Investing in art as a tangible asset Shea Goli, Contemporary Art Specialist, Gurr Johns
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ow to diversify your investment portfolio with something tangible, aesthetically pleasing and that could increase in value over time. The art market has a casual relationship with the stock market; paintings can go up in value even when the market crashes, making it an attractive option for a diversified investment portfolio. Any potential return from art is based largely on supply, demand and specific market trends which can be very volatile and are based on multiple factors, so it is important to consult with a trusted adviser with an ear to the ground in the marketplace. What can start as simple curiosity can also become a true passion and hobby that can last a lifetime with the right tools and advice. It is important to educate oneself by looking at art. Visit galleries and museums, and seek professional advice from an art adviser. Once you can pinpoint your tastes and interests, it is always best to collect with a view that it could be hanging in your home for a long time because no matter what happens to the value of the art you then have something you love and that you can live with. Generally speaking, there are three tiers of investing: 1. Lower priced objects by emerging or relatively undiscovered artists. Although higher risk and speculative, they have the potential to provide higher returns in the long term 2. Higher value objects by mid-career and established artists, which have shown stability in the marketplace over a period of 5-10 years 3. Extremely high priced objects for blue-chip trophy pieces, which often reflect the rarity of the objects or the egos of potential buyers. Often established artists make prints and editions, which offer the opportunity to enter into their markets at a lower price point. These usually hold their value, sometimes even making attractive returns (for rare prints or limited edition runs resold at the right time) It is important to establish an objective and a strategy when entering the marketplace, whereby you are first and foremost collecting works that you are drawn to aesthetically, and that they are also vetted to ensure the greatest potential to hold their value.
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Collecting for passion vs investment Collecting should always be primarily driven by passion; if collecting has yet to become something you are passionate about, you should, at the very least, collect what you like. While value as an investment is an important factor, ultimately like any investment there is no guarantee there will be a return. The beauty about investing in art is it is inherently never a loss, because you still have an object you ostensibly like and can live with. Ironically, collecting with this in mind usually proves to build the most valuable collections! What should investors be wary of? Investors should seek the advice of a professional adviser to vet the authenticity of work, the fair market value, price, seller, and provenance. These are important aspects that help determine how much to spend on a work of art. There are two main marketplaces from which to buy art: 1. The primary market, meaning bought directly through a gallery or an artist’s studio 2. The secondary market, meaning bought through auction or from a private collection. Both have their pros and cons and serve different purposes in the art world. Having as much information as possible about the work of art is paramount, especially when investing in emerging art or buying on the secondary market, where it is even more important to seek the advice of an adviser who can guide on quality and value. Art is not a regulated investment, so there can be a lot of misleading information out there. How much do you need to start a collection and where would you begin? A case study in how to go about investing in the art world. A common approach is for a client to enlist the services of an adviser to help educate them about contemporary art. The adviser should show them exhibitions and images of what type of art is available on the marketplace. They may walk them through an art fair or a museum to help the client get a clearer idea of what they like.
