Investment Art: A Beginner's Guide

Forget your shares portfolio - the recession-dodging art market is increasingly proving to be the most profitable place for high-stakes investment

Oscar Wilde may have been mistaken when he claimed “all art is quite useless”. A new use for art has been emerging in recent years, and it may be the most pragmatic of all – as a solid investment. In a time when stock markets are sinking, debts are rising and the looming threat of double-dip recession cannot be entirely eliminated, the art market still sporadically dazzles with record-breaking profits. The unique economic buoyancy of art has long caught the eye of not just aesthetes, but also discerning investors.

Art now falls under the category of the "SWAG" asset. The term, coined by analyst Joe Roseman of Investment Week denotes "alternate investments" which manage to defy economic gravity – namely silver, wine, art and gold.

As well as being decidedly sexier than the FTSE 100, the trend of investing in luxury assets makes a lot of economic common sense. SWAGs often outperform other equities in times of economic downturn for several logical reasons. Firstly, they benefit from the uniquely profitable principle of "scarcity economics" (their value is related to their rarity). Secondly, in an unsteady market, people are drawn to stability, and all the SWAG assets are durable – they have a historical precedence of desirability and can be bought and stored almost indefinitely. Lastly, as their returns are not related to the patterns of the stock market, they add a sensible diversity to any portfolio, the literal asset equivalent of not keeping all your eggs in one basket.

So, we’ve all been there - you’ve got a few spare million in the savings account and you can’t decide whether to invest in the Damien Hirst or the Château Lafite. Luckily, help is at hand. The art market’s unique ability to maintain a bubble of prosperity amidst a global recession has given rise to a new type of business – the art investment advisor.

Businesses of this sort were virtually unheard of a decade ago, and yet the demand  for art purely as an investment has seen a proliferation in recent years. As well as increasing numbers of private banks offering advisory services to their clients, specialist companies such as Fine Art Wealth Management and The Art Investor exist to assist buyers on making choices for bespoke portfolios which can maximise returns. Perhaps most significant in this field, however, is The Fine Art Fund. Set up just over a decade ago by Philip Hoffman, this was the first business of its type to invest in art as an asset. Currently, they manage more than $150m of assets and achieved a net annual return of 6.34 per cent over the past eight years.

Hoffman recently told the Sunday Times, “In the old days people invested in bonds, stocks and cash, and now they’re investing in ten different subject headings and art is just one of them ... People don’t look at their gold bars and, in some cases, they treat art in the same way.”

The rise of these businesses is necessary because the unregulated nature of the art market means that it still straddles an awkward line between solid economic sense and a frantic, wild gamble. On one hand, there are plenty of promising statistics: in 2011, the Financial Times reported that the art market made an 11 per cent return to its investors, a frantic outstripping of stock market return. This year, sales have been promising, with impressive prices achieved at Art Basel in June, and there is a wealth of evidence that the top end of the market has been immune to the turbulence underneath it. In fact, over half of the 20 most expensive auction sales of all time have been completed since 2008, indicating an economic buoyancy which overcomes even the recession.

So far, so lucrative. Yet, the mechanics of the art economy are governed by strange, volatile forces which means that it is never a safe bet. Charles Saatchi himself noted “Art is no investment unless you get very, very lucky” in his 2009 book My Name is Charles Saatchi and I am an Artaholic. In many ways the art market is an economist’s worst nightmare. It is wholly speculative and subjective, and therefore constitutionally unpredictable. The valuation of contemporary art, in particular, is based on a collection of changeable and changing opinions. It is constantly affected by external circumstances, and trends are capable of crashing out of fashion just as swiftly as they crashed it. Additionally, it is fundamentally impossible to confirm the value of the market as a whole. Private sales comprise approximately 75 per cent of the total market, and these are almost always undisclosed. “The art market is the most illiquid, opaque market in the world,” explained Jeff Rabin, quoted in The Art Newspaper. Given this, manoeuvring within it is always going to be a guessing game.

Other industries have, too, sprung up in reaction to the demand of fine-art investment, notably the specialist storage port. Investment art is, emphatically, not bought to be hung on the wall. Instead, collectors are increasingly storing their assets in state-of-the-art warehouses. Christies are currently expanding their "Fine Art Storage Service" due to increased demand, and new ports are due to open in Singapore and Luxenbourg, adding to existing onces in Geneva. These large-scale warehouses offer highly regulated storage controls with humidity and light protection as well as extensive on-site security. They also have a notably appeal to the money-minded collector in that they allow the temporary postponement of VAT and customs duty payments.

The implications of this are vast. Not only with regards to the valuation of art, but with an entire overhaul of its purpose. Art bought as an asset and stored, indefinitely in a warehouse, far from the damaging light of day denotes a new mode of art ownership – one where the object d’art is reduced to a purely monetary transaction.

