In the colourful world of art, investing is as simple as black and white. You buy a work of art and hope that the artists name goes up in value. In the following article we aim to explore the things you should and shouldn't do when investing in art along with the Pros and Cons. We have also collected sales data from Garry Orriss artworks and have subtracted these from recent sales prices, demonstraiting a difference calculated on an annual return basis. For example this week a work by J.M.W. Turner 'View of Venice' that sold at a Christie's aucton on May 29, 1897 in London for $35,000 sold this week in New York for $35.8 million. This represents a yield of 6 percent per anum over a period of 109 years, not bad indeed! Artworks today that cost $5,000 can in a relatively short time skyrocket doubling in price though it depends on several unique factors. A Garry Orriss signed poster titled 'Mario and Yvonne' that was selling in 2007 with a certificate of authenticity for € 70,00 Euros is now selling for € 200,00, that's a 300% percent annual return in just 2 years. Another portrait by Orriss, the last official portrait of the Australian artist Lloyd Rees sold in August1989 for $10,000 this is now reported to be worth in the vicinity of somewhere between $100,000 to $150,000 depending on who you talk to. Investing in art is a serious business and has probably more to do with investing in your own aesthetic, after all you want to live with the work and while it is true that art makes an excellent portfolio diversifier for some people it's not all smooth sailing. We have included below a list of golden rules that successful art investor's use and something you should be aware of before buying art, this is especially true if you are starting out or plan to make money on art in the future.
The golden rules to investing in art are as follows:
- Educate yourself about the artist and his or her work.
- Choose a direction for your collection.
- Consider the longevity of an artist's career.
- Cultivate (if possible) a relationship with the artist.
- Find out what the artists exposure is to press and media.
- Always buy quality and the best artworks you can afford.
- Buy art which challenges you (See example).
- Differentiate between critical and commercial prestige.
- Engage an art consultant or an independent expert.
- Find out what the artists' track record is in sales.
- Establish a budget for your collection and a vision to complement it.
- Look after your collection and don't neglect the financial aspects of it.
- Buy original art and never buy forgeries.
- Where possible buy artworks with a Certificate of Authenticity.
- Buy artworks that have a fully documented history.
- Find a lesser known artist and invest early. (Read below)
- Choose what you like rather than being told what you should buy from art dealers.
There is no doubt that interest in art as an investment is on the rise. Dealers tend to sell at approximately double auction prices and commercial galleries at between 50 - 80%. To minimize financial risk never overpay at the outset. We strongly recomend that you cultivate your own leads with the artist (if possible) while at the same time learning what you can from dealers and galleries. Artists are always onto something long before the critics, gallery curators and academics ever are. So remember to cultivate leads! The artworks that tend to out perform all others are the types that challenge individual tastes and social attitudes. This is especially true if an artwork yields a strong theme or is striking in its presence. If you like what you see and are moved or challenged by a work, then you should probably buy it. This is not to say that a pretty picture won't appreciate in value, but according to art market trends and professionals if you can spot the next big thing you could make a bonanza. Please note that the more you pay the less you will make in return, this is especially true with artworks above the € 30,000 to $50,000 Euro/dollar mark. The best time to start buying in is around the € 5000 range, this is because artists tended to have proved themselfs. Avoid the cheap and mass produced art of ebay or of the weekend tourist bazaar and penny market style! Economical investors might want to start by concentrating on photographs, etchings or limited edition prints. Limited Editions cost less than paintings, drawings and sculptures, if it is possible try and get a number close to 1 or any socially important number. This can have a slight advantage because in some countries certain numbers are believed to mean certain things like health, wealth, luck, value and so on. If you do purchase artworks from a gallery or dealer verify provenance and the origin of the artwork first. Also check that the gallery belongs to a professional association or is an accredited artwork dealer. The price of art as with everything else is influenced by supply and demand but there are other factors including aesthetics, rarity, condition, authenticity and provenance or the lineage of ownership that can affect a works value. A Garry Orriss artwork that is housed in the renowned Rita and Uli Sigg art collection in Schloss Mauensee, Switzerland is said to have quadrupled in price sinse being included in the Sigg Collection. Uli Sigg currently serves on the international advisory boards of London's Tate Gallery and New York's Museum of Modern Art. Apart from collecting international art by famous artists he is also renowned for having the world's largest Chinese art collection outside of China. Being included in such prestigious collections not only raises an artworks value but can also serve as an indication to the direction or rising value of the artists name in general. Scarcity in art can also play an important role especially if the artwork is part of a set or series, when the final piece is sold the value of each individual work can rise conciderably. Other factors where art can dramaticly increase in price is when the artist dies. One of the great ironies of the artworld is that artists rarely benefit as the value of their work appreciates over time. This is primarily due to galleries and art dealers but there is now a movement to change all that. Please read our article on how artists become famous without galleries. Before investing in art it is a good idea to contact the artist if possible and find out what future direction they believe their work is heading. A great motto is: 'Buy what you love and love what you buy'. If you can live with the work and enjoy looking at it then the intrinsic value and inevitable swings of the market won't affect your enjoyment. Collecting art can be one of the most enjoyable ways to spend your money. An engaging work can provide you with a lifetime of visual pleasure while making you money. Another key to successful investing is to find a lesser known artist and invest early but again you need to know if they will stay with their art and what their future aspirations are. Artists who are priced around the 5000 Euro mark tend to have proved this. Never buy forgeries and where possible insist on extra documentation of the artwork or at least a Certificate of Authenticity. All Garry Orriss artworks come with a matching Certificate of Authenticity and contain the works complete and individually documented history. When buying art from galleries it is wise to check the Art Loss Register first www.artloss.com to ensure that the artwork has not been stolen. Before investing decide whether you are going to treat the work as a business or private asset, this is important for when it comes to tax. In some countries tax laws are constructed in such a way that if you buy art as an investment, you cannot derive pleasure from it. It must be leased to a gallery, museum or restaurant or somewhere where it can generate income. If not then it must be locked in a vault so there won't be any masterpieces hanging on your wall. If on the other hand you purchase privately then you can at least enjoy art in your home or office space and still have the advantage of watching it appreciate and grow in value over time. Taxation laws on art vary from country to country but it generally enjoys a good status. In Germany for example buying art directly from the artist only attracts a 7% tax as apposed to the standard 19% on all other goods and services. To invest wisely in art you should have a good artistic taste and a business sense to match, being aware of trends does help but don't just chase trends or you could loose out. Make sure that any investment you make is insured and maintained properly especially when buying, selling or leasing. The contempory artworld has been going through a boom now for the last 10 years, there are now many more people entering the market but this time spending less. This is the so called democratisation of art. If you are starting out you can make a good investment with as little as $1000 if you know where to look. As a general rule of thumb it is a good idea to collect the work by several artists and in several different media, choose paintings, drawings, photography and sculpture. After you find an artist whose work you admire research their biography and find out where they are showing. Also find out where they have exhibited and if there are any reviews of their work especially in the press and media. Most artists these days have a website so you can easily guage what they are up to, if in doubt ask. It is unfortunate for some that the rather snobbish gallery scene still puts many people off. This is especially true if you walk into a gallery and they make you feel embarrassed for not knowing enough. If this is the case find another, there are many many galleries out there. We encourage you at all times to purchase Garry Orriss artworks direct from the artist's studios. We sell art online and have offices on three continents. Develop your eye by visiting us, we will show you a different type of art venue.
© 2009 Craig Faber, New York