The information on this site is at best a general is opinion and is not to be relied upon in any way.
GFL nor anyone else connected to GFL can take responsibility for the results or consequences of any attempt to use any of the information presented on this web site.

In the past 18 months GFL have auctioned 2 of the most important views of Perth painted. One was by pioneering engineer Sir Edmund Henderson painted in 1862 to remind him of his time in Western Australia and the other by Kenneth Jack painted in 1979 to record Perth as it was during the year of the sesquicentenary.

The Henderson was a watercolour measuring 33 x 48 cm and the Jack was an oil painting with the dimensions of 138 x 220 cm. Private collectors acquired both works - the Henderson for the hammer price of $455,000 plus 15% buyer’s premium and the Jack for the hammer price of $65,000 plus buyer’s premium. Which picture will turn out to be the better investment?

“They are both great pictures” said company director Ian Flanagan. “Works by Henderson are very rare indeed and though there is better availability to Kenneth Jack pictures, paintings of Perth like the one we have just offered are just as rare as the Henderson – neither will paint another again. “Both works represented unique opportunities – but from different eras.”

“The Henderson showed a view of Perth from a colonial time and had a view of the town and Mt Eliza in a pre quarried state, and the Jack was a within living memory view from a similar position showing the corporate structure of the city  - both scenes are lost forever. “ I think some curator of the future will be disappointed at today’s incumbents for missing the Jack for less than $75,000, though slightly more understanding of them for missing the Henderson at $535,000.”

“Henderson’s picture had the advantage of age and he lived and worked here as well as making a sizeable contribution to the development of the state, whereas Jack’s picture had the disadvantage of him being a painter within contemporary memory who only visited Western Australia in his quest to record as much of Australia as possible. “Both works are important historical documentations and both works drew large crowds to the viewings, with the Henderson picture holding the edge in numbers.”
 
But which is the better investment? “ I would like to own both paintings” said market analyst Quentin Tapley, “ there are many factors to consider but I believe the bi centenary in 2029 will have a more significant impact on the price of the work by Kenneth Jack than that of the piece by Edmund Henderson. “We can see the changes to the city in the 30 years since Kenneth Jack’s picture was painted and can only guess what will happen between now and 2029. “By 2029 I expect that the changes to Perth will make the 1979 picture of Perth look quaint and with city portraits like these, it’s the changes that matter.

“Both works will get better with age but I believe that the lower entry price for the Jack picture will provide the better return.”

The information on this site is at best a general is opinion and is not to be relied upon in any way.
GFL nor anyone else connected to GFL can take responsibility for the results or consequences of any attempt to use any of the information presented on this web site.

This is a version of an original article published in 2004 ©

GFL Fine Art - Spring 2008 Art Auction

Diversity is a word often used by investment professionals and in time of economic uncertainty the advantages of having a diverse portfolio comes to the fore. Investment in collectibles is a serious consideration today and privately many have lamented that this is an investment area that was not explored earlier.
 
To pick winners in the art market is difficult for the experienced and almost impossible for the uninitiated. There are over 1500 dealers and galleries throughout Australia, each touting the worthiness of the artists they represent, irrespective of artistic merit or relevance to art history. When that number is added to the thousands of artists and dabblers relying upon the sale of their work to provide or supplement their income, what to buy for investment can become a very daunting prospect indeed.

"...look for the footprints in the sands of art history"

There is a basic guide when buying an artwork for investment – one should always look for the footprints in the sands of art history. If the mark is absent or only very shallow – the investment should be considered speculative.

Charles Blackman - "Fairytale Garden of Childhood"

The art market is an unregulated market, so there is a plethora of advisers, consultants, pressure groups and well intended amateurs posing as experts, each with an opinion and an agenda well meaning or otherwise. And as most considering investment in art are searching for advice, it is easy for them to fall under the spell of those that appears worldly in art matters.

"...many just don’t understand
the market..."

Many that pose as art consultants, proffer advice that cannot be substantiated and the secondary (auction) market is littered with the carcasses of their advice. So if you are preparing to invest … choose your adviser wisely and don’t be daunted about asking pertinent questions – it’s your capital after all.

It is more common to find an adviser that knows about aesthetics but little about the art market than one well versed in all areas. This includes academics as well – many just don’t understand the market though they can pick a good picture from an average one.

"...art is no longer the exclusive province of the wealthy..."

The purpose of this article is not to highlight and identify emerging and under valued artists, but to offer opinions and advice about;

•  the comments that art investment attracts,
•  guides to follow when investing or appointing an adviser,
•  guides as to the information experienced advisers will provide, and
•  the answer to some of the “how comes” that apply to the art market.

In 1957, Sir Daryl Lindsay as the director of The National Gallery of Victoria presented a paper to the trustees of the Felton Bequest. He was outlining the reasons why the funds the bequest was providing, were insufficient to acquire the old master and impressionist paintings they had in previous years. The following is an extract from Sir Daryl’s paper;

Arthur James Daplyn - "The Pioneer"

Sir Daryl’s assessment of the art market of 1957 is still relevant today, nearly 50 years past. The mechanism hasn’t changed, only the source of the clients. Collecting and investing in art is no longer the exclusive province of the wealthy and privileged, it is spread throughout the general community and increasingly is becoming the focus of the Self Managed Super Funds. 

“If you don’t like it don’t buy it” ….  It’s a throw away line used by those that frown upon fine art and investment being used in the same sentence ….. It’s old thinking in an industry that thrives upon innovation and change. But why is personal taste a factor when the investment is art? Who really knows. It doesn’t apply to property. One can buy with impunity the only derelict house in the street because the area has potential. We complain about the banks and their ever-increasing influence on our hip pocket, but we still buy and trade in their shares and trust them with our money. We invest in coins, bank notes, old share scrip, vintage cars, wine, antique furniture and even guitars, but no one says “if you don’t like it don’t buy it” … it seems to be a statement reserved exclusively for visual art and on many occasions it emanates from those that should know better.

