By DARLA MCCAMMON
Lakeland Art Association
Is buying art as an investment a risky business? Yes, you bet. And a bet it is, as almost all investing means taking a risk.
This week and next we will provide some tips-but no guarantees-about such investing.
There are opportunities for growth and gain but there are always downsides as well. There has been a recent upswing in the art market and projections are good for continued growth according to Clare McAndrew of Art Economics. McAndrews recently spoke at the ArtFi conference in Berlin with a number of other influential panelists of the art world. Following are a few tips gleaned from the panelists along with our own thoughts on art as an investment.
The key players in this conference were bullish about the art market for this year. Last year (2013) was the best record since art sales hit a low along with the rest of the world in the recession year of 2007. Some areas of the art auction market have seen an increase of twenty percent for the first half of 2014. The panelists felt the year would end strong based on first half sales, but also cautioned that final results in December will be when the year’s performance will be announced.
A growing upper-middle class in the China population has created an increased demand for art work.
Some statisticians quote that 55 percent of residents in China will become more affluent and move into the upper-middle class by 2022. Another panelist in Berlin, Serge Tiroche is an Art fund manager. He has made some strong bets for such emerging economic situations with the Art Vantage fund. Most of this is balanced with a privately held collection of contemporary art.
Balance your own love and passion for art with solid financial advice. It is very easy to get carried away when investing in art. Unlike other investments where we are just purchasing this or that stock, art work has an inherent additional draw for some of us. What we are crazy about may not be what has the same value to other collectors and art fund managers, so be careful not to overvalue the projected increase in your investment. Yes, you can invest in what you like, but do it wisely.
Educate yourself so you best understand the vagaries of art investing or collecting. It is complex just like regular stock exchange practices are difficult for newcomers and inexperienced investors. Get advice and get it early.
All kinds of challenges may arise, for instance: Art lending has become a rather common practice in the U.S. today, yet most of us know nothing about this practice. Regulations have relaxed on this issue, which means European art lenders must take actual physical possession of the artworks being lent or borrowed against. This has allowed collectors, galleries and artists to retain ownership yet pull out some of the liquidity of the works through mechanisms such as a pre-sale bridge loan or even long-term credit lines.
Check all the auctions to determine the selling price of different genres of art. Does a Mark Rothko command more money than an up and coming Parker Ito? Will Ito surpass Rothko at some point?
Be there or be square at Lakeland Art Gallery throughout October. Located in Pierceton, no admission.
Ann Peperak exhibit at Warsaw City Hall through mid-December. Weekdays 8 a.m. to 4 p.m. weekdays. Free.
Art informational presentation with slides by Darla McCammon on artist Mark Rothko at 7 p.m. Oct. 27, at LAA gallery, Main Street, Pierceton. Free admission, refreshments.
For more information on topics in this column contact Darla McCammon at [email protected]