The Finer Things – Investing in Fine Art: Part Two
The first part of this investing in art guide (https://alsanagroup.com/the-finer-things- investing-in-fine-art-part-one/) looked at ‘trophy art’ – the big-name works for which tycoons and institutions pay many tens of millions of pounds.
Such big sales generate equally big headlines, but do not exemplify art investment in general. Equally good, but less famous, works change hands for less. How can one get involved in investing in art?
Start with a budget
Let’s start with the crucial advice given in the previous post: you must be committed.
Of course, you might get lucky. You might find an unrecognised work by a master languishing, cob-webbed and dirty, in a corner of a pawnbroker’s or antique dealer’s premises.
That is the stuff of Hollywood dreams.
In the real world, you need to know what you want, where to find it, and what it’s worth. Start with a budget – and don’t think that, because you can spend no more than, say,
£15,000, you can only buy works by unknown artists. That sum could secure a numbered artist’s print by Francis Bacon.
Because it’s not unique, a print doesn’t command the price of an original painting.
Nonetheless, the fact it’s by a famous artist (in 2013, one of Bacon’s paintings fetched
$142 million) makes it a good investment.
However, you may want only original works, knowing, correctly, that the uniqueness of a painting is what can make it especially valuable.
Even so, big money is not a prerequisite, providing you know what you want and have done enough research.
Look for work that challenges you and makes you think, but that’s also stylistically distinctive. The opposite, in other words, to the obvious, or the comforting, or the merely ‘nice’.
However, you should also like the work, since you may need to keep it for several years before having an opportunity to sell it for a profit.
The main advantage of buying at auction is that sale prices are public
According to research, only about 0.5% of art buyers ever sell their pieces. So it is surprising how easy it is to source original work.
The most obvious places to start are auction firms. Most people have heard of Phillips or Sotheby’s.
Those famous names are just the expensive tip of an iceberg that extends all across the developed world.
Virtually all have websites, detailing their venues and listing what they have to offer. Some also hold on-line auctions and some, such as eBay, operate on-line exclusively.
Some specialise in particular kinds of artists or styles – contemporary, impressionists, old masters, water-colours, equestrian, landscapes, etc. You can, therefore, easily find those that cater most precisely to your preferences.
The main advantage of buying at auction is that sale prices are public, so you can track the sales history of an artist or work that interests you.
By the same token, auctions only feature artists that have such a history. They avoid offering anything unlikely or difficult to sell, so they are not the place to find works by the undiscovered.
Many find the auction process too intimidating
In any case, many find the auction process too intimidating, or too open to abuse (bidders colluding to drive up prices, for example). For them, galleries and dealers may prove more approachable and rewarding, especially if seeking new or obscure artists.
Again, you can search for suitable names online.
But you should also take the trouble to visit these galleries or dealers to establish a relationship.
Not only will you learn more about the works you want to buy, but, once a dealer or gallery knows you are a committed buyer, they will contact you first if anything relevant comes up.
The art market is opaque and fragmented, so access to inside knowledge is an advantage
Moreover, by making yourself known to a gallery or dealer, they will invite you to showings of works likely to appeal to you. Those events will deepen your knowledge and, just as importantly, they will introduce you to other like-minded collectors.
You will thereby join the ‘in-crowd’, which is all-important for getting first-hand knowledge of what is being sold, where, and by whom.
The art market is opaque and fragmented, so access to inside knowledge is a major advantage if you are to succeed.
Browse the graduate art shows
Perhaps, however, you are a lone wolf who prefers to act solo, avoiding intermediaries. Maybe you are wary of their sometimes self-interested promotions and, not least of all, their fees.
You could browse the graduate art shows held annually by the leading art schools and universities. This is the venture capital area of the art market, and can yield returns as impressive as those reaped by Silicon Valley’s tech entrepreneurs.
All you need is a few hundred pounds and a good eye for originality, significance, and quality. Who knows? You might become a patron for up-and-coming artists.
Yet again, the on-line world will furnish you with all of the venues and dates. If further motivation is needed, read this article (https://www.theguardian.com/money/2017/may/20/how-to-invest-in-art-degree- shows.).
It includes a list of recommended UK graduate shows, together with the names of some new artists that are thought to show promise.
Whether you are comfortably rich or more like the fairly typical middle manager highlighted in the Guardian article, there is a wide range of gateways to art investment.
Besides, whoever you are, money is not the issue.
Rather, what you need is genuine interest, dedication to acquire the essential knowledge, patience to find the pieces you want (and to keep them on your wall until their worth is recognised), and, most of all, the self-discipline to stick to what you know.
Paul Connolly
Paul Connolly has been a journalist for more than 20 years, as a reporter and editor for Argus Media, Reuters, The Times, Associated Newspapers and The Guardian. He has covered Islamic Finance for Reuters in the 1990s. Paul has since helped launch three newspapers, as well as reported from Tokyo, Los Angeles and Stockholm.
