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Ken Griffin warns art prices 'cause for concern'

Billionaire Ken Griffin said he has "cause for concern" about soaring prices in the art market.

Griffin, founder of the Citadel hedge fund and an avid art collector, told CNBC on Thursday that the art market has seen a rapid shift from one that was dominated by collectors and dealers, to one that is filled with people using it as an investment.

"I think people should be very hesitant in thinking about art as an investment," he said. "I would have some cause for concern around that."

Ken Griffin, founder and chief executive officer, Citadel
David A. Grogan | CNBC
Ken Griffin, founder and chief executive officer, Citadel

Griffin said despite the headline-grabbing sale of a Modigliani painting for $170 million at Christie's this month — the second most-expensive work of art ever sold at auction — the market for lesser works is starting to fade.

"We're seeing the tier one artists with their best works setting all-time record highs," he said. "But we're seeing second-tier artists and second-tier works by the best artists starting to slide down in price."

Sotheby's and Christie's just finished a two-week marathon of art sales totaling more than $2 billion. Yet while some works went for well above their estimate — including the Modigliani and individual pieces by Warhol and Basquiat — others went for below their estimate or failed to sell.

Griffin also warned about another favorite asset class among today's rich: Luxury real estate. The billionaire has gone on a personal shopping spree of high-end real estate over the past two years, buying two floors of the Waldorf-Astoria in Chicago, a $200 million apartment in Manhattan and a $60 million penthouse in Miami — all of which set local records.

While brokers and developers like to tout real estate as an investment, Griffin contends that it's more of a lifestyle purchase.

"In the high-end real estate market there is that element of consumption. And that's different from just investing," he said.

"So I think one must have to keep that in mind, that when people make a decision to buy a piece of high-end real estate, it's not just an investment. It's where they spend time with their families and their loved ones."

Asked if he would rather own gold or a prestigious oceanfront property, the now-divorced Griffin didn't hesitate.

"I'd much rather be in Miami," he said. "We only live once."