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By Michael Russell
Buying art is considered a 'boutique' investment or something that is
off the beaten track. However, is this really the case? Unlike other
forms of investment, economic conditions do not affect the art market
much.
The art scene has its own rhythm, mostly influenced by the artist's
quality of work and excitement of the collectors. It has more to do with
cycles. Basically, art investors would only buy a piece which they think
will increase in value in the future and bearing in mind that art is a
mid to long term investment.
People who bought art produced in the 1960s have managed to secure
500% returns on investment. However, the pieces are done by pioneer
artists who started their careers in the 1960s, or earlier.
New collectors need to practice caution and not be carried away with
hype and expensive art. When it comes to art investment, it can either
be a costly or affordable endeavor, so it all depends on the investment.
Potential investors might initially be turned off by the price of
art. However, you can start off with lesser-known artists whose
paintings are relatively cheaper. You can start with as little as $500
and build up your collection from there. The initial cost of buying art
would depend very much on the artist. Pioneer or seniors can command
prices ranging from $40,000 to $100,000 while works from
second-generation or mid-career artists range from $10,000 to $50,000,
depending on the size.
So, what is good investment value? There are two important factors;
style and consistency, which depend very much on the artist's commitment
level. The investment value also depends significantly on the artist's
track record, which includes his exhibition record, collection,
marketability and length of career (new, mid-career or senior).
Artists with good track records are often popular. However,
popularity may be hyped up. Price and quality do not necessarily go hand
in hand. More importantly, it's the psychological worth that determines
the price. Similarly, investing in established artists doesn't
necessarily guarantee good investment value either as sometimes their
work can decline.
There is a suggestion for collectors to buy works of artists who are
growing in value rather than those who are at their peak. Works of
mid-career artists are often considered to have potential for higher
investment value. On the other hand, works of most pioneer or senior
artists, have reached their price ceiling.
For collectors who are particularly new and budget-conscious,
consider works of young artists, as they are more affordable. There is
also a chance that the painting's worth might double or triple in five
years' time.
The art world is not easy to navigate, especially for new investors.
Getting to know artists, movements, genres and periods is one part of
the problems and becoming competent at identifying works of art can take
a long time.
You need to identify your own taste, so ask yourself why you like
certain art and dislike others. Serious art investors also need to know
which types of art sell and which do not. Moreover, talk to as many
people as possible, from curators and gallery owners to artists.
In many ways, investing in art is like investing in your taste, which
is why loving what you buy is important. People who buy art because they
love the piece, end up getting very good investment value.
Whatever the reason, you may not always get great monetary returns
from an engaging art piece but it can provide you with a lifetime of
visual pleasure.
Michael Russell, Your Independent guide to Investing
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