An (A)lte(R)na(T)ive investment

Investing in any market or scheme is undoubtedly unpredictable and comes with a great number of risks. Stocks and shares are volatile, and with this to consider some investors are now focusing their assets on alternative forms of investment, perhaps most interestingly in works of art.

Pros in the field of art investment, or the ‘investment of passion’ as it is often referred to, have a few rules when it comes to buying and selling art. Firstly, as with all types of investments, you shouldn’t expect a fast return on your buy. Art insiders would recommend holding on to the artwork for at least 5, if not 10 years, to allow for the artist to develop in the industry. This brings us to the second rule; ensure you purchase an artwork which you enjoy. When at art fairs or auctions buy what catches your eye, not what you think will impress others. The work is going to be with you for up to (if not longer) than a decade, so you want an artwork that you can look at on your wall and take pleasure in. 

An excellent example of how art investment works is the case of Peter Doig’s The Architect’s Home in the Ravine. The huge oil painting was bought for a mere £280,000 in 2002 by Charles Saatchi, who then resold the artwork in 2007, after the artists reputation soared, for £2.7 million. The buyer from 2007 put the painting in Christie’s February auction this year and it sold for just under £7 million. That’s an unbelievable 2300% rise in value in just over a decade.

Peter Doig’s The Architect’s Home in the Ravine

However with the positives you also get the negatives, as with all investment there are substantial risks involved. Taste in art changes over time, so what is popular one year may not be the other. As well as this, if the artist’s reputation is badly damaged, the price of the artwork will subsequently tumble. Take for example well-known Australian artist Rolf Harris who has a large contract with Whitewall galleries.  In spring when sexual allegations against him were first released, people started selling his work on eBay for low prices because they feared if he was charged the art would be worthless. Now Harris has been charged, it is still unclear what Whitewall are going to do in reaction, but price slashing will almost certainly be the first step, if not removing his art from galleries nationally altogether.

One of Harris' paintings

 To wrap up, art investment can absolutely reap the benefits, but it requires a lot of research, as well as the equity to invest in the first place. But with the correct amount of planning and in a decade or 2, perhaps you could be the next Saatchi?