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The art of investing in art

From how to start to low-risk options, a guideline to navigating this creative asset class

If the stock market is a turbulent maelstrom, art is a sea of calm.

There’s plenty of scope for investment within the men’s luxury lifestyle space in the UAE. Many may choose watches, jewellery, or designer accessories to start their investment journeys. Sometimes, channelling resources into the property market often yields lucrative and reliable returns, while risk-takers might choose the excitement of the stock market.

But what of investment in art? Of course, creative investments have an air of subjectivity. But there’s an easy way to dip your toe into the art scene.

There exists a basic yet important difference between spending and investing. When we make an investment, we do so with the expectation that the commodity’s value will increase in the future. When we spend on an item, it’s for sheer momentary pleasure, and future value doesn’t matter so much.

This premise holds true when you are looking to buy artwork as an investment. While it’s important to choose art that you actually appreciate on an aesthetic level, give due consideration to its value over time. Invest, rather than spend.

When embarking on the artistic investment journey, there’s absolutely no requirement to go for a Picasso when investing in art. Unless budget permits, of course, but for mere mortals the artistic investment journey depends on thorough planning, realistic expectations and creative thinking.

Like any new category of investment, it’s a good idea to start with a small, manageable budget. Don’t invest any more than you’re prepared to lose.

As you diversify your portfolio, you’ll form buffers that can absorb temporary downturns in the value of your investments. If the stock market is a turbulent maelstrom, art is a sea of calm. Artistic investments tend to not meander in value as often as other categories; you can be confident that, even if a piece of artwork temporarily adjusts your portfolio’s value downward, the long-term prospects are favourable. Your portfolio will therefore only need to absorb a loss for a brief period, while the value naturally settles and recalibrates to a trend of sustained growth.

Select a budget that your current portfolio can comfortably manage. A modest investment can help you to decide whether artwork is a good fit for your long-term wealth strategy, without having to gamble substantial amounts.

If the stock market is a turbulent maelstrom, art is a sea of calm.

Art is subjective, and it could be argued that managing an investment portfolio requires a creative flair. But it always helps to be informed. It may be tempting to walk straight into a gallery, find a painting you can tolerate, part ways with your cash, and wait for your investment to grow.

Unfortunately, it’s not quite that easy. Consider how you would go about investing in a company. You would show diligence in researching the market, current trends, future projections and rising stars. The same principle applies to investment in art. Find out what the market is saying, speak with the experts, and spend time as an observer in the art scene before you commit.

You’ll likely find that original pieces by well-known artists are outside of your budget, while affordable pieces by emerging artists don’t hold an optimal projection of long-term value. The challenge is to find a compromise. This is where you can begin to think outside of the box.

Investment is all about balancing risk and reward. For new entrants to the art market, there’s an accessible, low-risk alternative to original pieces. Serigraphs, lithographs and digital prints are three different way to create copies of original masterpieces. Don’t let the word put you off — copies are not fraudulent. Rather, they are authentic replicas that are bought and sold through studios and auction houses, just like original work.

While you may choose to buy authentic digital prints of artwork for decoration, note that their abundance means they rarely hold future value. Lithographs are an improvement, but still do not present an ideal investment opportunity.

Serigraphs are your best bet. They’re created using a precise silk screen technique, with each layer given time to dry and mature. As the colour profile builds, a little at a time, a new version of the original is slowly revealed. The process can take six months to complete; as such, the end product is a high-quality replica — the closest form of print to the original.

Serigraphs hold value not only due to quality, but direct involvement of the original artist, who oversees the entire process. Most are signed and individually numbered, creating scarcity and so, value — which usually increases over time.

When considering artistic investment, it’s not unreasonable to balk at the idea of replicas. However, high-quality serigraphs could be the ideal medium with which to test the waters. Good luck!

The writer is executive director — investments and strategy at investment solutions provider Century Financial

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