June 2010

Shares are volatile, property bubbles burst, but when it comes to art the investment is in the eye of the beholder. Sidney Nolan’s First Class Marksman recently became the most expensive Australian painting when it was sold for $5.4 million, but who knows what will break the record next. We speak with a local gallery owner, a CEO Institute exec and Xstrata Copper’s Sue Sara about the benefits of supporting creativity.

GLOBAL art sales fell significantly last year with New York heavyweights Christie’s and Sotheby’s falling around 30 per cent, but in Australia the trends have told a very different story.

Phillip Bacon’s namesake gallery in Fortitude Valley brushed international trends aside in 2009 with record sales and sell-out exhibitions.

“We had for instance a Jeffrey Smart exhibition which grossed over $10 million and had individual sales around the million dollar mark,” he says.

“The market has been really resilient through the global financial crisis in Australia, and while internationally the amount of sales were down around 50 per cent, the upper end of the market more than held its prices and in fact increased.

“I was surprised that we didn’t get more distressed sales, but what happened was that people were hanging on to their art because they felt they wouldn’t get a good price.”

Bacon points to the Art Market Handbook that shows art has outperformed the equity market over the long-term trend.

“You compare the art market index with the all ordinaries index and up until 2007 the all ords came in at 24,500, while the art market came in at 34,500.

“But in a way it’s an inexact science as the statisticians can only track public sales.”

As an investment class Bacon says you’ve got to love art if you want to buy it, but there are ways to find established art with upward value and potential growth markets with emerging artists.

“Do you invest in art? Only if you have an interest in it, because what’s the point of buying art if you’re going to put it away and hope it goes up in value? You may as well be buying gold.

“Go to the Queensland Art Gallery, go to local galleries, see what market appeals and talk to as many people as you can.

“If there was a magic formula we’d all be just supplying the same thing, but if they’re an emerging artist you can often smell the success, if they’re entered in prizes, win awards and are included in curated shows by galleries it’s always a good sign.”

His thoughts are echoed by CEO Institute Queensland chief executive Sue Forrester who gets a buzz out of supporting local artists, but isn’t so interested in the bottom line.

“When it comes to a passion for art and investing in art I don’t support speculating for profit, as it’s different to the share market – it’s very irrational as an investment because it’s not based on hard data.”

“I like to support emerging artists, I get a buzz from going to small local art galleries because it’s great to see the arts community, and until they make it they’re the ones living off bread and cheese.

“But if I wanted to treat art like an investment I’d treat it like any other investment like shares, debentures, or bonds – you do your research, you speak to the experts and there’s some great magazines to be found in newsagents too.”

With a keen interest in abstract modernism, Forrester says there is no such thing as ‘good’ or ‘bad’ art, just what you like.

“Collecting art is certainly more driven by hearts and not by the head and certainly not by the bank account.

“Whilst they have great works at more glamorous exhibitions, it’s not about being seen wining and dining and talking about how much your collection is worth – I’d rather be drinking a cheap beer on the pavement with a local artist.”

With a private collection with her husband that includes works from Graham Fransella, Roy Jackson and Cynthia Breusch, Forrester says art is uplifting and inspires her when she walks past it.

She believes the same principle applies to business too.

“I personally think and know that people come to work for their career and to be stimulated, but people are social animals and the environment they work in is very important.

“I think art should stimulate, excite and challenge the workforce, and most big corporates do have money they set aside for that.”

Favourite haunts are Doggett Street Studio and Heiser Gallery in Fortitude Valley.

Investing in the community

With its copper business based in Brisbane, Swiss mining company Xstrata has made its share of fortunes in Queensland, and now aims to give back to the community in several ways including art.

Through the Xstrata Community Partnership Program Queensland (XCPPQ), the company established a partnership with the Queensland Art Gallery Foundation to acquire contemporary Queensland artworks for the gallery’s permanent collection.

XCPPQ chair Sue Sara says the acquisition of the contemporary pieces is important to ensure their availability for Queensland communities to enjoy now and into the future.

“Through the XCPPQ partnership the Gallery has acquired pieces by some admired Queensland artists including Tracey Moffatt, Lisa Adams, Billy Missi, Lincoln Austin, and most recently by the artists of the Girringun Aboriginal Corporation,” she says.

“At Xstrata we believe communities should benefit from our operations, both in the short and long term, which is why our copper, coal and zinc businesses have invested more than $30 million on community partnerships throughout the Queensland.

“Our partners are organisations in the areas of health, education, social and community development, environment and arts and culture, and they are delivering significant benefits to Queensland communities.”

The Brisbane Convention and Exhibition Centre has also recently acquired $7 million worth of Indigenous art from World Expo 88 for its public gallery.

But when it comes to a safe investment in a purely financial sense, Phillip Bacon is cautious of Aboriginal artworks as well as sculptures.

“You need to have rarity value, but there’s not much rarity value in Aboriginal art as there’s so much of it being produced,” he says.

“Sculptures are difficult because most people can’t house them, so the safest is when an artist is towards the end of their career, their works have always been sought after, they’re output has diminished or they’re dead.”

That last tip might be a depressing reality, but the recent Nolan sale and the US$106 million sale of Pablo Picasso’s Nude, Green Leaves and Bust last month are both testament to the fact.

Bacon says as a rule of the thumb the cut off point where an interest in art becomes a more serious investment is $10,000 and upwards, but warns there are transactions costs and that like any investment art may not always be safe.

“The problem is that it’s easier to buy paintings of quality than it is to sell them – remember there’s a cost getting in and out, as the art industry works on a commission basis.”

“Another trend is that people have been buying art with their superannuation, but actually the upcoming Cooper Review has recommended against that.

“We don’t recommend to buy art with superannuation either, as the rules can be a bit messy.”

That is, unless you have no intention to ever sell, like Sue Forrester.

“I wouldn’t sell even if it did appreciate – art can be associated with memories, some good some bad, but I would find other assets to liquidate before my art collection.”

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