Richard Embrey 98


HOW TO VALUE ART? INVESTMENT OBSESSED


Today we are investment obsessed, as it seems we won’t buy anything ‘expensive’ unless it is going to give us a higher return in the future. With the exception of buying a property, we used to make most purchases that were not significantly based on their future value.


Antiques, jewellery and wine, were assumed they would at least hold their value and increase a bit over time, but they were not expected to achieve double digit percentage increases in a few years or even per year. But this is what we are constantly now led to believe; that art, wine, whiskey, sports cars, jewellery, watches, handbags etc are now the powerhouses of investment vehicles and this is now the norm, not the exception. Will the bubble burst at some point?


Take cars for example, even sports cars like Ferraris and Lamborghinis were purchased with the expectation of there being depreciation and the selection of a brand of car was done on the basis of minimising depreciation, not an increase in value. Now with today’s top sports cars they are largely bought as an investment. So this means all the best wine, whiskey, cars are all wrapped in cotton wool and in storage to earn money, rather than being seen and enjoyed.


For art at the top of the market this is of course a major factor and understandable. There are not many people, who are genuine art lovers and would pay £100m for a piece of art and love it so much that it would not matter if it halved in value.


So why is art now, seemingly at all but the lowest end, seen like this. People do spend a lot of money on luxury items that they don’t expect a return on; for example Executive Saloon cars, where a top of the range Mercedes S Class will cost up to about £150,000, but no one expects to sell these cars in 3 years time for a profit. Quite the opposite in fact, as the value of these cars plummets over 5 years and they lose about 40%. So why do people keep buying them?


People spend these amounts of money on luxury items because they like/love the quality they give them; even if they are perishable or disposable goods. For most cars depreciate and you can only drink wine and whiskey once. So why do people not buy art on this basis and put so much focus on future value, not just the quality of the art.


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ENTERTAINMENT ART GUIDE


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