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Investing in Art: Reaping Financial Benefits while Culturing your Sense of Appreciation

Updated: Oct 27, 2023

Investing in art is a unique financial proposition. Unlike the share market, for instance, an art investment collection consists of tangible artefacts and should be driven, to some extent, by the aesthetic sensibilities of the investor. Choosing a painting based its artistic appeal (in addition to the value of the artist and their works) is a sound decision, as if your proclivities towards certain genres or artists change or develop over time, you’ll be able to offload your investment and re-invest in artwork more commensurate with your current tastes. Following this strategy of acquiring works of fine art one appreciates makes financial sense, as although art investment is demonstrably proven to generate lucrative returns to the savvy investors, it can also be counter-intuitive compared to other types of investment. After all, art doesn’t generate continued dividends or provide tax benefits and you may literally be living with your investment, so collecting works and artists you love carries a strong imperative.

Despite the importance of appreciating your investment, it’s also wise to seek guidance and advice from seasoned art consultants such as the team at Art Index. Investing in a local artist whose works are hanging in the café down the road may net you some great results if you are very lucky, but visiting established art dealers and galleries is a much more sound approach.

You may wish to set yourself some strategic guidelines such as investing in contemporary artists or those of your own generation. For domestic and international investors alike, Australian art – our specialty at Art Index – makes great sense financially. Given the strength of output from our skilled and renowned artists, you’re sure to find pieces that you’ll be drawn to for their inherent painterly beauty. The continued increase in value of Australian art over the last couple of decades means it’s also a market that can deliver on your investment goals, as substantiated by record prices fetched at auctions over the last few years. There exists no better example of this than the hammer dropping on Sidney Nolan’s First-Class Marksman (1946) at $5.4 million in March 2010. Nolan’s work is highly reputed and bears rich historical significance with the artist assuming a prominent place in the hierarchy of Australian art. From an art investor’s perspective, owning a Sidney Nolan artwork is a sure thing, the value of which is only set to increase over time. An investment of this kind is secure, immune to the whims of art market ramping and the fluctuations in value suffered by investment in contemporary trends such as video or street art.

Similarly, aboriginal art is an area that continues to garner international and local interest from both appreciators and investors. Indigenous art represents a fantastic balance between astute investment and a world heavily imbued with artistic beauty and deeply codified meaning. Artwork by First Australians, both contemporary and traditional, offers collectors the chance to own a commodity that is beautifully rendered in vibrant colour, typically depicting Australian landscape and fauna that is central to this oldest of culture still in existence in the modern world. It is without wonder that these works attract interest from international investors – though it is local investors who are most apt to capitalise on this market, given the breadth of works available to them at local galleries, including our own.

Art Index represents artists such as Dorothy Napangardi, who is one of 3 aboriginal artists to have had solo exhibitions at the MCA. The value of her work, which features stunning Dreamtime imagery, continues to rise in value and has had over 100 auction results in the last 5 years. Her works can be found in many highly regarded national collections in Australia and overseas.

Likewise, the work of Northern Territory artist Lily Kelly Napangardi, which is part of many important local and international collections, is aesthetically captivating in its interpretive depictions of desert sand hills and other features of her Country. Her pieces are in high demand and rightly take their position in many high profile collections. It also comes at price point suitable for investors who may not yet find themselves at the level of financial commitment required, for instance, to invest in a Nolan masterpiece.

As an art collection grows, it’s important to consider the details of various financial aspects of the investment. Capital gains tax implications can vary based on whether works are company or family trust purchases, whether they belong to a managed super fund or are simply bought under one’s own name. The rules and regulations in this regard can be difficult to navigate without the advice of an experienced art consultant. In the case of self-managed super funds, art works may be required to find their way onto the walls of galleries or venues with whom consultants have established relationships, or depending on the restrictions of a particular fund, they may end up in a vault, which can obviously negate the depth to which the art can actually be appreciated by those who invest in it.

Generally though, the beauty of art investments is the rewarding nature of immersing oneself in the world of art, to some degree. Self-education comes naturally to many investors, while others are more reliant on the knowledge and track record of their chosen consultants. At Art Index, we help our clients strike the perfect balance of measurable returns on investment by brokering works from acclaimed artists that also provide innate enjoyment to owners, and a deeper appreciation of the rewarding world of art. As the neophyte investor can often feel overwhelmed by the mystique of the gallery experience, which often belies itself as a world of elitism and impenetrability, our consultants work with investors to develop their eye and the value of their investment. As with collecting antiques, gems or stamps, investing in art is most effective when implemented by consultants and collectors who have a deep knowledge of the world of art.

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