The art of investing

The enjoyment of treasure hunting for old-fashioned antiques and art is an exciting adventure to become a part of, and armed with a few industry secrets, even the beginner collector can secure themselves a great investment deal.

It has been said that people tend to cling tightly to their most valued treasures during uncertain times, as even those family heirlooms are not immune against the economic slowdown in the global community. According to a recent art market confidence index, art prices decreased by almost 4.5 per cent last year. However, the result outperformed a 37 per cent decrease in the S&P 500 total return index for 2008, making investment in art an acceptable portfolio diversifier.

There are many smart investors who are well aware of the significant opportunity to invest in alternative asset classes by turning to unconventional investments to support their existing portfolios. While antique and fine art collecting has previously been reserved for an affluent minority of collectors, more investors are seeking to acquire safe values that can be leveraged into high performance long-term investments.

Tiffany Jones Fine Art Gallery’s Tiffany Jones said investment in art had competitive advantages compared to the traditional forms of investment.

“The art market is relatively stable with less fluctuation than the share or property market but like all forms of investment, it is affected by larger economic events,” Tiffany said. “However, historically the art market is slower to respond to these influences and is quicker to bounce back.”

“Entering the investment art market is relatively quick and uncomplicated as there is very little red tape associated with its purchase,” she added. “The entry price point of art, can also be more flexible and less costly than property or blue chip shares with art investors able to acquire a piece of original investment art for under $5,000.”

The price of art is affected by a number of different factors so the true value of any piece can never be measured by an exact science. After all, taste is a subjective issue and what is one man’s treasure, another may find to be unsightly trash.

Tiffany explained that art values were predominantly measured by profile and demand.

“Artists that have a high profile are generally successful and therefore in demand. If the artist’s work is in demand with art collectors and art galleries, it sells consistently well,” she said.

“The artist’s work must also have resale potential. If there is no demand for an artist’s work and it hasn’t increased in value past the initial purchase, then it cannot technically be regarded as an investment.”

Some of the artists that Tiffany currently recommends for investment include David Boyd, Robert Dickerson, Hugh Sawrey, Garry Shead, Norman Lindsay, Charles Blackman, Jason Benjamin and Margaret Olley.

As the internet has opened up international markets and price comparisons through online auction sites, the parameters of the antiques and investment art business is changing, but the bargains are still out there if you are prepared to look far and wide. Some of the best investment bargains are can be found in and between big city auctions or in small town, dusty attics and basements.

Queensland Antique Dealers Association (QADA) and owner of Brisbane Antiques Graham See explained that the benefits of art investments yield both the tangible satisfaction of financial return as well as the enjoyment of owning the enduring beauty of a historically-significant antique.

“The real benefit of investing in art and antiques is the joy of living with and possessing something which has lasted through the years because of its quality,” Graham said.

 

“(However), antiques are subject to fashion and what is collectable today may not be in favour tomorrow, so I am a little wary of advising people to invest in antiques,” he said.

Investment in antiques or art is not a short-term strategy, so most people will be residing with their purchase for a number of years.

“You ought to buy them because of their beauty and their interest, and accept an increase in value over the long term, if it happens.”

While personal style should certainly factor into your buying decisions, it is advisable to work with an experienced, professional dealer who understands the market and can offer accurate advice, which would be the case with any serious investment strategy. The better informed the decision-making process is, the better quality the collection and potential return of the investment.

Representing the third generation to be involved with Applebys Fine Art and Antiques, established in London in 1913, Matt Holmes specialises primarily in European art and antique furniture from the 18th, 19th and early 20th century.

Matt said that while there were certain guidelines to follow, there was no substitute for research.

“An appropriate level of research takes time and effort and typically a strong interest or passion for the area you are researching,” he said. “Bearing this in mind, I believe that investing in antiques and collectibles should only be considered by those prepared to do their homework.”

He said the main risks were that collectors needed to understand what they were buying.

 

“There are a number of sophisticated fakes in the market, with furniture, art, china, glass and other collectibles being produced, artificially aged and offered for sale as originals,” said Matt.

“To minimise the risk it is advisable to buy from a reputable dealer such as those that are members of the Australian Antique and Art Dealers Association (AAADA) or auction houses where items for sale are vetted by experts,” he said. 

“Try to buy items in the best possible condition you can afford,” he added. “Antiques are unlikely to be in perfect condition but it is advisable to avoid items that need a lot of restoration as getting it wrong can devalue your investment.”

“It is advisable to look for paintings or objects that are typical of the period or the artist and ideally, signed and dated. Not all fine pieces have a mark so the absence of one should not necessarily deter you if you love the piece,” he said. 

“Finally, look after your investment, seek advice on how to store and care for your pieces and aim to ensure they do not deteriorate whilst in your possession. Ironically, the reason many objects are valuable is because so many others have been damaged or destroyed.”

For someone who is lucky enough to be surrounded by ancient treasures, I was intrigued to discover what Matt was still most looking forward to finding?

“The collectable item I would most like to own is a 1963 Aston Martin DB5 Convertible,” said Matt. “We are fortunate enough to come across a number of beautiful and collectible things, sadly the Aston has not so far been among them!”

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