Profit from art without owning The $cream

Profit from art without owning The $cream
13 May 2012

EDVARD Munch’s iconic painting fetched an eye-watering $119.9 million when it went under the hammer at Sotheby’s in New York last week, but you don’t need to own The Scream to make money from art.

Bidding for The Scream started at a relatively modest $50m, but the lofty price – the highest ever paid for a work of art at auction – was reached after just 12 minutes of bidding. The masterpiece, painted on cardboard as the artist lacked enough money to buy canvas, was snapped up by an anonymous telephone bidder for far beyond its $80m estimate.

The 1895 work surpasses the previous record of $106.4m, set by Picasso's Nude Green Leaves, and Bust in 2010.

The Scream is one of the most famous – and disturbing – works in the history of modern art, with a remarkable history to match: during the second world war when Norway was occupied by the Nazis, it was hidden in a hay loft.

However, you don’t need to own a globally acclaimed masterpiece to make a significant profit from art. cashy asks the experts for their top tips...

Soaring demand

Stephen Howes, an international art dealer, says: “There is big money in the market and nowadays it’s not just the Picassos, Da Vincis and Warhols which are reaching unprecedented figures.

“The demand for great pieces by less well known artists is strong, and growing all the time, as investors are keen to discover The Next Big Name in order to make serious money.”

Investors are increasingly turning their backs on more traditional forms of investment, such as blue-chip stocks, property and commodities – driving demand for other investments.

“Original art, which always rises in value due to its rarity, is now widely viewed by investors as a safe haven in these economically turbulent times,” says Howes.

“Buying art used to be seen as an ‘alternative’ investment option, but now it’s very much part of the mainstream.”

Cashing in

Savvy investors recognise that original art prices are increasing between 30-35% per year – meaning it is outperforming almost every other form of investment, including gold, according to Howes, who is based in Malaga, Southern Spain, and acts on behalf of private and institutional collectors of fine art assets.

The art dealer has just sold a painting by Don Clarke, the recently deceased, Birmingham-born painter, to a Spanish buyer for more than five times what he paid for it.

However, Paul Fraser, the London-based collectibles expert and dealer, tempers some caution.

“While individual pieces can certainly achieve 30% growth in a year, our research shows that annual returns of 7-8% are more realistic,” he says.

“Even at these more modest figures, fine art can play an important role in a balanced, diverse, investment portfolio. And what’s more, not only do these tangible assets offer the potential of strong returns, you also get to experience the great pleasure that comes with owning beautiful pieces of art.”

Artful advice

Howes insists that by following a few tips “anyone can make a decent profit” from art.

He says: “For the best investment opportunities, you need to do your homework and research key trends and up-and-coming artists.

“Always buy from a reputable, experienced dealer and preferably from someone who knows the artists they’re representing personally for the best deal. Similarly, you must keep an eye on the market and be prepared to sell when it is favourable to do so; don’t hang on to it unless you’re sentimentally attached to it.”

Finally, he advises budding collectors to start a collection based around one theme, artist or movement so you “develop your own expertise in one area, making future purchases easier and, most likely, more profitable”.

Have you invested in art or would you like to? Share with cashy...

Comments

  • Colin
    Colin
    2012-06-23T00:04:32

    I like this advise Jen "...start a collection based around one theme, artist or movement so you 'develop your own expertise in one area.'" We could apply this to many areas of life, business and investments. If we don't, then where art is concerned, The Economist says: "the emotional nature of the art market will remain murky." BUT the rewards can be very very handsome... emotionally and economically if we take Howes advise.

  • Colin
    Colin
    2013-02-19T19:53:19

    The BBC has a good article with questions - "can investment in the arts stimulate economic growth?" The expert is also "looking at whether the mere presence of art and artists contributes to increased productivity in other areas." what do you think? Read the article and then share your thoughts:

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