The chances of finding a renowned, long-lost sculpture that will fetch millions at auction in your granny’s attic, is sadly slim. The same goes for unearthing an extraordinarily valuable painting in your local charity shop (although it does happen very, very occasionally, just watch Antiques Roadshow…).
The rarity of these moments doesn’t mean that buying art isn’t for you though; but equally, don’t cash in your life savings to buy one single spectacular piece. Chen Chowers, a relationship manager at HSBC Private Bank who focuses on clients across the art sector, does not like to call buying art an “investment” as such, because grand returns are not guaranteed. “It’s a very illiquid private market type of asset class,” she notes, meaning “you would place it on a longer-time horizon. Artworks come to market on average between 11 to 23 years, so [buying art] is not something [you do] for immediate financial gain. It’s not the same as investing in public equities [like stocks and shares].”
Here’s the lowdown on adding art to your finance portfolio…
What are the benefits of buying art?
“The art market is very sentiment-driven. It’s not a necessity. People don’t need it to eat,” says Chowers. That said: “Art is an amazing thing to acquire if you can.” “Look at things that you love and have resonance. It’s also a very nice ecosystem [to be a part of]. For instance, if you start collecting contemporary art, you may get to know the artists you might be collecting. There’s a lot of education [you can engage in] which includes going to museums, getting to know different periods, different artists, different influences.”
Basically, it can be fun, educational and even a little bit of a glamorous hobby (stars like Elton John, Madonna and Leonardo DiCaprio are all art collectors), just don’t expect it to fill your coffers.
If you have a pot of cash (however big or small) you want to spend on art, where should you start?
“First of all, educate yourself. Understand what you want to know and what you are looking to get from it,” says Chowers. Visit galleries, go to shows, look in charity shops and at auctions, and work out what kinds of art you like, and what’s in your budget. If you can, make connections with local galleries or even artists on social media, and buy direct from them. “Galleries will look to build the reputation and career of younger artists,” says Chowers. “They will look to place [pieces] with people that won’t necessarily go and flip the work the day after.”
Be patient too. “People shouldn’t expect to go to a grad show and buy the next big star or stumble across them by accident,” says Chowers wryly. Prioritise buying pieces that you will enjoy for years to come.
Besides buying the art itself, what other costs are there?
“Think of [buying art] like real estate, except real estate can generate rental income, whereas art doesn’t,” says Chowers. Art, if you plan to actually take care of it properly “comes with costs” separate to the initial layout.
There are “costs of storage, even if it’s in your home, basic things like UV protection on your windows, or climate [control] as different works have different sensitivities, storage insurance, export licenses if you’re moving it around, all these things have to be taken into consideration.”
Should you seek professional support?
“There are professionals for a reason,” says Chowers, but whether you engage their services depends on your personal portfolio and what you’re looking to gain from entering the art world.
“It’s great that we can connect to art and see it, and it can impact us emotionally. If that’s what you’re after, then you don’t need any professional help,” she explains. “But if you are looking at it for financial gain, either to understand that and how to protect it, maintain it over time, or if it’s a bigger part of your assets, you may need professionals to help.”
Is it a good option when you’re thinking about legacy and inheritance?
“I started liking art because I went with my grandmother to museums, so it’s a great conversation point and connector,” says Chowers. “But what you’ll find, though, is that sometimes the next generation doesn’t necessarily have the same taste as the parents.”
You cannot guarantee that what you like hanging on your wall is going to go down well with your offspring – or the market for that matter, if they decide to sell it.
“Old masters are now slightly less popular with the next generation than contemporary, and we’re seeing more digital-driven art. So tastes are changing, in which case, if you are thinking of art as an investment, [consider it within] broader estate planning.”