The Artful In­vestor

Beauty is in the eye of the be­holder, but price is de­ter­mined by the mar­ket, writes Tara Loader Wilkin­son

Hong Kong Tatler - - Con­tents -

There’s an old adage among art buyers that says you should “buy what you love.” Tra­di­tion­ally, few would ad­vise buy­ing art for in­vest­ment pur­poses. But as global mar­kets yo-yo and the price of art con­tin­ues to climb, a new gen­er­a­tion of savvy in­vestors is turn­ing to the art mar­ket for di­ver­si­fi­ca­tion.

It’s a rel­a­tively re­cent phe­nom­e­non, says Je­han Chu, a Hong Kong-based art ad­viser who coun­sels not only on aes­thet­ics, but also on ap­pre­ci­a­tion. “Art as an in­vest­ment used to be taboo; now it’s just an­other ap­proach,” says Chu, who tar­gets a re­turn for his clients of 100 per cent to 300 per cent over three to five years, which he says is a “safe” es­ti­mate. “While it may be frowned upon by some, it’s much more part of the con­ver­sa­tion of the art world to­day com­pared to even five years ago.”

Con­tem­po­rary artists, both Asian and West­ern, re­main ex­tremely pop­u­lar at big-money auc­tions. Take the Jeff Koons

Bal­loon Dog (Or­ange) that sold for US$58.4 mil­lion at Christie’s New York in 2013. Or Zeng Fanzhi’s The Last Sup­per, which sold for a record-breaking US$23.3 mil­lion at Sotheby’s Hong Kong in the same year. “The con­tem­po­rary art sec­tor has never been so com­pet­i­tive and spec­u­la­tive,” says Thierry Ehrmann, founder and chief ex­ec­u­tive of data provider Art­price.com.

In four years, global turnover achieved at art auc­tions has al­most dou­bled since the slow­down of 2009/2010, ac­cord­ing to Art­price. “The gal­lop­ing spec­u­la­tion of the pe­riod be­tween 2004 and 2007 is once more to the fore and the con­tem­po­rary mar­ket is more af­flu­ent than dur­ing the mi­cro-bub­ble of 2007,” Ehrmann adds.

It’s a sign that you won’t get a bar­gain buy­ing th­ese types of work, cau­tions Pas­cal de Sarthe, a vet­eran art dealer and founder of the De Sarthe Gallery in Hong Kong. He adds that in­vestors in­ter­ested in long-term ap­pre­ci­a­tion should look at less fash­ion­able gen­res and artists—and buy in the sec­ondary mar­ket, not the pri­mary.

“Con­tem­po­rary art, by emerg­ing artists, should be col­lected out of pas­sion and not for spec­u­la­tive pur­poses,” says de Sarthe. “As a con­ser­va­tive and safer in­vest­ment, I would rather fo­cus on the sec­ondary mar­ket.”

Un­like many of his con­tem­po­raries, de Sarthe is known for col­lect­ing as a busi­ness, rather than try­ing to buy “what you love.” He never keeps his prized pieces but sells at op­por­tune mo­ments. “For me, this is a busi­ness and things need to be run like a busi­ness,” he says.

Global banks like UBS, Cit­i­group, Deutsche Bank and JP Mor­gan boast large and world-famous art col­lec­tions and in­house art ad­vi­sory teams. Wealthy pri­vate clients are of­fered ad­vice on fine-tun­ing a col­lec­tion through the bank’s wealth man­age­ment arm, help­ing with any­thing from in­surance and trans­port to re­selling at the right op­por­tu­nity. How­ever, banks still take the tra­di­tional ap­proach that art should be bought for art’s sake.

“Our clients are in­creas­ingly tak­ing an in­ter­est in con­tem­po­rary art, and in our own renowned cor­po­rate col­lec­tion, which is on dis­play in our of­fices around the world,” says Stephen Mc­coubrey, cu­ra­tor of UBS Art Col­lec­tion in Asia Pa­cific, Europe, the Mid­dle East and Africa. He adds that nei­ther he nor the bank ad­vise UBS clients on art col­lec­tion for in­vest­ment.

