief executive of The Fine Art Fund Group in London, also shied away from Warhol.

“It’s a waste of our time,” he said.

“We don’t make money buying what everyone else is buying.”

The firm managed $300m of art assets and expected to reach $500m by the end of the year, he said.

Walking through the fair on opening day, Hoffman said he was alerted that another buyer was interested in an artwork the fund had agreed to purchase earlier.

By the end of the day Hoffman resold the work to the new buyer. “We made 10 percent on the deal.”

Hoffman said he consigned several works to dealers at Art Basel, selling almost $5m worth of art and averaging compound gains of 10 percent to 20 percent.

Most of the art the fund acquires was valued at $1m to $10m, Hoffman said.

He looks to buy works by artists whose prices are on the rise.

Christopher Wool was in that category five years ago, Hoffman said.

In 2007, the fund bought a Wool painting for clients for $800 000. But like the financial markets, there are ups and downs.

In 2009, Hoffman told his clients that the value of the work dropped 50 percent to $400 000.

The fund held on until last year, when it sold the work for $2m.

“Now these investors are happy people.” – Katya Kazakina from Bloomberg