| PERSONAL FINANCE
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Investment on the wall
Written by: Petr Vykoukal (www.penize.cz)
Photo by: Jan Vágner (2,3), Hana Hamplová (1)
If the word investment makes you think
only of shares, bonds or equity funds, you are missing many opportunities.
Shrewdly purchased artistic work can generate more money for you
than securities.
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Iva Nesvadbová |
At the present time, art is not often included among investments
in this country. The reason is simple: while trading on the exchange
is understandable and can be read about in the newspaper or consulted
with a broker, collecting art is not so easy. It is necessary to
be well-oriented with the market to be successful at investing in
art. However, efforts exerted will certainly provide a good return,
as yields can reach tens of percent a year.
Those interested in investing are advised to go to galleries and
exhibitions (even at state institutions) and to visit several auctions.
The older auction catalogues can help in getting acquainted with
the development of prices. Iva Nesvadbová of the Gambit gallery
recommends spending half a year monitoring the market, after which
the potential art investor should select a few galleries that best
suit him. Since you will probably purchase works you wish to display
at home, the most important thing is that you like them. Start small
- a graphic art piece can cost from six to thirty thousand crowns.
If you wish to invest more, or once you get a better feel for the
market, you can choose more expensive paintings that will set you
back anywhere from twenty thousand up to hundreds of thousands of
crowns. Sculptures are the most expensive artwork, starting from
fifty thousand and pushing upwards to millions of crowns.
Galleries and auction houses are the best places to make a purchase.
Galleries often represent several artists, sometimes on an exclusive
basis. If you are interested in the work of a particular artist,
you should begin in "his" gallery. Auctions are another
option. They are mainly held in the spring and autumn and are usually
focused on Czech modern art or art from the 19th century. Contemporary
art seldom lacks the potential to fetch enough money to be the focus
of an entire auction.
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Jan Nízký |
Up to 30% a year, risks attached
With each investment, a suitable combination of yields, risk and
liquidity is sought. Art needs time to increase in value. According
to Nesvadbová, the shortest possible time horizon is five years.
During this time, a well-chosen work can reach a growth in value
of one hundred to three hundred percent (15 to 30 percent per year).
David Kmínek, of the Behémót gallery, cites the paintings of Martin
Mainer as an example. In the mid nineties, they sold for CZK 50,000
(for a mid-sized painting) and today they are worth hundreds of
thousands of crowns. But don't forget the reverse side of investing
- similar to other investments, the higher the yield, the higher
the risk. Contemporary art promises the highest yields. However,
the talented and currently fashionable artists can fade into oblivion
within a couple years, so the resulting yield can also be negative.
If you prefer more conservative investments, choose verified artists,
the best being those that are dead. True, the yields will not be
extremely high, but it will certainly be interesting and less of
a risk. Another way to reduce the risk is diversification - purchasing
many works from various artists or, if you are collecting only one
artist's work, from several creative periods.
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David Kmínek |
As with shares or funds, it is important with art to bet on the
right horse. Determining this is the difficult question. According
to Kmínek, one indicator could be whether the author is represented
in the National Gallery or if he was awarded the Chalupecký (a prestigious
award for young artists under 35), or if the institutions (such
as banks) are buying his work. In the future, estimates and recommendations
by experts should serve as a kind of guide. The Behémót gallery
asked six gallery owners, as well as artists and critics, to estimate
the risks and yields for twelve artists it represents. The most
favorable evaluation went to Adriena Šimotová. According to evaluators,
the risks associated with her work were virtually none and expected
yields were around 150% after five years and almost 500% after fifteen.
According to Nesvadbová, there are several other artists in this
country with the same potential as Adriena Šimotová, including Karel
Nepraš, Bedřich Dlouhý and Jiří Sopko.
When seeking a suitable piece of art, the opinion of the gallery
owner can be of help. A gallery owner should be a person you can
trust, and let the recommendations of friends guide you as well.
Besides trust, the important thing is that the works of the artists
represented by the galleries appeal to you. If you purchase a work
of art, you probably won't toss it in the basement, you'll want
to exhibit it at home or in the office.
| Antiques
- an investment in time
IN THE BEGINNING, antiques require as much research
as with art. Jan Nízký of the Dorotheum auction house
suggests visiting shops and auctions and monitoring
the prices. He recommends the auction catalogues from
previous auctions containing final prices as an excellent
guide. While these prices reflect true market prices,
items in shops are frequently inflated.
The economic situation of the country strongly influences
prices, too. At the beginning of the nineties, when
the Czechs were afraid of inflation and the devaluation
of the crown, there was much interest in antiques
and gold. The price of gold coins reached a level
that has not been reached since.
Nízký considers paintings, sculptures and fine porcelain
a good investment. One shouldn't expect high growth
in value, they are just good protection against inflation.
In terms of risk and liquidity, the best idea is to
purchase top-quality items, as they are much easier
to sell than average pieces.
Fashion trends and exhibitions can influence prices,
too. For example, an exhibition of paintings by Josef
Lada substantially increased interest in his work.
If you are planning the sale of artwork sometime soon,
find out first if there will be any large exhibitions
of the artist, as the price of your item could substantially
increase after such an event. |
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Don't be rash when selling
A sale should be considered as carefully as a purchase. In the
case of artists who were not too productive but are still in demand,
sales can be realized within a few days. However, you could also
end up waiting an entire year for a buyer. So plan your financial
needs well ahead of time, and request the sale of your investment
by a gallery (or auction house) at the appropriate time. Auction
houses and galleries which represent a particular artist are the
best way to get the money, as they will know many interested collectors
and the sale can be concluded within a very short period of time.
While collecting art in advanced countries is a normal practice
among the middle class, until recently it was only a hobby of intellectuals
here. However, this fact can mean real potential for future growth.
The good economic situation and the necessity "to have something
on the wall", preferably from a well-known artist, can generate
immense demand, putting pressure on value growth. This pressure
could be similar to that which occurred after the November revolution.
Many works that were traded for thousands and tens of thousands
of crowns in the mid-eighties are today ten times more expensive.
The return of institutions could also have a positive influence
on the market. In the first half of the nineties, banks were significant
buyers; they helped to maintain the market and many galleries survived
on their money alone. Then the break came. Banks and other institutions
deserted the market and have not yet returned. When their interest
is sparked again, it will contribute to the development of the market,
to an increase in prices, and so to a growth in the value of your
investment.
| Auction
houses online
Dorotheum - www.dorotheum.cz
· Behémót - www.behemot.cz
· Meissner Neumann - www.meissner.cz
· Antikva Nova Praga - www.anp.cz
· Forum 9 / 11 - www.forum9-11.com
· Jiří Švestka - www.jirisvestka.com
· Bayer & Bayer - www.bayer.cz
Auctions planned until the
end of 2002
Dorotheum: 12. 10. - plastic arts, 30. 11. - antiques and
art auction
Meisner Neumann: 28. 9. - art and antiques, 9. listopadu -
plastic arts, 14. 12. - art and antiques
Antikva Nova Praga: 24. 9. 2002 - art and antiques
Forum 9 / 11: 14. 9. - plastic arts. |
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