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Jun 20, 2016

Weekend Switzer | Senior Blue Chippers & The Fine Art of Investing

Switzer Weekend & Art Index

Words by Christine St Anne.

A book on the collected art works held by the Reserve Bank of Australia has prominent position on my bookshelf.  The art collection was secured through the efforts of the central bank’s former governors Nugget Coombs, (1949 – 1968) and Sir John Phillips (1968 – 1975).  With works from Russell Drysdale, William Dobell, Sydney Nolan and Brett Whiteley, Coombs and Phillips obviously had a love for art. It was also an astute commercial decision.

Art is the oldest asset class in the world. Indeed, the great art auction house Sotheby’s began in 1744. It’s no secret that major institutions around the world hold major art works.  In fact, a cheeky sign at Singapore airport by HSBC bravely states that the global art market has consistently outperformed the S&P 500.

“Art is not just about beautiful pictures.  Investing in art can pay off commercially for the astute investor,” says Art Index chief executive Sacha Clemens.

Art Index provides independent research on art as well as sales and rental services. The organisation has a focus both in Australia and the South East Asian art markets.

Clemens says there are two types of purchasers of art, those who buy paintings to match the curtains of their house and those who buy art as a commercial play.

Clemens’ clients are in the latter and given the commercial reality, Art Index prefers to with deal with artists who sell in the secondary markets – that is in the auction houses.

Art Index houses some big names; in fact Clemens was talking to me while gazing at three of John Olsen’s Bronze Frogs.

John Olsen 'Leaping Frogs'

Clemens says that if you are collecting for you walls at home, first and foremost you should buy what you like.  However, there are some key rules to follow if you want your art investment to pay off.

It’s important to focus on popular artists or those he calls the “senior blue chippers” such as John Olsen and Tim Storrier. But just behind these blue chip artists, you’ll find the likes of artist Geoff Dyer.

Dyer has been professionally paining for 40 years and won the 2003 Archibald prize for his portrait of the Man Booker prize-winning author Richard Flanagan.

Six years ago, a painting of his sold at auction would average $6,000, today his paintings at auction can command $30,000.

The artwork below recently sold for $22,000 at Sotheby’s and was originally exhibited in May 2003 for approx. $6-9k (prior to winning the Archibald).

Geoff Dyer 'D'entrecasteaux Creek II'

Clemens says an artist like Dyer is clearly one to watch, with his work set to increase in value. This proves that you also don’t have to buy artists who are deceased.

Artists must also be liked by both the public and critics and while critics don’t make or break the artist “they do play an important role”, says Clemens.

“There are a number of really unique and popular artists who are really in their prime,” Clemens says.

He mentions Jason Benjamin as another artist to watch.

The 45-year old artist has painted portraits of Bill Hunter, John Olsen and Paul Kelly, with patrons including Brad Pitt and Kevin Spacey. The portrait of Bill Hunter won the Archibald Packing Room Prize in 2005. A recent work of his sold for $67,500 in 2015, with his auction record currently at $76,375.

Jason Benjamin 'Portrait of Bill Hunter'

Buying iconic images is also important. For example, Brett Whiteley’s works created while in his apartment overlooking Lavender Bay would have been a good investment. In 1999, his painting ‘The Jacaranda Tree (on Sydney Harbour), 1977” sold for $1,982,500, a record for any modern Australian painter at that time.

His 1976 artwork ‘My Armchair’ was then purchased for $10,000 but was sold for $3,927,270 in 2013.

Brett Whiteley 'My Armchair'

Although emerging art aficionados could enter the market by picking up an etching from collectable artists such as David Boyd for $2,000 to $3,000, according to Clemens the “sweet spot” in art investing is between $20,000 to $200,000.

Ultimately, Clemens says successful art investing is about buying the best you can for the money you have. While he urges investors to seek independent advice, he says art as an investment can pay off and can stack up against the more traditional asset classes.

“You have to remember that art was one of the only asset classes in the world which didn’t collapse during the global financial crisis,” he says.

See the full article HERE.