Art investment returns :
Articles from different media with their source showing that investing in fine art is definitely a good investment.
Art investment is considered as a new asset class
for a balanced portfolio. The average annual return is of 10% over last 20
years.
Collecting work by emerging
artists is the best way to begin investing in art.
Art
& Finance report 2014
Download the report
(PDF - 4.5 MB)
In last year’s report we identified an
increasing sense of convergence in motivations among key stakeholders in the
art market and in the wealth management community regarding art as an asset
class.
Based on the findings of this report, the
wealth management industry is clearly taking a more strategic view on art as an
asset class and how it might be used as a tool to build stronger and deeper
relationships with clients, in an increasingly competitive marketplace.
This year’s findings suggest that art buyers
and collectors are increasingly acquiring art and collectibles from an
investment viewpoint (76% said so this year, compared with 53% in 2012), which
will most likely increase the need and demand for professional and wealth
management services relating to the management and planning, preservation,
leverage and enhancement of art and collectible assets.
It is particularly interesting to see that the
wealth management community is already responding to this new demand, with 88%
of the family offices and 64% of the private banks surveyed said that estate
planning around art and collectibles is a strategic focus in the coming 12
months.
This highlights that art related tax, estate
and succession planning issues are increasingly becoming a hot agenda topic.
Also, 50% of the family offices surveyed stated that one of the most important
motivations for including art and collectibles in their service offering was
due to the potential role it could play in a balanced portfolio and asset
diversification strategy
Deloitte Luxembourg and ArtTactic, which
conducted the research for the report between April and June 2014, found
that the average wealthy individual currently allocates approximately
9 percent of his or her portfolio to art and collectibles. However,
particularly in the United States, the firm says, wealth managers are
forecasting increased portfolio allocations to art as an investable asset
class. They say such an increase will provide "fertile ground for Art
& Finance-related services aimed at protecting, leveraging, and
enhancing" wealth allocated to the sector.
·
· 1
Visit places that sell original art. Go to an art gallery,
museum and auction house to develop a sense of both great art and art that
sells.
·
2
Read books and magazines on the art world. These offer
background information and newsworthy items to enable you to spot trends, find
new artists and understand how the art business works.
·
3
Buy art after you research the type, painter, average prices
and authenticity.
·
4
Allocate a budget to invest in art over the long term.
Artworks go up and down in price. Buying at the peak or before changing trends
often means a poor investment.
·
5
Invest in art that you enjoy. Know why the art appeals to
you to determine if it might appeal to someone else.
·
6
Keep original frames and documents of any artwork. Replace a
missing frame according to its period.
·
7
Insure art investments that already have value with your
insurance agent.
June 20 (Bloomberg)
-- The main thing that’s driving the growth of the art market is the demand for
a good investment for the very rich, art adviser Todd Levin said.
Levin,
standing outside the convention center in Basel, Switzerland, was referring to
the brisk sales inside at Art Basel, the world’s largest modern-and
contemporary-art fair. A self-portrait by Andy Warhol sold for $32 million
within 15 minutes of the fair’s start on June 17. Other numbers were
impressive: $4 million for a David Hockney landscape; $3 million for a Fernand
Leger painting; $250,000 for a towering sculpture by Thomas Houseago.
“It’s
about the need of high-net worth investors to park their excess capital,” said
Levin, director of Levin Art Group in New York. “They don’t want to keep it in
cash in the bank. They can’t put it in a mattress. Art has historically
provided the greatest intergenerational return of any asset class.”
The
Artnet C50 Index, which combines performance data from 50 top contemporary and
postwar artists, advanced 434 percent from the start of 2003 through last year,
beating asset classes including gold, fine wine and stocks.
Art
sales increased 8 percent from 2012 to 2013 to 47.4 billion euros ($65.9
billion), nearing the high reached in 2007, according to an annual report
published by the European Fine Art Foundation in Maastricht, Netherlands.
Auction houses in New York sold a record $2.2 billion of modern, Impressionist,
postwar and contemporary art last month.
Step Ahead
Wealthy
art collectors may be a step ahead of other investors. Multimillionaires have a
high allocation to cash, according to a survey released today from U.S. Trust,
a unit of Bank of America Corp. Sixty percent of respondents, who had at least
$3 million in investable assets, said they had at least 10 percent of their
money in cash. Last year, 56 percent of those surveyed said they had a large
amount in cash.
These
investors may have taken notice that their parked cash isn’t earning much as
central banks globally push down interest rates. About 17 percent of
millionaires said they plan to move some money out of cash in the next 12
months, the survey said.
In
Basel this week, bearish outlooks were a rarity as dealers reported strong
sales and broad international attendance. First time visitors from China, India
and the Middle East are among the 86,000 people expected to attend through the
fair’s end on June 22, organizers said. About 284 galleries from 34 countries
offered as much as $4 billion worth of art, according to an estimate by insurer
AXA Art, a sponsor of the fair’s 45th edition.
Rising Values
Alberto
Mugrabi, whose family owns one of the largest Warhol collections in private
hands, routinely buys and sells art, and he wants values to rise.
“The
same way an investment banker analyzes a company, we analyze a work of art,” he
said. “When you are paying money like that, you have to think about it as an
investment.”
During
the first two days of Art Basel, Mugrabi stayed away from purchasing Warhol,
instead going for a 1981 drawing by Willem de Kooning for $450,000 at Matthew
Marks and a 1960s painting by Joan Mitchell for $1.5 million at Cheim &
Read.
“You
see prices of the young guys today and de Kooning looks cheap by comparison,”
he said, taking a break on a bench by Gagosian Gallery’s booth, where Warhol’s
painting of 10 skulls was still available for $22 million. “For $450,000 I can
buy a de Kooning drawing or a Mark Grotjahn drawing. It’s a no-brainer.”
‘Young Guys’
He
hasn’t brushed off the “young guys.” He collects emerging artists with blazing
speculative markets including Joe Bradley, Alex Israel and Lucien Smith. In
November, Mugrabi paid $389,000 for Smith’s painting inspired by Winnie the
Pooh and made while he was in college. The price was a record for the
24-year-old artist.
Philip
Hoffman, chief executive officer of The Fine Art Fund Group in London, also
shied away from Warhol.
“It’s
a waste of our time,” he said. “We don’t make money buying what everyone else
is buying.”
The
firm manages $300 million of art assets and expects to reach $500 million by
the end of the year, he said.
Walking
through the fair on opening day, Hoffman said he was alerted that another buyer
was interested in an artwork the fund had agreed to purchase earlier that
morning. By the end of the day Hoffman resold the work to the new buyer.
Ten Percent
“We
made 10 percent on the deal,” he said, declining to name the artist or reveal
the price. “We never paid for the work. We just netted the profit.”
Hoffman,
who started the company in 2001, said he consigned several works to dealers at
Art Basel, selling almost $5 million worth of art and averaging compound gains
of 10 percent to 20 percent.
Most
of the art the fund acquires is valued at $1 million to $10 million, Hoffman
said. He looks to buy works by artists whose prices are on the rise.
Christopher
Wool was in that category five years ago, Hoffman said. In 2007, the fund
bought a Wool painting for clients for $800,000. In November, the artist’s
text-based painting sold for $26.5 million at auction. But like the financial
markets, there are ups and downs in art investing.
In
2009, Hoffman told his clients that the value of the work dropped 50 percent to
$400,000.
“If
I had to sell it then, it would have been a major loss,” he said. The fund held
on until last year, when it sold the work for $2 million.
“Now
these investors are happy people,” he said.
To be continued
Gerard Van Weyenbergh