Robert Juniper - "The Rising Moon on Gwalia"

Art investment is becoming a consideration for many people and consequently has attracted detractors. These detractors generally prefer to keep the investment funds in an area in which they feel comfortable. The art market’s lack of transparency can cause the negativity though there are moves afoot by some areas of the market to address this problem. Some of the other issues the detractors may raise are;

• Art is illiquid
• Selling costs are high
• Art is subject to trends in fashion
• Art is a risky investment
• Art does not generate income and
• Holding costs are expensive

• Art is illiquid ….   Good art and important art is very liquid. It all depends upon the price the seller wants. Don’t confuse liquidity with profitability and as with all areas of investment, timing is important in maximising returns. 

• Selling costs are high …. They can be, but the spirit of competition in the resale market is so intense that deals on fees can be done when the work is very desirable. The answer is to buy the correct work, determine the proper price and negotiate the selling fee.
  
  
• Art is subject to trends in fashion …. That is the art to avoid. Facile, fashionable and decorative art.  An experienced art adviser can explain the differences and help you avoid that type of work.

• Art is a risky investment …. No more than others. Just as there is blue chip in the stock market, there is blue chip in the art market. Just as there is the penny dreadful in the stock market there is the penny dreadful in the art market. It is just that most new art buyers take their own counsel and  tend to buy the penny dreadful equivalent - generally because they like it.

• Art does not generate income …. Some art can. It depends upon a number of different factors including copyright restrictions, desirability of image and marketing activity surrounding the artwork. Many works in the public domain are being reproduced under license, with royalties being paid to the owners. There are Ponzi schemes around that should be avoided and a professional adviser will be able to identify those.

• Holding costs are expensive …. No more than other areas and a lot less than vacant land. Art doesn’t attract land tax or council and water rates. It should be insured though and stored under proper conditions.

Elwyn Lynn - "Curve on White"

Today there is a substantial amount of published information that was not readily available in Sir Daryl Lindsay’s time. This information is an important tool to use in reaching sound investment decisions but only a small number of dedicated industry professionals bother to access the data, and even fewer completely comprehend it. The quest the new investor should undertake is to find the adviser that can provide the proper advice and analyse the information the fine art market publishes. 

There are some indexes intended to mould the art market into a shape that is easily interpreted by financial advisers, and while it is an admirable attempt to provide a degree of science to art investment, the product variables are too wide for the indexes to be taken as anything other than interesting guides.  It should always be remembered that one original artwork is not like the next and often one series of an artist’s oeuvre is not as important as another.

"...just as easy to buy something you like that is a good investment as it is to buy something you like that is a bad investment."

When you’ve taken the decision to invest in fine art and are seeking professional help, ask those being considered a few simple questions along the lines of;

• How many years of experience in the arts industry,
• Which investment products and journals do they subscribe to either electronically or in hard copy,
• Do they have any prejudices in style and period or are they able to encompass all,
• Can they provide referees and
• What’s the state of their library

Sidney Nolan- "Antarctic Camp"

• that the artwork is as described,
• that there is a published sales history for the artist’s work achieved through the secondary (auction) market,
• the sales period covers a minimum of 10 years with at least 50 pieces (excluding graphics) being offered and,
• that the artists biographical details are recorded in the standard reference materials.

• market activity,
• financial support for the artists work in the resale area,
• historical relevance of the artist and
• importance of the piece to the artist’s oeuvre.
• condition of the work,
• if the work is speculative or sound and
• price relative to current market value.

John Passmore - "Studio Interior"

To secure an important piece, it is common to pay a price in excess of current market value. This is referred to as opportunity cost. Your adviser should be able to advise as to the percentage of the purchase price related to opportunity cost.

As Australia tends to be a DIY (do it yourself) society, the art market tends to attract more than its share of quasi-experts and well-intended collector friends. While it is fine to share a common interest, it is important to seek the services of those experienced in art investment and dispose of the DIY attitude. Today, there is such a variety of works available for purchase and only a small number of them could be considered important or (good) investment quality.

Remember it is just as easy to buy something you like that is a good investment as it is to buy something you like that is a bad investment. The art adviser who analyses the market in a proper manner will be able to tell you the difference.

Investing in the art market is not for amateurs. The advice to take is the best that you can afford and you should remember that free advice can be expensive and advice that isn’t free and well founded can often be disastrous.

Some interesting quotes from over the decades:
 
"In buying modern pictures, I think you must anticipate that only a relatively small part of your purchases will ultimately have permanent value”
Dr. Stanley Cursiter Director, The National Gallery of Scotland 11 June 1945.

“I think we are all agreed that it is much better to evoke a period by a few well chosen objects than to do so by what very often turns out to be a distant recollection of a dealer’s shop.” 
Sir Leigh Ashton Victoria & Albert Museum London 17 July 1945.

“I am always happy to give my friends and associates the benefit of my years of collecting experience. That is until they ask about something that I want.”
Johnathon Tribe Sculpture Collector July 1998.

"Having buyers, say in London and New York, does not seem to me a successful scheme. Even if they are honest, I think that you will find inevitably you will be getting pictures that somebody else did not want.” Harold Edgell, Director,Museum of Fine Arts Boston Massachusetts 6 April 1945.

“It is almost impossible to define what are the outstanding works of our contemporaries”
Professor Thomas Bodkin, The Barber Institute of Fine Arts, The University Birmingham, 11 July 1945.

“An investment in knowledge pays the best interest”
Ben Franklin 1706 –1790