10 Aug 2007

Factors that affect investment potential of artworks

(By Nalini S Malaviya)

The uncertainty in the art market continues, as prices remain low, sales appear to be limited and the demand seems to be affected. Irrespective of the condition of art market, as an investor one would always like to make a sound investment.

As discussed previously, the quality of a painting or any other kind of artwork is of prime importance. Even if you were to invest in a work done by a mid-level or a senior artist, unless the quality meets highest standards, the work may not appreciate substantially over time. In fact, this has also been demonstrated at some recent auctions, where paintings by senior artists failed to find a buyer. Some of the criteria that define the quality of a work are its technical perfection and uniqueness of the concept. The theme of the work and how the artist chooses to present and interpret it is a mark of his creativity and will ultimately impact his market value. For instance, a socially relevant topic presented in a contemporary style stands a better chance compared to a copy of a real-life scenario.

Its also helps to pay attention to the quality of the materials used in terms of durability, longevity and the finish of the final product. An oil or acrylic painting is more likely to appreciate compared to a watercolour or a sketch. Remember, works done on paper may require greater care and maintenance. It is always wiser to invest in a mainstream artist rather than one whose works are gimmicky or likely to be a passing fad. The condition of the painting (especially if it has changed hands many times) – creases, chipped paint, cuts and tears, obscured signature can greatly affect the price of a painting.

The past performance of the artist is generally a good indication of future price trend. The artist name or brand also plays a role in determining the price growth. It goes without saying that without an artist’s signature the artwork could be worthless. Similarly, it helps to have a provenance certificate, which will help greatly when reselling the artwork.

(Published in Financial Times)
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