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Investing with Art Futures Group

Art cements itself as one of Hong Kong’s preferred alternative investment assets.

By SMART Expo, May 9 2019


Sinking-Floating-No.-1 by Wang Xiao Bo

Sinking-Floating-No.-1 by Wang Xiao Bo

Over the course of approximately the last decade, fine art has officially become a “thing” in Hong Kong. Which is not to say art didn’t have its place before that—vanguard galleries Para/Site Art Space and the Cattle Depot Artists Village are just two that were actively promoting local and international art and artists long before that. But the increasing awareness of art as a pleasurable lifestyle element as well as a viable investment has raised its profile. Art may never replace property as the SAR’s preferred asset, but it can certainly enhance a portfolio. And it’s easier than ever to do.

Awakening
It could be argued Hong Kong’s position as an art hub stretches back to at least Art Walk, the annual charity walk that led participants along a path with stops at most of the city’s (then) independent galleries in and around Hollywood Road. Later came Art HK 08, and eventually the PMQ, SCAD’s Hong Kong campus, Art Basel and Art Central. There’s been no looking back since. In fact, 2018’s Art Basel set a high water mark for the fair when Microsoft co-founder Paul Allen sold Willem de Kooning’s Untitled XII from his private collection for US$35 million. But it hasn’t been all big-ticket pieces and superstar painters. The Affordable Art Fair has contributed to making art more accessible to all. In addition to making it easier, “it certainly makes our job more interesting, as the range of enquires become more international,” begins Jeremy Kasler, CEO of Art Futures Group, a China-focused art investment and leasing broker.

Jeremy Kasler, CEO of Art Futures Group

Jeremy Kasler, CEO of Art Futures Group

All those high-profile art events make investing in Hong Kong as wise as picking up an emerging oil painter in London or New York. “International events such as Art Basel help to raise the profile of Hong Kong as an art hub,” theorises Kasler, referring to Art Basel as well as the satellite events that have sprung up around it (like Art Central) to create Art Week. “For one week Hong Kong is the worldwide focus for the international art community and even though most of the people taking part leave Hong Kong after the event, this has a lasting impact on the way Hong Kong is perceived in the art world. Hong Kong is important in that sense because it is a meeting place for both industry people and buyers from the east and west. And people tend to trust the provenance of art bought in Hong Kong.” And they are buying. In 2016 the global art market was valued at US$56.6 billion, according to Art Basel and UBS’s 2017 Global Art Market Report.

Sinking-Floating-No.-10 by Wang Xiao Bao

Sinking-Floating-No.-10 by Wang Xiao Bao

Investing
Unlike property or stocks, art is something that enhances a portfolio, and is often something to be enjoyed, such as wine, vintage cars, and classic Hollywood and sports memorabilia. “I think once you have your mainstream investments in place—stocks, property, etc.—it is time to consider investing in art. People love to invest in something they can be passionate about hence the phrase ‘investments of passion’,” says Kasler. The variety of art for sale also makes investment commitments equally varied, giving both first-time investors and savvy veterans an entry point that suits them.

“Sky-high property prices in Hong Kong have multiple effects, leading people to look for investments that have a lower entry-level [price point] and it also leads those that have invested in Hong Kong successfully to have more funds to invest, so they are more open to alternative investments.” Naturally, the question becomes one of where to start. Sotheby’s and Christie’s are well beyond most dabblers but first and foremost: like what you’re buying. Art is, well, art; a visual medium designed to be looked at and to bring pleasure. If you don’t think you can stand to look at a particular painting in your office or living room over and over and over again, it’s not the right piece. Also crucial is a thorough understanding of what you want from your art. Are you perhaps hoping for a profit years in the future, after a long relationship with a piece or are you expecting a return on your investment? Seeking professional help is recommended—even an art history major friend could steer you in the right direction—and more fiscally responsible leasing may be the way to go, especially for beginners.

Searching for Light by Wang Xiao Bo

Searching for Light by Wang Xiao Bo

“Many art investment advisors require a minimum commitment of at least HK$5 million as an initial investment,” explains Kasler. “At Art Futures Group, we look to assist people with more realistic figures to spend. Our entry level can be as low as HK$100,000, with our more blue-chip artists costing over HK$1 million.”

There are hazards to beware of, for veteran and newbies alike. Art is ripe for counterfeiting, information and provenance can be hard to come by (the work of finding it is part of the reason the big auction houses charge fat commissions), and emerging artists can go boom or bust at the whim of a fickle art “scene” (critics, gallery groups and so on). Bear in mind art as an investment is just that. “As with any investment, prices can go up as well as down. More common for an artist in a challenging time would be to see the price flatline for a period. Also, liquidity can be an issue especially for the lesser-known artists,” finishes Kasler. “Always look for artists with an established track record with the well-known auction houses, preferably based in Hong Kong.”

Photos courtesy of ©2019 Art Futures Group All Rights Reserved

Meet Art Futures Group at SMART Investment & International Property Expo, Booth C10. Hall 3G, Hong Kong Convention and Exhibition Centre, 15-16 June 2019.

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