Investing is an art. But did you know that art is also an investment and not just any investment but a top performing passion investment of 2022 according to a long running survey that tracks such things. So what are the five things you need to know about investing in art? I'm Jonathan Pearce from the Money Mind team and my guest today, Guang Zang, founder of Art Agenda, an art advisory that specializes in 20th century Asian art and Stephanie
Gee who's been collecting art for over two decades. She's also a wealth manager for ultra high net worth clients. Now, according to the annual night, Frank Luxury Investment Index, art was the top performing luxury asset providing a return of 29% last year. That means it did a lot better than mainstream investments like equities and gold. In 2022 we also recently had Southeast Asia's biggest art fair here in Singapore. So guys can we say the art world is back in business
after the pandemic? Stephanie,
the art market actually has been growing and we noticed through a recent survey done by um Art Basel together with U BS, right? They published a report which showed that during COVID, right, actually spending on art has more than doubled. So we're talking about the period from 2019 to 2020 two is growing as an interest in Singapore. We're seeing more and more collectors typically as a country matures at the beginning of uh collecting journey, people tend to support
artists in their own countries. But as they travel more and they learn more and they get more exposed, right? They start collecting artists from other countries. They expand beyond just a painting or a culture and going to potentially other mediums. I see more and more people are gaining interest. I can just see just from my own uh co-workers. They are starting their art journey in art fairs such as
affordable art fairs. So there's a growing awareness that you don't have to just have a wall that is done by your ID. You can actually put a real piece of work on the wall and that is a good sign for art markets for years to come. Art fairs and exhibitions which are traditionally a Barra meter for market activities. The state of the market, these are all back in full swing. The global art work calendar in 2023 is looking as pack as pre pandemic times now.
But numbers haven't exactly dropped during the pandemic though, you know, in person events like exhibition openings, option previews back then during the pandemic stop or they took place in very curtail formats. I say numbers haven't dropped because really during the pandemic, we saw still very passionate interest in acquiring art. People were still collecting and we saw actually the onset of
people accepting to, to acquire over digital format online. And I would say when it comes to traditional art forms, things that in general one needs to see in person, right? Art forms that are better appreciated in person, the hunger and the desire to see this uh material hasn't really
subsided at all during the pandemic. I mean, art holds up well, if anything has has grown, is this kind of desire to see these things physically and during the period of the pandemic, the absence of encountering these physical art that was very real. But now things have come back, the range of activities has returned with the pandemic. People couldn't really travel. So there was a more disposable income and more time at hand because you get less distraction.
So the collectors actually had more time to look at what art is out there and what's being produced. But on the other hand, it has also handicap travel visits to art fairs, art galleries or also practically non-existent, right? So it's actually fuel the growth of online um buying of art. That's what we observed. Uh personally, I prefer to see the art pieces. Unless I'm familiar with the artist, then I'm comfortable to just buy from a catalog or a PDF right? But most people still like to see art
in person. That's what um we've noticed also from a lot of surveys that have been published on art.
Now, what kind of advice would the two of you give to someone who is interested in collecting art? Where should one begin
and the journey as an art collector? If you're just starting out, you need to do some research, right? Speak to people. We have been collecting for a while and be mindful that their taste may not be the same as yours visit. Art galleries, go to museums, art fairs, expand your perspective and look at more artworks before you commit. And just keep in mind if you're buying a piece of art, you have to love it, it might be worthless 10 years from now and that piece of work is still
in your house. So just do it out of fashion rather than for financial consideration. And if you're going to start your journey first, try to understand yourself what appeals to you rather than what appeals to your friends. I made that mistake myself and I was influenced by more experienced collectors, but you grow into your own with time consider also how much money you're willing to spend and assume that you're not going to get any return
aside from emotional returns, right? Art does not pay dividends. So the dividend is your happiness when you see the piece of artwork. So my advice is buy what you love and appeals to you. And a little tip here try not to buy on impulse. I have now imposed a little rule on myself and I see something I like. I sleep on it for two days if I still want it after two days. Ok, I can go and
seriously consider buying. I would say one should dive straight in, you know, set aside a certain small budget to be an active player in the market, participate in it properly, buy, sell and probably make some mistakes along the way. And all of that's inevitable at times. The thing about art collecting is that it is also about the cultivation of personal taste and knowledge. And one lesser discussed aspect of art collecting is how it brings about awareness of oneself.
And the best art collections can really reflect and align one's uh beliefs and orientation as strange or as old fashioned as it sounds. When you think about art collecting, one should really begin from within knowing what one wants, makes the process of looking for art much more focused and more meaningful.
So, art collecting is a passion and it's deeply personal. But can a hobby become something that can be monetized? And how do you know when an artwork is something worth investing in?
You need to do a lot of research, read, talk to galleries, talk to art collectors, more seasoned art collectors, talk to the art advisor. Now there's the growing market. And there's a lot of art advisor that can give you a more informed opinion on what they think may be good in the future. But again, a gentle reminder, right, art pieces are all unique. So even if your artists price goes up in the auctions, it doesn't mean every single art work done by the artist goes up in value.
It would be really about trying to get a complete set of information about the work that one is uh contemplating to acquire in any sort of circumstances where there are pressure of time to make a decision, pressure from the other end of the table to close a transaction. Sometimes it doesn't allow you to acquire all the information that's necessary. So I would advise that one takes the time as
much as you can in the acquisition process. Because really if you think about it, the only person who wants you and needs you to hurry is the person across the table selling something to you. But as a buyer, as someone collecting, you wanna equip yourself with a complete information and appreciate all the complexities of, of the work of art, get
its context right before you acquire. And this way, the enjoyment of the work is heightened, I would say and yeah, I, I won't, you know, for instance, worry about missing out any artwork because again, uh taking a a larger perspective on things in the contemporary art world, the amount of art that exists today will definitely be less, less than the amount of art that exists tomorrow. In the contemporary art world, art is being generated and produced every day and there will always be choices.