“It’s a depressing thought,” comments Connie Viney, a London-based artist who regularly exhibits at The Vyner Street Gallery, “Just recently there was the news that Sotheby’s have once again broken their auction record by selling a Rothko for £47.3m. By all accounts, it seems that that price will just increase once again next time it’s sold. With sums like that, how can people think of art becoming anything but a get-rich-quick scheme?”

Is this the real status of art in today's world? Elite, out-priced, stored out of site and endlessly circulated in a micro-economy closed off to all but the super-wealthy? "Art for art’s sake" is a 19th century concept. "Art for the people", too, is becoming swiftly outdated. The motto for our times, it seems, is "Art for the 1 per cent".

Auctioneers place bids during the Damien Hirst's Beautiful Inside My Head Forever, at Sotheby's in 2008. (Photo by Daniel Berehulak/Getty Images)

Kamila Kocialkowska is a freelance journalist based in London.

@ms_kamila_k

 

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Okja begins as a buddy flick – but ends up in the slaughterhouse

Korean director Bong Joon-ho works with British co-writer Jon Ronson on this tale of genetically engineered superpigs.

If Studio Ghibli, the Japanese animation studio responsible for Spirited Away, were to branch out into live action, the result might be something like Okja – at least in part. It’s the tale of a genetically engineered breed of waddling grey superpigs, not so much porcine in appearance as manatee or hippo-like, created by the twitchy, imperious CEO of a multinational corporation, Lucy Mirando (Tilda Swinton), in the hope of solving a global food shortage.

Each of these docile beasts is despatched to a different corner of the planet to be reared. The enormous Okja grows up in rural Korea, gambolling in the fields with her young companion, Mija (Ahn Seo-hyun).

Okja is no dumb animal – she saves the child from falling off a cliff by using a rope to improvise a sophisticated pulley system. She should be working in crisis management, not ending up on someone’s fork. But eventually the day comes when Mirando’s representatives arrive to claim their several thousand pounds of flesh.

The early scenes borrow the leisurely rhythms of Mija’s idyllic days with Okja; she snoozes on the beast’s vast belly, softly rising and falling in time with her pet’s breathing. Yet once she follows the kidnapped creature to Seoul, where they are taken in by a band of animal rights activists, the film lurches from one style to another. What begins as a tranquil buddy movie finishes up in the blood-soaked slaughterhouse where Okja is due to end her days; it’s as though My Neighbour Totoro had morphed into Fast Food Nation.

The film’s Korean director, Bong Joon-ho, and his British co-writer, Jon Ronson, present viewers with a transaction that reflects the ethical and ecological implications of the story.

We can have our heart-warming tale of the bond between human and animal, but only if we accept also those parts of the plot which demystify that relationship and take it to its industrialised extreme. It’s a bold strategy that has worked before for this film-maker – in The Host and Snowpiercer he used the genres of horror and action, respectively, to smuggle through political and environmental messages.

But Okja risks falling between two stools. Young children who might enjoy the first third (and can see Okja on Netflix the very day it is released in cinemas, easily bypassing the 15 certificate) would be alternately bored and traumatised by the rest of it. Conversely, adults will have an awful lot of whimsy to wade through before reaching the meat of the movie.

There are compensations. The film is sumptuously designed by Lee Ha-jun and Kevin Thompson, and crisply shot by Darius Khondji. Swinton, who played the villain in Snowpiercer as a grotesque northern schoolmarm with oversized gnashers, puts in the distorting dentures once again in Okja as both Lucy and her sister, Nancy, with whom she is locked in an irresolvable rivalry. Lucy is bleached (pink skin, platinum hair, white robes) to the point of invisibility, whereas Nancy is a harrumphing Penelope Keith type in a quilted jacket.

Other capable actors are undone by the unreasonable demands placed on them. Shirley Henderson, as Lucy’s assistant, has been directed to talk at comically high speed for want of any actual funny dialogue, and Paul Dano would be more plausible as a winsome animal rights activist if he weren’t leading the Animal Liberation Front. The group’s portrayal here as a group of touchy-feely flower children (“This is a non-lethal chokehold, OK?” one member says, as he disables a security guard) is laughable.

But no one comes out of Okja quite as badly as Jake Gyllenhaal in the role of Dr Johnny Wilcox, a wacky nature TV presenter who is like Steve Irwin trapped in Timmy Mallett’s body. The film is at its most wrong-headed in scenes where Dr Johnny, left alone with Okja, first forces her to mate with another superpig (a pointless episode that serves no plot function) and then tortures her.

It’s that risky trade-off again: enjoy the knockabout chase sequence in which Okja fires turds at her adversaries, and later you must endure the darker side of the same narrative. It will be a forgiving audience indeed that doesn’t recoil from this approach, which is too much stick and not enough carrot.

Ryan Gilbey is the New Statesman's film critic. He is also the author of It Don't Worry Me (Faber), about 1970s US cinema, and a study of Groundhog Day in the "Modern Classics" series (BFI Publishing). He was named reviewer of the year in the 2007 Press Gazette awards.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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