Alternative Investment: Investing in art is increasingly popular - but is it better to choose work by up-and-coming artists or to play safe with famous names? Just make sure you like whatever you buy, advises Ian Whyte
The first rule of investing in art is never buy a work you do not like. While capital gain is the main aim, it is important to remember that the only dividend one gets from pictures is the pleasure derived from ownership, so one should only buy what one is prepared to live with on one's walls. This is not to say that everything you like will turn out to be profitable, but by matching your taste with good independent advice you should be able to choose works that will appreciate in value and decorate your home.
The booming economy of the past few years has led to an increase in art collection, and more recently, the failing stock market and the poor return from bank deposits has fuelled interest in art as an alternative investment. The new collectors tend to look for works which look well in their homes and at the same time are likely to appreciate in value. Most of them go for works by Irish artists unlike collectors in Britain, France or the US who tend to have more cosmopolitan tastes. This is probably because few galleries in Ireland show works by foreign artists and not many of the lots in auctions are from outside this island. The lack of a market in foreign art here tends to deter many potential investors as it means they would have to do their buying and selling overseas with the currency and logistical risks that entails.
Generally speaking, investment in art is for a long-term return, usually at least five to 10 years. Costs for the investor include commissions ranging from about 10 per cent to 50 per cent depending on price and the method of purchase or disposal.
Insurance will usually cost from 50 cent to €1 per €100 a year depending on value and security measures.
Investment in art is very much like investment in other areas. "New issues" would equate to works by young, up-and-coming artists. While these are exciting and interesting, it should be remembered that, like new issue shares, a few will bring spectacular results, some will gain moderately over many years, some will remain static in value - and some may end up worth very little.
Many of the pictures now being sold at auction were bought between 20 and 40 years ago. The returns made vary considerably. A tapestry by Louis Le Brocquy bought from the Dawson Gallery in 1972 for £1,000 made €106,000 at a Whyte's auction last year, well outpacing most other investments, including property. A Kenneth Webb painting exhibited in the Hendriks Gallery, Dublin sold for £120 in 1959 made €13,500 earlier this year, also at Whyte's. However, a pair of works by Cecil King sold for £300 in the 1960s only made €2,300 in February this year, not even keeping pace with inflation.
More recent purchases also show healthy returns such as a large John Shinnors bought for £3,000 in 1998 which made £35,000 at a De Vere's auction in 2000; a Graham Knuttel painting acquired in 1991 for £1,000 which sold for €9,000 at Whyte's in September 2002; and a Brian Ballard still life purchased for £1,000 sterling in 1996 brought €4,000 at the same auction.
A good bet is buying established artists whose works are not yet fetching astronomical prices. Names that spring to mind include Brian Bourke, William Crozier, Peter Collis, Felim Egan, Anne Madden, Sean McSweeney, Michael Mulcahy, Patrick Scott and Anita Shelbourne, just to mention a few. These can still be bought at galleries and auctions at prices (from €2,000 to €3,000 upwards) that will seem very inexpensive in years to come. Many Irish artists of the mid-20th century are rather undervalued. These include George Campbell, Gerard Dillon, Jack Hanlon, Evie Hone, Mainie Jellet, Norah McGuinness, Dan O'Neill, and Colin Middleton. Do remember that not every work - even by famous artists - is worth buying. Look for quality works produced at the artist's prime.
The "blue chips" of Irish art are still Yeats, Le Brocquy, Orpen, Hone, O'Conor, Osborne and Lavery and decent, small works by these Irish masters - available from only €10,000 to €30,000 - will always be treasured by collectors. More serious works will cost up to €2 million, which, when compared to the top artists of other countries are very reasonable.
Popular artists of the 1930s to the 1950s such as William Conor and Harry Kernoff have really taken off and show no signs of slackening in price. Their successors, Markey Robinson and Gladys Maccabe, are also doing well, and while may not be regarded in some circles as high art, there will always be a good market for pictures such as these, just as there is in England for painters such as L.S. Lowry.
Good landscape paintings by the great Ulster artists, Paul Henry, James Humbert Craig, Frank McKelvey and Maurice Canning Wilks will always be in demand. Since their deaths, in 1995 and 2001 respectively, landscapes by George Gillespie and Norman McCaig have seen gains of up to 100 per cent a year.
The English art patron, Charles Saatchi, recently predicted that the next big move will be on landscapes - his reputation of making vast profits from art would suggest his advice be taken seriously.
Less sought-after in this country but more appreciated in Britain are the 18th- and 19th-century painters. In the last year or so, however, prices in this area have hardened and this is a trend that will probably continue. With the exception of the odd spectacular sale - such as €675,000 paid last May at Christie's for a view of Dublin by 18th-century painter Joseph Tudor - the older paintings have made steady but modest growth gains. They are the "gilts" of the art market and should be considered for a balanced art portfolio.
Ian Whyte is director of Whyte's Fine Art Auctioneers & Valuers, 38 Molesworth Street, Dublin 2.
