Tuesday, November 17, 2009

Contemporary Art Collectors Stay Close to Home

While contemporary art collectors' tastes are multifarious, and the locales they visit to purchase art vary, there is one aspect of art collecting that many collectors have recently agreed upon: the desire to buy local art. This trend - due in most part to the economic downturn of the past year - is a worldwide occurrence.

In a recent article from the Wall Street Journal, Gary Wasserman, a major collector and Detroit steel company executive says he's stopped buying work from English and Chinese artists (like he previously had). Instead, he has decided to focus on buying "powerfully Midwestern" art.

Italian art collector Pierpaolo Barzan agrees, saying,

"I believe that I can put together a much stronger collection, and make an impact in the art world, by collecting local artists rather than trying to find the next Chinese star"

In addition to supporting local artists and strengthening local economies, the trend of buying locally has allowed art collectors to cut-back on expensive art-buying trips to international destinations.
Likewise, auction houses and galleries are noticing the shift and have made the appropriate changes. As Grett Gorvy, Christie's international co-head of postwar and contemporary art notes,

...the company decided to shift Chinese pieces to sales in Hong Kong. "There's been a reluctance in the U.S. and Europe for these works but the appetite is still strong in Hong Kong and Taiwan..." The New York sales for both houses also include no Indian artists, with the exception of Mr. Kapoor, who was born in Mumbai. Mr. Gorvy says top examples of Indian art were scarce this time around. Instead, both houses [Christie's and Sotheby's] have packed their catalogs with works that traditionally appeal to U.S. buyers, like Alexander Calder, Jasper Johns and Joan Mitchell.

The new direction of art collecting could prove to be extremely positive for artists in smaller U.S. cities (like Atlanta, Austin and Detroit) that have typically been overlooked by the art world. While some collectors are hesitant to stay local, many like that works by primarily regionally-known artists are cheaper (than those of international artists) and collectors may also feel a personal connection to artists who live and work close by.

To read the full article from the Wall Street Journal, click here.
Above images courtesy of the Wall Street Journal

Tuesday, November 3, 2009

When Collecting is Worth It

While art collectors typically collect because they love art, those who collect with the hopes of gaining wealth may want to re-think their investments. According to recent academic studies, long-run returns tend to be lower for art collectibles than for stocks and bonds.

An article from the NY Times discusses the positive and negative aspects of collecting art. The article states,

If you acquire expertise in a particular area, ideally one shown to hold its value over the years, you can enjoy a pastime that is personally and culturally enriching. It still may not be as financially enriching as other activities, but you stand a good chance of making better deals than many other collectors — or at least you can avoid being played for a chump.

The very feature that makes items worth collecting — scarcity verging on uniqueness — is what makes them problematic as investments. It is hard, almost by definition, to determine the value of a one-of-a-kind, or few-of-a-kind, item.

This shortcoming is amplified by the likelihood that the interests of amateur and professional collectors are often in conflict. In stocks and bonds, by contrast, portfolio managers do better for themselves when they do better for you.

The article dispenses advice on how to be a successful collector and suggests dealing at an auction or hiring an advisor.

On a positive note, the article suggests that in-demand items (rare items and those of high quality) are always in demand, and that being able to look at valuable pieces of art may outweigh some of the monetary cons.

Certain artists tend to be “tried-and-true wealth holders,” Ms. Gyorgy said, including Old Masters, Impressionists and Abstract Expressionists like Willem de Kooning and Mark Rothko.
Their work is out of most investors’ price ranges, of course, and there is no assurance that they will outperform conventional, lower-maintenance assets. But there is one advantage that artworks and some other collectibles have over stocks and bonds: You can look at them.

This consumption value, as academics and specialists in collectibles call it, is what makes them desirable and valuable in the first place, and it accrues to their owners for as long as they possess them. That is why collectors are urged to focus on art appreciation, not capital appreciation.