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Alison Coleman 16 Jun 2017 04:07pm

How to invest in art

Given the UK’s unpredictable property market and the intangible nature of historic investment opportunities such as the stock market, a growing number of investors are looking at art as a home for their cash

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Caption: Investing in art

A study by Lloyds Private Banking revealed investors are planning to spend an average of £19,900 in the art collectibles market in the next 10 years.

Like wine, art appeals as an investment because it offers both lifestyle benefits and financial returns. However, as Dr Johnny Hon, founder and chairman of venture capital and alternative investment advisory firm Global Group, points out: “While the returns on art investment can be huge, they are almost entirely dependent upon the state of the market, contemporary tastes, the buyer’s ‘eye’ and how the artwork is purchased. And where the secondary market is involved, in other words, where artworks are not purchased directly from the artist, investors should be aware that returns can be affected.”

Nevertheless, the Lloyds research predicts that over the next 10 years, art investments are expected to yield a return of 36%. The quandary for many budding art investors is what to buy.
Classic art is perennially popular with buyers and generally offers good returns. However, Mary Claire Boyd, fair director of the Art & Antiques Fair, Olympia, says some more traditional art tends to be a good medium- to long-term investment, which means for a minimum of 10 years.

“The works of Edward Seagos, for example, have gone up well over the past decade, as have those of Mary Feddens and the Welsh artist Kyffin Williams,” she says. Artists with recognised provenance will always prove popular, adds Boyd.

The art world has also become more global. Argentinian art, in particular, is undergoing a renaissance presently. Graduate shows, too, have also proven fertile ground for those interested in contemporary works. Howard Lewis, who manages his family’s Old Masters art collection, The Schorr Collection, says: “The UK alone has over 200 art schools, so there is much scope to scout new talent. There has been a resurgence too in the craft movement, a reminder that art is not confined to what may hang on your wall.”

Antiques expert, auctioneer and TV presenter Adam Partridge says: “The big names will always hold up to a certain extent, but it can be fun to see if you can spot the next up and coming artist, and you’ve not as much to lose. The most important point is that you buy what you like.”

It isn’t just the number of people investing in art that has changed, but the way they go about it, with a growing trend towards the use of online platforms and with mobile devices.

Hiscox’s Online Art Trade Report 2016 shows this market up 24% to $3.27bn, in spite of the global art market slowing in 2015. Robert Read, global head, art and private clients, Hiscox, says: “Ease of use is growing the online art market. I can sit at my desk and look at art being sold anywhere around the world and deal on it straight away. It’s making whatever you are selling a global market. But it’s not going to take away the big auction market. People still like to physically see art and still enjoy the social aspect of it.”

In their search for the next Picasso or Pollock to invest in, investors should be aware that the market is fraught with potential pitfalls, with a high rate of fakes and forgeries increasing risks for investors. “Provenance is crucial when you are buying for investment,” says Partridge. “It’s so important to make sure that the art that you invest in is genuine. Do your research, use a trusted gallery, and speak to the auctioneer.”

Three top tips

1. Be realistic about return on investment, art is subjective
2. Cast your net wide, art is not just what you hang on a wall
3. Make sure your home insurance policy covers art as standard

Further information:

hiscox.co.uk/icaew

johnnyhon.com

olympia-art-antiques.com

adampartridge.co.uk