Mention the words “art investing” to most people, and the image that gets conjured up in their minds is probably going to either be one of snooty art auctions that involve ridiculous amounts of money (thanks Hollywood!), or lavish mansions that house rare art pieces with state of the art security systems (once again, thanks… ok nevermind).
But things are changing up, especially around the region. Local artists are starting to get more exposure, and people are starting to see investing in art as a viable method of diversifying their portfolio. As we previously mentioned in another article, the increase in interest started in 2011, with art investments outperforming equities for the second year running.
Since then, there have been several local startups right here in Singapore that have started to not just help with educating people about art but more so to give exposure to local artists around the region and help connect them and the art to a global audience. One of the companies at the forefront of that right now is ART LOFT, and we spoke to them a little bit more about how getting a nice looking piece of art for your home could also translate into a great investment further down the road.
How is art investing changing in the region?
As the emergence of the young affluent class increases in speed, and together with the fact that the Government has realised that perhaps we should spend a bit more time building up some semblance of culture and not just raise a country of workaholics, there has been an exponential growth in young and entry level art collectors in Singapore. Needless to say, people buy art for various reasons, the most basic of which is probably because it looks nice. But some also buy art to support a particular community, or as we are discussing here, see it as an alternative investment form. But where does one start on their art investing journey?
According to Michelle Chan, Chief Curator of Art Loft Asia, “A place for entry level collectors to start investing in art is to start with emerging artists. Most people don’t jump straight into high end art collecting. Rather, many start off their art collection with pieces that they feel a personal and emotional connection to and are affordable. But as art pieces start increasing in value, the thought process of buying art starts to shift. The potential for profit on the art piece starts being part of the decision making process.”
Some of the artists that we support and believe have great potential are Stefanie Hauger (Winner of last year’s UOB Painting of the year), Chow Chee Yong, Marisa Darasavath and Jae Yong Rhee, starting from USD 1000.”
Investing in Art – Why and What to do
So why exactly should you consider art as an investment form? Sure, it might be a good way to appear a bit more atas when your friends come over to visit, but as we found out, there are several key points you should consider as well.
In the opinion of Melvyn Yeo, CIO of Singapore-based Thirdrock Group, who is also an art collector, “Amongst the high net worth individuals, we have seen art acquisitions as a viable strategy for investors seeking alternative form of asset classes to park their money to diversify their portfolios. Art is fairly immune to financial market volatility and this can be seen in the Art Index over the last few years. The Fine Art Fund Group, a UK Art Fund, has seen 10% annual return on average over the past four decades”.
As good as that may sound, just jumping in to buying an piece of art could also very well make you the not-so-proud owner of an unsellable home decoration. So what exactly should you be looking out for? These are the top 4 things that one should usually take note of when looking at art that is relatively new (read: not centuries old):
- Track record: make sure the artist has had some sort of sales track record. Either via previous sales from collectors or there are some sort of provenance which is a record of ownership of a work of art, used as a guide to authenticity or quality.
- Background: make sure the artist has a comprehensive body/bodies of work that you can preview to understand his/her progression and current direction. You can also find out if the artist had received technical training either from an art academy or tutelage under established art practitioners.
- Exhibition history: the artist should have exhibited in several shows and fairs
- Observe trends on what is being sold in the market: Keep in tune with various art publications like Artnet, Ocula, Artinfo, and The Art Newspaper.
What else should you consider?
As with every other investment, this is not a magic bullet that will turn your bank account into a swimming pool of money. While quality art can hold it’s value even when the market goes down, that doesn’t mean it is immune to taking a hit.
Also, when it comes to pop art and newer artists who don’t necessarily have a long track record, there is a possibility that your investment may not make you the returns you were imagining. As with all other investment tools, it’s highly important to do your homework first.
What is awesome with platforms like ART LOFT is that they even allow you to rent a piece if you are still undecided and are the sort who needs to let a picture “sit” in your home before you pull the trigger on a purchase. Rental rates are 4% of the artwork’s purchase price, and you can keep the artwork for as short as three months and up to 12 months and decide, when you are ready, whether or not to commit to a purchase.
So the big question is how much do you need to get started? With art pieces on sale for less than 2,000SGD, it’s now no long inconceivable to get into investing in local artists at an affordable level. As the growth of artists around this region continues, this doesn’t only mean that there will be more art available, but also the appreciation for Asian art could also be a good thing for a piece that you’ve purchased.
As ART LOFT co-founder Tian Qiuyan says, “At the very core, we believe that Art plays an important role in shaping the evolving landscape of culture, enterprise and community. Through our many travels, we wanted to create a comprehensive online experience that celebrated the creative talent, conversations and connections we had encountered.
In our effort to make art accessible, we take art out of its typical white box gallery space and put them in homes and studios through our pop-upn events which we organise every few months. We hope to encourage people to discover and support our artists on their creative journeys as they continue to push boundaries, before they take their bow on a larger stage.”
Are you thinking of alternative investments in 2015? What are your thoughts on investing in art? Share them here!