ART INVESTORS BLOG

Whether you simply love art, are a casual art collector, or are an avid art investor, you’ll enjoy educational and interesting facts about art culture, investing, collecting, evaluation, events and more here in our Art Investors Blog.

How to determine if your art collection is appreciating in value

Everyone wants to keep an eye on their investments, ensure that their portfolio is growing and make adjustments as needed. This is as true of investment in art as it is of investment in stocks, bonds, precious metals and real estate. Keeping track of where you stand as an investor in art involves periodic reference to sales in the art market.

Because the quantity of transactions in the buying and selling of art are considerably less than those in financial instruments, pricing is less volatile. Art is a long-term investment. Nevertheless, it is advisable for the serious investor in art to keep an eye on the market. This will not only allow you to manage the insurance on your assets, but will also indicate when it is time to dispose of works that are underperforming or have reached a fair market value where they can be liquidated to your advantage.

To check the current value of your assets in art, you can refer to public sales of equivalent works at auction houses. There is no guarantee that your well-chosen sculpture by Ai Weiwei, Jeff Koons or Rodin will fetch top price at auction, but you can, through study of sales, get an approximate retail price. Remember that you have to subtract the cost of disposition – an auction house seller’s fee – from this to determine the actual value of your art asset. By analyzing auction prices, you will be able to determine which of the pieces in your collection have declined in value or are not rising in value at a rate that you expect. You can take appropriate action to dispose of these works and acquire others with more potential. You can access several sources of auction sales records on the Internet. Some are free and some charge a subscription fee. For living artists, the most useful and accurate source of information on the retail price of their work is through their dealers. Try to attend all the dealer shows of artists in your collection and see how their work is stylistically evolving and consider the current prices being asked for their work.

Depending on the size of your collection, it may be worth considering having it professionally evaluated periodically. This will give you an approximate value of your assets and can be used to satisfy the needs of your insurer. The accuracy of an evaluation depends on the skill of the evaluator. Because evaluators in many jurisdictions are unlicensed, you will have to exercise care in choosing one. Ask for advice from commercial and not-for-profit galleries and weigh what you are told carefully before proceeding.

The only certain way to determine the value of a work of art in your collection is to offer to sell it to another collector or dealer or place it in an art auction. Before contracting to sell an artwork at auction, you should be given an estimate of the sale price. Be aware of the fact that this is an estimate only, and that the auction house has a vested interest in including your work in a sale. Based on this you, can choose to proceed with the sale and, if you want, protect your investment by setting a minimum bid. You can check the estimates provided by auction houses by having a look at their sales records. Compare the estimated prices with the winning bids. This often yields sobering results. In using any of these means of determining the value of an artwork by actually disposing of it, always keep in mind the complimentary adage to “buyer beware,” that is: “seller beware.”

The value of your investment in art will, in the best of all possible worlds, slowly increase. This is particularly true for the work of contemporary emerging artists where patience is necessary. Remember that only a few artists achieve such acclaim that the prices for their work rise astronomically. It is your job as a collector for investment purposes to find the new Damien Hirst, Michael Snow or Andy Warhol and acquire their works in the early stages of their careers. Even if you don’t manage this, a small increase in value over a number of pieces in your collection will be rewarding. Through infrequent evaluations, either informal ones you make yourself or ones provided by professionals, you will be able to keep an eye on the approximate value of your collection and weed it accordingly.

By Dr. Alan McNairn

Authenticity and provenance are critical

Acquiring art works for investment purposes can be much more complicated than purchasing real estate or publicly traded financial instruments. What you do before you complete a transaction with a seller, whether it be an auction house or dealer, is critical.

As a collector the first step in your due diligence is to ensure that the artist’s agent or dealer is reputable. This applies also in the case of art sold at auction. Claims of authenticity by auctioneers can vary in accuracy. High-end reputable auction houses generally have the means and expertise to ensure what they sell is described honestly. The occasional errors in attribution or identifying the creator and/or the period of a work of art, made by even the most highly respected auctioneers indicate how difficult it is to guarantee authenticity.

