Should you invest in art and antiques?
The answer to this question is of course, from my ever so slightly conflicted position, yes, but not for the reasons you may be thinking. Unless you are a professional investor you should not buy paintings, objects, furniture or items for any other reason than because you like them. You should not set out to buy things with the express goal of selling them for a profit at some time in the future because this may never happen. The investment you make is an investment in your own enjoyment of life and your surroundings. There is little point in living in an environment filled with things you do not enjoy simply because you hope they will make you money. You may get lucky and spot the next big thing before the rest of the market piles in and forces up prices. Buying for enjoyment means you donít need to concern yourself with such matters. If and when you come to sell, if you get your money back or even a profit then this should be considered as a bonus rather than an expectation.
Another factor which drives demand is the usability of the item in question. A prime example of this would be the classic Georgian mahogany bureau. A handsome example in the year 2000 might have cost you £2000. With the advent of computers, tablets, mobile phones and email no one needs a bureau in which to keep their writing paper, envelopes, stamps or to store the current yearís bills and paperwork. Technology has killed demand and consequently a fine example could now be bought for perhaps £300, exceptional value for money and no less attractive than when it was worth six times as much. A reduction in room sizes has reduced demand for larger items of furniture as has the desire for fitted kitchens and bedrooms.
Many of the above negatives are in fact positives for people interested in furnishing with antiques because it means they can own beautiful, interesting, robust and functional pieces at prices that make them accessible to everybody.
Supply and demand
The above examples demonstrate how changes in demand have affected the price of cheaper and mid-range items which were purchased by householders who never expected them to lose value. The reduction in demand has coincided with an increase in supply as fewer pieces inherited by younger generations are retained in the family.
Where prices are likely to take off is where demand is high and supply is limited. This will really only apply to desirable items where rarity is the key to success. Works of art which are unique and canít be replicated should always prove a better investment, we canít say for sure but by buying the best you can afford at this end of the market you will give yourself a much better chance of success.
As the worldís wealthiest people force the prices of the rarest and most desirable artworks ever higher, the second tier of works is pulled upwards behind it. As investors can no longer afford the most expensive items they target the second tier of the market and some of these artists have seen their works rise in value from £10,000 to £100,000 in just a few years. This second tier, if you pick the right artist, is where significant gains could be made in the next decade. Of course when works fall out of favour prices can plummet.
In the early century the works of the most famous pre-Raphaelite artists such as Edward Burne Jones and Dante Rossetti were so unpopular they were virtually being given away. The Mander family furnished their house, Wightwick Manor, with these works and for a small outlay now have a collection, 100 years later, worth tens of millions. However the average investor looking for a medium term gain doesnít have 100 years to wait! Furthermore, as the collection is unlikely to ever be sold it has a true value of nothing!
Few of us can however afford to invest at these levels but the same rules apply to less expensive items- donít buy damaged or heavily restored items, donít buy cheap items where you can go out and find another 500 exactly the same, always buy the best example you can afford.
Investments or possessions only have a value when they are sold, the same goes for all types of investment. Shares in a company on the stock exchange might have a "value" of £50,000 one day. The next day the company declares bankruptcy and goes into administration, the shares becoming worthless. They only ever had a value of £50,000 if you had sold them the day before!
Selling into a market where demand is high and supply is small should result in a high price. Where supply is large and demand is small you might be lucky to even sell it at all. This is where the investor is at the mercy of the market and the savvy buyer will only buy items he is sure will be easy to sell.
For us, when buying at auction, it is much better to buy lots where there is a lot of competition and prices are higher than expected. If you buy it very cheaply you are either lucky because the item was overlooked or more likely because no one else wanted it - that should ring alarm bells. Maybe buying these sorts of items will yield high returns in the future when demand picks up. Shall we look into our crystal ball to find out?!
Some antiques and certain artworks have proved to be exceptional investments over the last few years but generally at a level accessible to only very few people with significant sums at their disposal. Our advice is invest in your enjoyment of life by buying things that you like, not things that might make you money. You donít have to spend a fortune to surround yourself with things you will enjoy looking at every day and who knows, when the time comes to pass these things on to a new passionate owner, you might even come away with a profit!
Article written by Stephen Cohu for Jerseylife Magazine, July 2018.