JUNO INVESTING ©

Monet, Manet, Money: Investing in Art

JUNO INVESTING ©
Monet, Manet, Money: Investing in Art

 

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.

SUMMER 2016

By Brenda Ward

Ben Plumbly, Director Art at auction house Art + Object, has just sold Colin McCahon’s The Canoe Tainui for NZ$1.6 million, the highest price achieved for an artwork at auction in this country. And last year, part of architect Ron Sang’s collection was sold for more than one million dollars. The sale fetched many record prices for Kiwi artists, showing that a carefully curated collection will grow in value over the years (see Sang’s story on page 32).

The average investor may not reach those heights but they certainly can get big profits, says Plumbly.

Primary and secondary markets

The first thing you need to know about investing in art is the difference between ‘primary’ and ‘secondary’ markets. Most galleries sell only primary works: those on the market for the first time and often by emerging artists.

The ‘secondary’ market comprises artworks being resold, often at auction, after being in collections for a number of years.

Those starting a collection tend to begin with the primary market, investing in emerging artists, whose works are usually cheaper to buy.

Join an art club

The easiest and cheapest entry into the art market is to band together with others into an art club, to increase your collective buying power. Sang started New Zealand’s best-known art club, Spectrum, which lasted for 10 years before members cashed up their investment.

Members of an art club usually each put in an agreed monthly sum, then buy works as a group, circulating them around each other’s homes. The art clubs often have a social element to them, with members meeting in the group’s homes to discuss works and plan purchases – and drink wine.

Marketing business owner and director Lucy Dobbs says the Auckland art group she bought into 18 months ago is both an investment and an interest. It had been going for three or four years before she bought into it when a previous member left.

“Our goal is to get works from artists who are on their way, just before they become famous. For example, we have a Fiona Partington from before she became established. We also have a Paul Dibble and a Karl Maugham,” she says.

Dobbs says she’s learning a lot about art, in the same way that she’s reading more widely since she became part of a book club. 

“For me, this last year of buying has been amazing. I’ve had to ring up galleries and dealers. It’s like a really good book club I’ve been in for years. You’re pushed and extended. 

“It is quite hard to find pieces that everyone likes. But I wouldn’t mind if we bought a piece I didn’t personally like. We just look at the artists who are on their way up. It’s a way of developing and expanding into an area I don’t know well.”

Dobbs says her husband encouraged her to join the art club as a way to diversify their investments. Membership of the club has been time-consuming, but rewarding. 

Where to buy art

Beginners can invest in art in several ways:

•    Galleries: You immediately know the price of the artwork, which removes much of the guesswork. You can benefit from the expertise of the dealers, who generally know each artist in person.

•    Auction: Buying through auction houses such as Mossgreen-Webb’s, and Art + Object, you may get a bargain if few people are bidding for the same work. However, much of the secondary market deals in the work of top artists. These works tend to be pricey, and you’ll be bidding against experienced collectors. A reserve price, if disclosed, will be an indicative guide of the minimum sale price.

•    Art shows: Wellington’s NZ Art Show and the Auckland Art Fair in May, as well as regional craft fairs, all showcase a range of styles and media, often at affordable prices.

•    Online buying: This is a growing area, if you’re happy to purchase works sight-unseen and have them shipped to you. Websites will open your search to artists around the world.

Once you’ve found a work you want to buy, finance need not be an issue. A website called myart.co.nz offers interest-free loans (from NZ$1,000 to NZ$25,000) to buy art from a long list of New Zealand galleries. Otherwise, many collectors buy artworks on time payment, leaving a deposit of NZ$1,000 or more and paying off the balance over a number of months or even years.

A big year for art

Despite people taking on big mortgages in the booming Auckland housing market, it’s also been a very strong year for the art market, says Plumbly. 

“People see equity in their houses, which makes them feel comfortable buying art.

“There is quantity of work and a variety of art. You can come through and see different styles and media. You can buy an interesting work of art for less than NZ$1,000 at auction.”

Plumbly says some newer names in the art world – such as Seraphine Pick, Andrew McLeod, Michael Parekowhai, Peter Robinson, and Yvonne Todd – are generating a lot of interest in the market.

Adrienne Schierning, manager of Sanderson Contemporary Art in Newmarket, says a gallery’s role is also to nurture artists’ careers as well as selling their artworks.

“We work with artists that are both emerging and established. We support them; we build a relationship with them.”

Sculptor Ray Haydon and painter Simon Kaan are among the artists Sanderson Contemporary works with. Although students graduate from five tertiary art institutions in Auckland every year, very few graduates would get signed with a dealer gallery – it is a highly competitive industry.

Artworks can move in and out of fashion, even those by established artists such as Colin McCahon. Schierning’s advice is simple: “If you invest with your heart, you can’t make a bad investment.”

Ron Sang’s art tips

Ron Sang is an award-winning Auckland architect who made a fortune investing in art. Part of his collection was sold by Art + Object in 2015 for NZ$1.3 million. Here are his tips for people wanting to start their own art portfolio.

•    Start by collecting limited edition (LE) prints, which you can buy for NZ$2,000. LE prints become valuable because the artist only makes a few; the lower the number produced, the better. 

•    After a few years of collecting LE prints, branch out. Consider buying paintings, watercolours, or oil on canvas, which are priced from NZ$5000 upwards.

•    Don’t collect old, expensive art. Buy today’s art: in 10 years those artists will have become established.

•    Negotiate with the dealer and use time payment. All dealers want to do is sell. I very rarely pay cash. I would say to the dealer: “I like this painting; can I pay it off in two to six months?” 

•    Stretch yourself to buy the art you love. Whenever you want to buy a painting, it’s always too dear! I bought my best Don Binney in 1980. It was NZ$58,000 and the dealer gave me more than one year to pay for it. Over 20 years, it would have gone up in value to 10 times that amount.

•    Get to know the dealers. I once asked a dealer to contact me if he ever had a Don Binney bird. This was in 1982. He called to say he had one and I rushed down to the gallery and fell in love with it. It was called Katoomba Fatbird, a painting of a red Australian bird. It was NZ$2,000. I said at the time: “I can’t afford it, I have to say no.” I went away, bitterly disappointed. He called later and said he wanted me to have the painting, and offered time payment for six months at $2,000. I told him I still couldn’t afford it. He said: “I’ll give you 10 per cent off my commission.” We made a deal for six months. That was one of my first major buys. [It sold last year at an
Art + Object auction for NZ$304,850.]