Great Investment Potential

Editorial Idea - Go to as many galleries as possible and over a reasonable period of time before deciding to buy any work of art. Don’t rush the process.

Art: Great Investment Potential

Go to as many galleries as possible and over a reasonable period of time before deciding to buy any work of art. Don’t rush the process.

Many art buyers, especially newcomers to the art scene, find something they like-but a year or so later discover it no longer has the same appeal to them.

What often happens is that the individual’s eye usually evolves since they purchased the painting. That’s because art has a visual language that evokes a certain emotional response. It has its own magic that we unlock over time.

By taking the time and visiting a number of galleries, we begin to develop that visual language. Children have that gift but lose it as they grow up.

So do the research and get an overview of what’s out there before making a commitment. Second, get the advice of an expert, especially if you’re buying art for your home or office for the first time.

There are many good consultants out there who can help you make your initial purchase-art that reflects your particular taste. A good consultant should also serve as an educator. If you are fairly knowledgeable about art and you’ve done your homework, find a reputable art gallery or use a consultant. A trusted expert can make a considerable difference, especially when it comes to historical art.

There are two types of art, contemporary works by living artists; and historical works by dead artists. In contemporary art, you don’t get the same kind of problems that can reduce the value of an historical painting-forgeries and damaged art.

This is not such a problem with contemporary art because, in most cases, the dealer works directly with the artist. An art dealer is also important if you’re collecting contemporary paintings. You want someone who shows the works of a number of artists, who has the reputation for selling quality art and who knows the artist and can resell the painting should you need to at a later date.

This is important, because there is not a very active secondary market for contemporary art at the moment. Otherwise, when you buy contemporary art, be prepared to live with it or donate it and get a tax write-off.

Be forewarned, however, that not all paintings are recognized for donations by revnue and taxation services. Each painting must be assessed by the Critical Properties Expert Review Board, which provides an appraisal certificate of the painting’s value. That’s the other thing. Buy through a dealer who can tell you whether the artist is likely to be acceptable to this board. It will not, for example, accept donations from weekend painters. A good dealer will carry artists who are acceptable to the board.

If you’ve made up your mind to invest in art, here are a few things to keep in mind:

Price is not necessarily a criterion of value. Some people believe the higher the price, the better the painting. That’s simply not true. Contemporary art is more affordable. Prices for young contemporary artists range from $1,500 to $15,000, even as high as $25,000.

Keep in mind that critics have their views. One may regard a certain artist as brilliant but others may see him or her as run of the mill.

The only thing that will resolve this is time. In 100 years, we’ll know who the great artists of our time were. That’s why contemporary art is a bigger risk. Historical art has already gone through this process.

Normally, historical art is purchased at auctions, from an art gallery or a private collector. In the case of historical art, knowing something about the dealer is crucial. Prices for historical art are significantly higher, especially those pieces where we have some knowledge of their provenance. It also offers the best returns for investors.

Think of historical art as blue-chip stocks. Unlike contemporary art, the more it costs, the safer your investment. Some senior contemporary artists might also be classed as blue chip-but only a few. Historical artists are dead and have an established record in the marketplace, where the majority of sales are resales.

Be extra careful about paintings showing up at auctions. Take the time to have the painting examined by an art consultant. Put it under a blue light to find out whether it’s been overpainted or restored. Restoration is not in itself a problem-unless it’s been done badly. All the same, it does affect value.

What about returns? That depends on the market. In a good market-and with the right artist, you can double your money in a year, even 10 times your original investment within three or four years. These are rare occasions. But it does happen.

Best strategy? Buy for a 10-year hold. There are exceptions, but no one can really predict which artists will take off-much like the stock market. We can only make educated guesses.

In the past, art has tended to follow the real estate market, but with one notable difference. In the 1990s, real estate prices dropped by as much as 30 percent following the big run-up in the late 1980s. Contemporary art did not. It just didn’t go anywhere and drifted until 1997. In the historical market, quality maintained its value.