Three things to avoid when you invest in art

Fsp Invest, 16 Aug. 2013

Tags: art, invest in art, artwork, what to look for when you invest in art, potential buyers, restoration costs, historical

If you fancy investing some of your cash into art you need to be wary. Don’t jump in before you do some thorough research. Read on to uncover three things to watch out for…

Make sure you don’t waste money on a piece of art that you’ll be lucky to get your money back on.

When you invest in art, you hope to buy a piece that will appreciate in value, making you a tidy return over time.

When not to look twice at an artwork

To make sure you don’t waste your money, here are three things to avoid when you invest in art, as The South African Investor’s research team explain…

1. When there are no potential buyers:
Just like any investment, the basic economic principle of supply and demand applies.

While not being able to find a buyer for an artwork can depend on many factors (including market sentiment and timing), it may also indicate that the artwork isn’t a collector’s item and not a great investment.

So ask around at your nearest auction house and read up on past auctions to find out what prices a specific artist is selling at and whether there is high demand for the artist.

Also visit sites like to discover what prominent SA art pieces are selling for.

2. When the restoration costs exceed the artwork’s value:
Many investors look at art in much the same way they’d look at a house. But, this isn’t the best way to go about it.

Unlike a house, which you might consider buying to fix, thereby increasing the value of your investment, if the cost of restoring a piece of art far outweighs the value of the piece you may never recover the money you’ve laid out.

The same rule applies to the frame. If the frame on a painting or sketch is dodgy and it’s impossible to fix the job without ruining the piece, steer clear.

3. When it isn’t a slice of history:
Apart from aesthetic merit, the work also needs to have historical importance.

This means history in terms of the artist and the art world. And it's the reason why earlier works often sell at a cheaper price than later works by the same artist.

Remember, for the work to be in demand, the general public must be able to recognise the artist’s contribution to art history.

Contemporary art is also not the best investment.

Why? Well, in the same way a certain look may be fashionable for a season or two, an artist may be a fashionable addition to your home for a while.

But, this doesn’t mean it’ll retain that value once the trend is over. You may be stuck with a piece with no market.

So unless the artist is setting the world alight with his/her pieces stay clear.

There you have it, three things to avoid when you invest in art.

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