Art Investment Guide
Welcome to Art Investment Guide
There is a significant financial tail wind behind art (as an investment). It has been whipped up by the boom in self-managed superannuation funds; by a market driven by the intergenerational transfer of wealth from a conservative, saving pre-war generation to their inheritors, the free-wheeling baby boomers; by a relatively strong domestic economy, one that has outperformed so many of our trade partners over the last few years; and, finally, by what I call 'smart money': those collector investors who have foreseen that the returns on orthodox financial assets are going to be substantially less in the next ten years than they have been over the last fifteen. The smart money has always figured this one out early and is finding its merry little way into hard assets.
It is my belief that art has appreciated to a point where it should now be looked at from a portfolio standpoint … I haven't forgotten the age-old way of viewing art from the art historical and theory standpoint - that is taken as a given. But the art market has come to a point when art as an asset class - and the tools by which we understand that asset - demand greater consideration. I hope that (this) window of understanding … into the nuts and bolts of buying and selling art will empower all collectors to get down and amongst it. After all, beauty demands possession.
Michael Reid
Sydney 2004
A GUIDE TO BUYING & COLLECTING ART AS AN INVESTMENT
When buying and collecting art as an investment it is important foremost that you like what you buy. Chances are that if you hate a painting, a potential buyer will also hate the painting.
Never buy just a signature. The artwork must stand on its own merits irrespective of the artist's reputation. A bad painting from a good artist will remain a bad painting, and be treated as such by the art market.
The value of an artwork is indicative of numerous unique subjective considerations. A potential buyer looking to purchase a quality painting or artwork capable of obtaining strong capital growth should minimise their art collecting risk and be satisfied that the artwork lives up to or exceeds each subjective consideration.
The subjective factors are:
- The status or standing of the artist. Is the artist on, or likely to one day be on, the secondary market?
- Understand and differentiate between the creative periods within any artists life. Their productive output may indeed vary. Focus your attention on those strong artworks or themes from the artist's best years.
- The medium, condition, provenance and exhibition history must impress.
- A painting's subject matter must be neither offensive or unpopular.
- Whether a painting is signed or not.
- Collectors must take into account the cyclical nature of the art market and the economy itself. Sell in a boom and buy in a bust.
- Know the availability and value of other works by the same artist.
- Collectors should know the final price settled upon and ensure there are no hidden costs such as buyers premiums which may distort the final cost.
- Understand the vagaries of taste and fashion. An acquired work which delivers a good return on the purchase price usually exhibits universal themes and emotions.
The above subjective factors are an edited version. Reference: Michael Reid, How to Buy and Sell Art, Allen & Unwin, Sydney 2004, pp252-3 and generally. Independent professional advice is recommended when considering art as an investment and which gives consideration to your personal financial circumstances and goals.
Who's Hot and Collectable in Art in 2012