Those that do see it as an in­vest­ment, ad­vise a good rule of thumb is to pick a rare, un­pro­lific artist or a low-pro­file one. Many con­tem­po­rary artists—koons and Damien Hirst, for ex­am­ple— have small armies of as­sis­tants on an as­sem­bly line who churn out hun­dreds of pieces. The artists sim­ply ap­prove the piece and sign it, which could mean the mar­ket will even­tu­ally be flooded and your work’s value may suf­fer as a re­sult.

Ac­cord­ing to Art­price, one of the rarest and most valu­able con­tem­po­rary artists of the mo­ment is Jonas Wood. Truly rare at auc­tion five years ago, Wood, now rep­re­sented by the Gagosian Gallery, has ex­ploded this year. Fif­teen works have al­ready sold dur­ing 2015 in New York and Lon­don, in­clud­ing a record US$610,000 sale at Sotheby’s in May.

Win­ning a prize or hav­ing a first solo ex­hi­bi­tion can cat­a­pult an artist’s value. After new­comer Dan­ish-viet­namese artist Danh Vo won the Hugo Boss Prize in 2012 and then had an ex­hi­bi­tion at the Guggen­heim Mu­seum in 2013, his prices soared. This year his work broke records when one sold for US$700,000.

Lesser-known artists prom­ise more lu­cra­tive re­turns than house­hold names. Chu points to Bel­gian artist Harold An­cart, whose paint­ings have risen by an av­er­age of five times dur­ing the past two years, and Bangkok-born Ko­rakrit Arunanond­chai and the late T’ang Hay­wen, whose val­ues have both shot up by a fac­tor of three in the past year or so.

To­day, many col­lec­tors with an eye for in­vest­ment are look­ing out­side the tra­di­tional gen­res of im­pres­sion­ist, con­tem­po­rary or post-war. Artcu­rial is a French auc­tion house that re­cently launched in Hong Kong, spe­cial­is­ing in some of the more unusual col­lec­tors’ items. Eric Leroy is the head of the comic strips depart­ment at Artcu­rial—a seg­ment that he says has risen by 100 per cent in the past 10 years.

For ex­am­ple, Tintin in the Land of the Sovi­ets (the first vol­ume of The Ad­ven­tures of Tintin by Bel­gian car­toon­ist Hergé) sold for around US$9,500 a decade ago, whereas a rare draw­ing of Tintin in Shanghai sold at a Hong Kong auc­tion in Oc­to­ber this year for HK$9.6 mil­lion (US$1.2 mil­lion).

“Comics are ris­ing in pop­u­lar­ity be­cause a younger de­mo­graphic find them par­tic­u­larly ap­peal­ing,” says Leroy. “It’s a form of con­tem­po­rary modern me­dia that em­bod­ies and even demon­strates is­sues of im­por­tance, for ex­am­ple so­ci­etal prob­lems such as ecol­ogy. Comic books are pop­u­lar be­cause they cap­ture trea­sured mem­o­ries of youth. And they also serve as beau­ti­ful works of art for the walls.”

Leroy reck­ons comic print­ing plates will be a good in­vest­ment dur­ing the next 10 years. “It is a strong mar­ket with new buyers from all around the world, and it is con­cur­rently more and more dif­fi­cult to find good and rare pieces.”

That art can be a re­li­able in­vest­ment is clear. “In­vest­ing in art is on par with in­vest­ing in stocks,” says Chu. “If you know what you are do­ing or have good ad­vice, you can make good money.” But art has an ad­van­tage over stocks, he adds, be­cause you can still en­joy a beau­ti­ful art­work if its value drops to zero. “And

that is why we al­ways say: buy what you love.”

CON­TEM­PO­RARY ART BY EMERG­ING ARTISTS SHOULD BE COL­LECTED OUT OF PAS­SION AND NOT FOR SPEC­U­LA­TIVE PUR­POSES

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