The way to win the stock market.
Jonathan Macey is originally from the UK and has worked in the fine art industry for over 25 years. He is both an Auctioneer and a Valuer. Jonathan established his own auction house in Hong Kong in November 2014.
The Highest Rate of Return by Selling Artworks is after 3-5 Years
Jonathan reminds the investor that the price of entry level investment in art should be between HK$ 100,000 and HK$ 200,000 and the best holding period is 3 – 5 years; he advises that you should not expect an instant return for an art investment. The investors should understand how to diversify their art investment, select an appropriate art specialist and, most importantly, purchase only high quality artwork. [Someone who is looking for a profit within a couple of days of purchase would be better to invest in securities]. Macey says, while he has continually heard comparisons between the Hang Seng stock index and the price of art products from his clients, the investment period for these two types of assets is completely different. Investors should not expect instant returns on art investment.
Ask for Suggestions from an Art professional Specialist and Understand the Background Before Purchase
Macey suggests that the buyers should hold their artworks for at least 3-5 years in order to make the highest return. Therefore, people should consider investing into art field, if they are not in a rush to cash out their investment. As the M+ Museum will be soon be established; he is predicting that the art market will be booming in 3-5 years as more and more western investors hunt for arts in Hong Kong.
The level of ROI (Returns on Investment) will depend on the various artworks from different artists. Macey mentions that the average return rate for his client is between 10% and 15%, which will be higher than the stock market in the longer term, provided that the artwork is highly recognized in the market. It is, therefore, recommended to consult with an art specialist before purchasing any piece of artwork so you can better understand the background and track record of the artwork and the artist, such as the auction and exhibition history. In addition, given the price of artwork is subject to demand and supply, it would be better to focus on the rareness of artwork. Investment in artwork is deemed a good choice for first time investors, due to its high liquidity and the easy ability to resell, normally within a week. Macey also recommends traditional paintings in Ink and Colours as a good first purchase.
Diversify Painting Investment
It is preferable to have a diversified art investment portfolio. Macey suggests that art investment portfolios should include artworks from different artists and various countries with a strategic focus on artists from Asia, such as China, Malaysia, Philippine and etc. Han Yajuan, a young artist from Mainland China is highly recommended by Macey. Each of Han’s artworks is normally traded at less than HK$ 200,000 with great potential for new investors. Moreover, Macey emphasises that investors should select artworks based on their own preference. [Art investment can be addictive throughout your lifetime.] Stephanie Kelly, Director of Affordable Art Fair (AAF) says, she understand that people think that art is unreachable to them due to the very high prices, therefore, AAF provides a platform to show that an art collection can be obtained at an acceptable price. Around 130 galleries will exhibit in AAF this year, the price of the artworks will range between HK$ 1,000 - HK$ 100,000, Thousands of artworks and 75% of the products will be less than HK$ 75,000. According to AAF sales record (HK$ 36Million) from last year, first time buyers accounted for 30% of the total revenue. Kelly says, 90% of fair attendees are Hong Kong residents and foreign employees, however, many are potential first time art buyers. AAF, therefore, provides various artworks with friendly prices to satisfy every customer, including paintings, statues, photography, limited printing artwork etc.
Let Artwork Be Part of Your Home
AAF has set up a new area for Art Home, in collaboration with Home Journal and interior designer Candace Campos. Art Home will showcase over 50 artworks, all under HK$ 10,000, chosen to show how you can live with art. Kelly suggests that buyers can refer to catalogue, take some pictures of their favourite artworks, then go for a drink before deciding to purchase. In addition, Kelly recommends paying by instalments if the artwork is above your budget; alternatively the buyer can consult with the gallery to determine if there are any other similar artworks from young artists.
Art Investment Tips
- The entry budget should be between HK$ 100,000 and HK$ 200,000
- Holding period is 3 – 5 years, do not expect an instant return
- Consult with an art specialist before investment and focus on highly recognized artworks
- Track record of artwork and artist, including auction and exhibition history
- Rareness of artwork.
- An investment in painting is good for first time buyers due to their high liquidity.
- Compared with emerging art (Pop Art), the price of traditional created artwork, such as ink and color, is more stable.
- Diversify your art investment in different artists from various countries