Art Investment

The unpredictable nature of the worldwide investment market over the past decade has lead many international investors to discover the benefits of portfolio diversification as a means to reduce risk and improve returns. An increasing diversification trend, as noted in the 2007 World Wealth Report, is towards alternative asset classes. Many high net worth and wealthy investors are turning to art as an alternative investment vehicle for diversifying their portfolios “given the low correlation between art prices and the market cyclicality of stocks, bonds and real estate.”

This worldwide analysis strongly applies to the Australian market where a noticeable and growing trend of investors adding Australian art to their portfolios has emerged. A key indicator of this trend is the Australian Art Auction Sales which records a leap from $33.5 million in total sales in 1997 to over $150 million in total sales in 2007 (Australian Art Sales Digest).

The type of people investing in art is varied, spanning from those in the finance industry, to property investors or developers, and art collectors looking to invest in art to generate returns. Many buyers are new to the art investment market and actively seek information on how to enter the market, which are the investment quality artworks and which investment strategy to employ when buying Australian art.

Galleries Direct – a leading provider of investment quality art and art advisory services in Australia recommends a balanced portfolio approach. “Treat art investment a bit like property investment, take a long term view and seek out quality to build a portfolio of assets, and use specialists as advisors in your search and selection processes.” said Cameron Hall – the Director of the company, with an Economics and MBA background.

This unique art gallery has adapted to the changing needs of the art investment market by offering a range of art investment strategies for their clients – one of which includes the popular invest and rent option, where clients earn a rental return as their art is hung in businesses paying rental for the privilege.

The gallery’s invest and rent option is where the art buyer purchases an investment savvy art work – based on the recommendations of one of the expert art advisors. The artwork then goes to the corporate rental program where an 8% per year return is underwritten for two years. It is structured so that the buyer earns the annual rental return on the artwork over the two year term in addition to the potential capital appreciation of the artwork in the art market. This art investment strategy is particularly suitable to international investors or business owners who want to invest in art but are unsure about storage.

Internationally, investors are taking a strong interest in Australian art as an alternative investment, as the major cities pioneering art such as Paris, New York and Dubai, promote unique Australian art at the global forefront. Some of these Australian artists include Ningurra Naparrula, Judy Watson Napangardi, and Gloria Petyarre. Furthermore, the magnificent hand crafted artworks by these artists have achieved outstanding growth rates in the art investment arena.

Like any market, the art investment market carries risk which is why any first time art investor should seek practical advice from an art gallery that can provide tailored art purchasing strategies and expert industry insight.

Information Supplied by:

            Galleries Direct

               129 Devonshire Street, SURRY HILLS NSW 2010

            Phone: +61 2 8823 4300

            Email: info@galleriesdirect.com