The news stories of errors in attribution made by very experienced experts delight those who are skeptical of expertise but they should also serve as a warning to all. It is a rare occurrence when, for example, a work sold at auction as a 17th century follower Rembrandt turns out to be by the master himself. Much more common is the sale of a work optimistically attributed to a well-known artist that is in fact by the hand of an imitator, copyist or forger. The reputation of an auction house or art dealer depends on the accuracy of their attributions and their description of a work of art. Any serious collector is advised to exercise caution. It is wise to remember that the art market has justifiably been described as “the last unregulated frontier of commerce.”

If absence of regulation were not enough to scare off investors in art, there is something even more troubling affecting the art market. Worldwide commerce in the sale of illicitly acquired works of art generates enormous profits. Even the works of emerging or young artists, such as those in this magazine, appear from time to time on the Interpol list of stolen art works. Add to this the highly lucrative business of art forgery, that is not entirely restricted to old masters, and you have a marketplace where it is impossible to exaggerate the importance of the warning “buyer beware.”

When acquiring art, be sure to investigate who you are doing business with. You don’t want to acquire a work that you are assured is an authentic creation of a particular artist only to have it proved otherwise when you are disposing of it. A certificate of authenticity provided by a dealer may or may not be of value. After all, it is just a piece of paper that is only of value if the signing expert is widely regarded as reputable. With the work of emerging artists, you can generally be assured of authenticity and provenance by a dealer who has a direct and ongoing relationship as representative of the artist.

Authenticity is more of concern with the work of deceased artists than of living ones. However, it is not unknown for the work of living artists to be copied, reproduced and forged. The wise and careful collector will always assure himself or herself that what they are buying is exactly what it is purported to be. If it is an old work of art, then the provenance is of critical importance. One must be supplied with evidence of who owned the work in the past, when they bought it and when they sold it. Examine the artwork carefully to determine that it is exactly as described by a dealer or an auction house. This includes checking the medium, dimensions, condition and, in the case of multiples such as prints, photographs and cast sculpture, the date when they were made and the authenticity of the artist’s signature. Of course, you should also practice this due diligence when buying art, even if it is by an up-and-coming artist.

Whether you are making a small or large investment in art, you must, without fail, ensure by every possible means that what you are acquiring is genuine. If you have any doubts whatsoever, either forgo the purchase or consult a highly reputable advisor before deciding to proceed.

By Dr. Alan McNairn

Collecting art multiples as an investment

Prints, photographs and sculpture that are part of a limited-edition pose particular problems for the investor in art that set them apart from unique works.

The fact that an object of art is unique is of critical importance in determining its monetary value. When purchasing an art work, the collector will consider the price of similar pieces by the same artist or works from the same period and determine whether the asking price is fair and reasonable. Inevitably, there will be some uncertainty.

With the acquisition of prints, photographs or sculptures that are part of an edition of multiples, this uncertainty is reduced. In some cases, not all of the impressions of a contemporary print will be absolutely identical. The price for each print in an edition will, however, be within a fairly narrow range. Differences in the price of individual sequentially numbered impressions of a print arise from visible variations in quality of reproduction of the printing plate or major and minor differences in ink colour or density. Because of changes in printing technology and paper and ink manufacturing, the value of different impressions in contemporary lithographic or giclée editions is not as variable as it is with etchings, woodcuts and engravings. Determining the value of contemporary prints is less complex than for singular works of art. One simply checks the auction records or visits a dealer to see what the current price is for other impressions of the same print. The same applies to editions of contemporary photographs and sculpture.

Because prints and photographs can be consistently reproduced with ease these days, the numbering of impressions in a limited series is of less consequence than it once was. For instance, print numbered “one” in an edition of 50 is unlikely to be worth much more than impression number 50. The value of a print or photograph is, however, dependent on the number of impressions printed in any edition. Generally, the smaller the edition, the more likely a print will appreciate in value. This fact is reflected in the popular advertising slogan of “limited edition” used in the marketing of everything from cars to porcelain. Of course one must be cautious that an edition is not limited to as many as can be sold. Ethical artists can be trusted to adhere to the implicit promise of destroying the plate or digital file when the stated limit of the edition has been printed.

