By JONATHAN VOAK Director, Atelier Limited
Investing in Art
An art dealer’s perspective
in London and New York. While the supply of major Impressionist and Modern works has been dwindling, demand has been growing which inevitably puts upward pressure on prices.
As a tangible investment, art is now accepted as an important alternative asset class. It is considered to have a closer relationship to real estate than pure financial assets however it has the advantage of being portable and can be bought in one currency and sold in another. The art market is a global business, however the United States and the United Kingdom are by far the largest exporters and importers of art in the world and therefore the pound to dollar exchange rate has always had a special significance.
A typically sensitive portrayal of feminine beauty, this watercolour of Cecilia Reading Poems by Sir William Russell Flint PRA, PRWS, RSW, ROI, RE (1880-1969) depicts one of the artist's favourite models. The arrival of the beautiful young ballet dancer on his door step in 1953 marked the beginning of perhaps the most productive and successful period of his career. Watercolour 11 x 15 1/2 inches. (Private Collection, acquired through Atelier Limited).
Over the past decade there has been a surge of interest in fine art as an investment. This has been fuelled by uncertainty in the property and equities markets, historically low interest rates and the close attention given to the subject by the media. During the recent recession the art market has performed well and since the end of the recession records continue to be broken. New York’s series of Impressionist, Modern and Contemporary sales in November 2014 achieved an astonishing £1.44 billion, smashing all records and continuing the upward trend that has risen almost continuously since the 1990 economic recession.
As a consequence we are increasingly asked to acquire high value works of art on behalf of our clients and over the past few years have purchased important works by such names as Picasso, Renoir, Pissarro, Miro and Leger. We have also been meeting demand for paintings by Modern British artists such as Lowry, Montague Dawson, Russell Flint and Ivon Hitchens. The high value acquisitions that we have made have overwhelmingly been of Impressionist and Modern paintings purchased from the leading auction rooms
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Comparing the characteristics of a work of art to a financial asset, such as stocks and shares, highlights strengths and weaknesses of both as an investment. Being tangible, a painting can be hung on the wall and enjoyed for its own sake. Properly insured, it will not disappear as a store of wealth altogether. It is, however, also illiquid meaning that the value of a work of art is more difficult to realise than a financial asset. In other words it is harder to turn art into cash at short notice.
There are many factors at play that influence a decision about whether to acquire a work of art. The often repeated rule that “you should only buy art because you love it” is certainly true but potential investors must also anticipate that others will need to love it too. This is often overlooked. Similarly, as an art dealer there is no point in acquiring anything that you are doubtful about finding a buyer for. We always consider whether a picture can be targeted to a wide, possibly international audience or whether it might only be a small number of potential buyers. We also have to keep abreast of shifts in taste and changes in fashion.
When setting out to acquire a high value work of art by a particular artist it is important to follow the market, talk to experts, and see as many pictures by that artist as possible to gain the confidence to be
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