Art as investment: Paintings may have a price tag, but art itself is priceless
7 min read
30 June 2016
The international art market has experienced an astounding degree of growth over the last few years. With auction records seemingly broken as soon they are made and works by Picasso and Paul Gaugin fetching over $100m apiece, it is no surprise that art is becoming an increasingly popular form of alternative investment.
According to a recent report by the European Fine Art Foundation (TEFAF), art market sales amounted to an impressive $51bn in 2014, the highest level ever recorded, and sales in the US rose to over $27bn.
Moreover, since 1995 the value of auctionable post-war and contemporary art, the largest sector in the fine arts market, has ballooned from $250m to almost $6bn.
As the Deloitte Art & Finance Report recently highlighted, 75 per cent of buyers and collectors are now purchasing art with a wider view for long-term investment. This is unsurprising given that art fetched online sellers a total of $4.7bn in 2015.
The fact is many now laud art as an investment, not least in comparison to the volatile stock markets, as on paper it is impervious to economic uncertainties. It is a largely non-correlated asset – insofar as it is not affected by the financial or other markets that collectors might be part of – which makes it attractive to those wanting to diversify their portfolio.
However, it must be noted that any engagement with the global art market requires extreme diligence, careful consideration of volatile trends and a certain degree of luck. It needs to be invested in like a monetary asset if it is going to act like one.
Art markets are, for instance, somewhat receptive to trends in fashion, fads and consumer taste. As such, market value does not always correspond to long-term monetary worth.
In addition, prediction of future price is difficult because, whilst it is possible to take note of record prices for “similar” artworks, each artist and artwork is unique. In order to yield a significant ROI therefore, one must carefully decipher which artworks will hold their value and it is often advisable to buy out of season.
On a similar note, I would strongly encourage buyers to consider their purchase in terms of a wider collection portfolio and to select for personal benefit rather than simply for financial motivations. This is because what drives any passionate collector is their individual perception and viewpoint on an artwork.
When a buyer’s personal interests resonate with those of the artist’s, the artwork collection is thus far more likely to be profitable, financially or otherwise. It therefore pays to delve into the artist’s viewpoints and experiences, for this will provide meaning and context for an investment piece.
Moreover, art is more than a financial investment. It is a cultural investment. In my own as a collector myself and as the founder of the Stellar International Art Foundation, I have found that by collecting a series of works by a chosen artist simply out of genuine interest, a buyer can begin to value their collection as more than a mere sum of its parts.
I have long endeavoured to commission and acquire complete series of artist’s oeuvres because I am acutely aware of the non-monetary values that this can bring.
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My Foundation, for instance, contains the largest private collection of works by Paresh Maity, one of Delhi’s most accomplished contemporary artists and this features a full breadth his media spectrum over his entire career.
Similarly, we have a huge amount of works, including the entire Maria series, by the late but great MF Husain. Such panoramic collections of work provide a unique insight into the artists and their lives, beliefs and cultural perceptions. Their value extends far beyond the economic.
Thus the value of art as cultural expression must not be underestimated. Comparing art from different areas of the world, for instance, allows unique insight into how different cultures view and understand the world.
The Stellar International Art Foundation’s collection consequently distinguishes its selection less on regional concerns and more on the individual’s artistic talents and interests.
Personally, I am inclined to argue that one should focus first and foremost on the non-financial benefits of art collection. Under this view, any financial gain is merely an additional benefit rather than an expected outcome.
On the other hand, my son Bhanu Choudhrie, is likely to argue that one need not come without the other. A second-generation collector, investor and businessman, he appreciates and respects the cultural investment of art collecting, but also perceives the long-term returns on investment for the Foundation and for the artists themselves.
However, in either position what emerges is that when contemplating an art investment, it is integral to take a step back and take a more holistic view. While art may well prove to be a worthy financial investment, its value certainly does not end there. Indeed, whilst paintings may have a price tag, art itself is priceless.
Anita Choudhrie is the founder of the Stellar International Art Foundation. Currently the Foundation comprises over 600 works dating from the late 19th century to the present day, including international artists, and ranging from paintings to sculptures.