Investing in art is more of a calculative decision rather than just having a passion for art. It is looked upon as a source of investment that would yield handsome returns in time to come and rightly so, it does.
We share with you some quick guidelines and do’s and don’ts to keep in mind before investing in art.
Let’s begin with a case study which narrates the story of an art investor by the name Michael va Rensburg who is a Futuregrowth portfolio manager and has been an investor for more than two decades.
Apparently he nurtured this habit of buying and selling since he was in school. When he was a teenager, he happened to develop a keen interest in art and realized that there were good profits to be made in the art world. There was no looking back for him then. Michael bought his first serious artwork in 1994 – a Wiliam Kentridge and ever since he has invested in a wide range of artists. According to him, attending auctions and exhibitions is very important and it is at an auction that you would realize the best way to identify trends. He makes it a point to keep in contact with gallery owners and the artists thus helping himself to keep his finger on the pulse. The most important thing here is that he buys mostly for-profit and does not let his own sentiment or personal taste get in the way. He goes on to share that art is a very much long term investment, it does not mature and it is subject to global cycles. So as you can see, investing in art is supposed to be more from the head than from the heart unless of course, it is an investment to satiate your passion for art in its purest form.
Pierre Valentin, head of Arts and Cultural Assets team at City law firms Wither very aptly says, “It would be rare for an individual to spend a million pounds on a property without turning to independent experts first, to verify the price and viability of the investment. Yet many people invest in art for the first time without first ensuring that its history, its seller and its value have been verified.”
Taking from that, note that it's always advisable to take professional help while buying art as an investment. However, here we’ve put together a few guidelines that will help you through the process.
Quick Guidelines for buying art for investment
1. Emerging/young artists
While it is important that you divert your resources to investing in work that is known and widely accepted, you may also want to check on the work being done by emerging artists. Check out India's top emerging 2018 artists. W
hile the risk is higher, the payout is usually much more if the artist you select happens to make it big. It’s like gambling. However, it's also advisable to not park all your funds in emerging artists and have a mix.
2. Focus on one category
Choose a category of art or style of painting that interests you the most. Focus your attention in studying that one category instead of randomly picking up pieces that appeal to you. The more you concentrate on one category (nature, still life, abstract, mythology, etc.) the better are your chances of making the right decision.
3. Start small
Do not rush with your investment. Divide your kitty into how much you would want to spend each year. This would also give you enough time to gauge the market response.
4. Keep abreast of the latest trends
Check on international trends. Most of the information is available online. As soon as there is a demand for a particular genre of art gaining momentum, put up your investment for sale.
5. Be firm and negotiate
While buying, make a fair offer and wait. If the artwork is available in your said price, you will get it. If it’s of higher value and you didn’t think so, it's not worth having it. While selling too, be firm on your pricing. Now that you are considering investing in art, it’s a good idea to keep in mind these dos and donts.
Do’s
- Remember – Investing in art is a long-term return investment option. Keep patience and it will pay off.
- Do your research well. Make sure you verify the origin of the painting/work of art. Do NOT go by what the dealer or the auction house has to share. Connect with the artists if you can if he/she’s alive.
- Feel free to ask as many questions as you want to the dealer/auction house about the painting/work of art. Go ahead only when all your doubts and queries have been attended to.
Don’ts
- Don’t get carried away by the price. If it comes at a price that is far lesser as compared to what it commands, check the authenticity. Check whether it is rightfully being sold or is it stolen or illegally being brought in the country.
- Do NOT risk your credibility at any cost. Ask to see export licenses before buying if its an international piece of work.
- Don’t overlook the insurance documents. Check on the insurance options made available.
- Do not neglect it once purchased. Maintain it well.
Is It Worth Investing In Art?
Unlike other forms of monetary investment where you can pull out when a sudden financial need arises and still get decent returns, art investments don't allow you this flexibility. The pricing here is more based on market trends and you need to find the right buyer. So be ready to be an art investor only and only if you are mentally prepared to hold onto your purchase for as long as it would take to get you the right price it deserves.
