Written by Benjamin Ng, Founder of Barnadas Huang

Whether you are new to art collecting or a seasoned collector, the value of the piece you are thinking of acquiring will certainly be a key consideration. So, how do you tell if the artwork is a good investment? One of the founders of Barnadas Huang, Benjamin Ng, provides a quick outline of three factors you should look at before making a purchase.

One of the main questions we always receive before a client purchases a painting is whether it is a good investment. It’s not always possible to tell whether a painting will definitely be a good investment in 10 years – so you might as well purchase a piece you love and feel a connection to. However, here are some key indicators should you wish to hedge your bets:

1. How old is the artist?

The age of an artist matters: a young artist with a high level of competency has more time to hone his ability. As an artist develops his style, his later pieces tend to become more valuable as he becomes more technically adept and the demand for his pieces increases. Knowing this, collectors sometimes try to “get in early” with the right piece and at a good price. On the other hand, the younger an artist, the more difficult it is to predict his trajectory over time.

If you purchase a piece by an older artist in his 70s with very stable prices, it is more likely that his prices will not fluctuate wildly in the market. But the potential return on investment may be lowered since, at that age, the quality of the artist’s works would have stabilised and his prices are unlikely to double or triple.

A good compromise might be a mid-career artist in his 40s or 50s, whose works have entered certain museums or public collections. An artist at that stage has honed his skill and been tested by the market. He has also demonstrated firm commitment to his career trajectory, which is important if you are buying for investment. With such an artist, you have the benefit of viewing the increase of his prices year-on-year, and still stand a decent chance of having the value of his paintings appreciate. For example, Gerhard Richter, one of the top contemporary artists in the world, sold his work for 8,000 Euros 30 years ago, when he was in his 50s. Now, his pieces easily command at least six figures in the market!

2. Which gallery is the artist represented by?

The gallery plays an important part in the investment value of an artist’s works. A good gallery assists the artist to understand the commercial art market and provides mentorship and guidance to the artist in his career. An influential gallery is able to place an artist’s works with good private and public collectors: this boosts the artist’s curriculum vitae, and lays the ground for further acquisitions by other reputable collections.

Also, the closer the gallery’s ties with the artist, the better the gallery’s chances to secure the best pieces by an artist. Artists generally have their works divided into different series: these distinctions may be thematic, or based on certain periods in the artist’s life, or both. For example, Picasso’s works from his Rose Period (1904 to 1906) fetch the highest prices at auction houses today. A good gallery is able to identify the artist’s best pieces, which increases the chances that the artwork will increase in value over time.

3. How much has the artist’s works been auctioned for?

There are a few auction houses that matter in the art industry: Sotheby’s, Christie’s, Poly and Phillips. Lasarati, Henry Butcher and Masterpiece Auctions are auction houses to look at for South East Asian artists.

However, as the common saying goes, one only puts up an artwork for auction for one of the three Ds: debt, death or divorce. In general, galleries generally do not approach an auction house until there is a very strong secondary market (i.e. resale market) for the artist’s works since auctioning an artist’s works prematurely in a market with insufficient demand may lead to lower auction prices or unsold lots.

It should be noted that auction prices only indicate the highest or lowest prices an artist’s work has been auctioned for, but do not necessarily reflect the current market prices of an artist. For this reason, oil paintings by Pablo Picasso have auctioned for as low as 1,148 Euros in September 2009, to as high as 2,375,000 Euros in 2011!

Conclusion

While these tips would help you in your art collecting journey, do remember that nobody can ever guarantee the investment value of a piece. There is a reason we always tell our clients that they must first love the art they purchase: art is so much more than a numerical value, and it is tragic to see the hard work of an artist reduced to mere dollars and cents because, at the end of the day, it is the connection between the collector and the piece that matters most.