Sculptures also are often produced in an edition. There might be variables in the finishing of the surface from one impression to another. This will affect the value or desirability of a particular piece over another. In the work of deceased sculptors, a premium is added to the price for pieces that were cast or fabricated during the artist’s lifetime. For example, casts made of Rodin sculptures after his death have a much lower value than those that were produced under his watch. The same applies to photographs that are styled vintage, meaning they were printed during the artist’s lifetime, as opposed to those posthumously printed from his or her photographic negatives. It is not certain what the market will make of digital art printed after an artist’s death, but generally, a work of art is more valuable – in other words in more demand – when its authenticity is confirmed by the handwritten signature of the artist.

For those collectors who are concerned with the investment value of art, collecting prints, photographs or sculptures produced in multiples has certain advantages. The price of acquisition of each piece will usually be much less than that of a unique work of art. This allows the less well-off collector to enter the market, but one should be aware of the fact that the capital appreciation of a work created in multiple impressions will not necessarily increase at the same rate as a unique work of art.

Another advantage of collecting prints and photographs is that they are easily stored and simple to transport. This reduces the cost of managing and disposing of an investment in art in these media. Finally, collecting prints, drawings and sculptures that exist as multiples allows the investor to spread risk of capital appreciation over the work of several artists with minimal cost.

Collecting prints and photographs or sculpture created in a limited edition can be rewarding in terms of investment, but as with all acquisitions of art, risk can be reduced if one has broad understanding of the market.

By Alan McNairn

Cambridge Art Fair, UK

The art world fair might seem to be circumscribed to a couple of major, big cities – especially in UK London-centric. The Cambridge Art Fair, launched in 2013 by Craig Kerrecoe, represents a significant exception and it is quickly becoming an established part of the international art fairs calendar.

Indeed, in only two editions thus far, the Cambridge Art Fair has been growing at a rapid pace and its attendance figures have substantially increased, the fair becoming a respected stop on the art world circuit. People come to the Cambridge Art Fair to enjoy the art exhibited by high-quality British and international galleries and dealers.

Several features make the Cambridge Art Fair unique. Firstly, its exceptionality is due to its hosting city. For centuries, Cambridge has been one of the most admired cities, most widely known as the home of one of the most prestigious universities in the world. As the second fastest growing city in the country, in the last few years, the city has witnessed the emergence of a stimulating contemporary arts scene with new art spaces and a fresh dynamic and vibrant cultural life. Even if only for the month of October, the fair functions as an epicentre and crucially engages with the broader local art community, and as a result, exciting creative ideas pop up across the city in all manner of ways.

Furthermore, the Cambridge Art Fair offers an informal, friendly and relaxed atmosphere where every kind of visitor can expect to experience a diverse and rich range of artwork. The combined knowledge and experience of the galleries and dealers exhibiting at the fair ensure that any visitor is able to find the perfect piece of art he or she is looking for.

For both new and experienced collectors, the fair is a unique opportunity to build a quality collection that combines art from different periods and from any region of the world. Moreover, the Cambridge Art Fair dispels the common notion that building an art collection is a privilege reserved for a selected cluster of people. Indeed, at the Cambridge Art Fair, a collector has the opportunity to build a beautiful and rewarding art collection commensurate with one’s budget.

For its 3rd edition in October 2015, the Cambridge Art Fair offered a major opportunity to immerse into a rich collection of global art booths showcasing modern masterpieces alongside ground-breaking contemporary artists. A number of local galleries returned, including, Byard Art and The Lynne Strover Gallery. A plethora of new galleries with exciting programs and presenting art from outside the UK participated for the first time. Among them, Blue Nile Art (specialized in Ethiopian art), Hanoi Art House (a gallery specialising in Contemporary Vietnamese art) and Wealth-of-Art (an art platform offering both online selling and consultancy), specialized in established and emerging promising young artists from geographical locations, such as Belorussia, Colombia, Cuba and Italy. Thus, the 2015 fair will outclass with more diversity than ever presenting art from all around the world.

For more information, please visit www.cambridgeartfair.com.

By Laura Bruni

Laura Bruni holds a B.A. from the University of Bologna and an M.A. from IUAV, Venice. In September 2015, she started an MFA in Curating at Goldsmiths, London. She has worked as a research assistant at the Philadelphia Museum of Art, and as a researcher and assistant curator of prominent artist Pier Paolo Calzolari providing curatorial support for projects, such as Another (Galerie Kamel Mennour, Paris) and Ileana Sonnabend: Ambassador for the new (MoMa, New York).