So it is more important that we secure for ourselves, that kind of space to be able to think holistically about the acquisition of the world and make it a much more of a considered exercise.
So here are some practical tips. If you're looking to buy art, know what you want, do your research and take your time, like any asset prices can go in either direction. Just because a work of art by an artist fetches a high price at one auction doesn't mean that the price of all their works will go up as well. Investing in art does come with risks. So season collectors say you should start small and assume that you only get emotional returns.
Now let's talk about those risks. You mentioned the need to do your homework. But how easy is it to get information about valuations? And how do you know what's a reasonable price to pay for an artwork?
We often think about the art market uh and our market information as essentially compilation and analysis of sales uh figures, sales data. It's not wrong to think about it that way. Uh because obviously markets have to be defined uh by their size. But when it comes to the art market, there's a lot of transaction that's being handled privately. And to be perfectly clear evaluation is rather difficult to obtain in a
less than entirely transparent art market. The value of an artwork is really determined very much by comparison with sales figures that exist. But when it comes to the market with a lot of transactions being done privately, this kind of data is often times not so accessible and sometimes not entirely reliable as well,
even if one obtains them. So it's important to, to be talking to people in the know and be prepared at times to pay a little and to go out of your way to get impartial research information, other types of assets, invest or investment vehicles, the traditional stocks and bonds, right? There is a market, there's an exchange.
So it is transparent. Art is not so transparent because there are many sales channels you can buy directly from the artists, the art galleries, there's a primary market you can buy from secondary markets through auctions or uh other channels. And there's no published index to say this particular artist's work is at what price right now? Because every single work is unique as a store of value. I find
it more as an emotional value than financial value. If you buy a piece of art and the value goes up double 10 years down the road, you congratulate yourself for having made a good investment. But to me, it's more an emotional journey,
other than the cost of acquisition. Just like many other assets. There is the cost of ongoing maintenance as well. How would you advise prospective collectors to prepare for
this? A lot of categories of art and related categories like design, collectables. What really sets these assets apart from other investment class or different assets class would be the physicality of the object? When we think about something physical, we do need to think about maintenance and good upkeeping of these physical things. The first thing is really being aware that it is physical and that we need to therefore maintain it.
And when we think about maintenance of an art work, I would think of it in the same way that we think of our physical bodies, we take care of ourselves with exercise. Some people with health supplements, we go for our checkups at the doctors and as funny as sounds, it's really the same with, with artworks. Occasionally you want to get your galleries or your dealer or friend who's knowledgeable about the art to come and have a look at it. In my course of work, I discover a lot of cases where
an artwork is hanging there on the wall. People do take it for granted because it becomes part of something familiar. But things can happen in a very low key insidious way to an artwork just hung on the wall. If one doesn't take notice and take care and artwork can suffer irreparable damage. In the worst case scenario, if it isn't taken good care of, for instance, more is a big issue in our part of the world. With the relatively higher humidity
in the environments that we display our art. Sometimes the most intelligent of my clients and they are generous as well. They would ask me out for lunch or dinner at their place. I play the role of a doctor for them. I just have a quick look at the artworks. If anything is up with them, we can get it addressed as soon as possible to new collectors who are looking to venture into the art market. Just remember, there's a lot of costs involved.
We're talking about not just actually buying the artwork, the storage and if you're buying from a different country, you have to insure the shipping, you got to maintain your artwork. If you're buying works on paper, they can get moldy in our climate, even sculptures. If it's bronze, depends on whether it's treated or not, right. It might also change color, the material might change colors might fade. So there's actually a lot of risks involved. So when you go in, go in with your eyes open and
buy what you like and what you love. You never can go wrong there. I once bought a piece of artwork from a secondary market to an auction in Hong Kong that you happily bid for the piece. You think that's what you're paying for but you still have to pay your buyers commission to the auction house, right? That can easily be um 30 35% these days, right? On top of that, you still have to pay for your shipping, your insurance, the creating and the G S T when everything arrives in Singapore.
So when it arrives in Singapore, you still have to arrange for somebody to come to your home, to arrange art piece, to hang it on the wall. If it's a sculpture, you have to pay someone to make a custom, make a pedestal for you. So all those costs adds up, which I think sometimes people underestimate the cost of refurbishing could be in the hundreds of thousands depending on the artwork and how big the piece is.
And also even the simple thing when you buy a painting, sometimes it comes without a frame, you got to frame it up. Then you have to consider, do you want to frame it with, you know, museum quality frames? Make sure there's, there's no air in there is vacuum type of framing. And then do you want to put your air conditioner on, on the 24 7? Personally, I find oil paintings probably
the easiest or acrylic. You don't really have to do much, you just hang it there, but paperworks, unfortunately not so good for our climate.
Now, we've been talking about the upkeep cost of physical works of art, but of course, the if not all art works are now physical. Can you tell us a bit about art in the digital realm? Yes,
we are really increasingly living out our lives in the digital sphere. A great deal of uh art that's emerging as a digital uh elements to the N F T. Art has been a very big new category to emerge in the past past uh few years. Uh And it's essentially a 21st century phenomenon in the world of art collecting has spawned a whole new category because it ties in very well with our increasingly mobile digital lives. Yeah, so not all art books are indeed uh physical um but by and large uh
whatever is classical, doesn't really go out of fashion. So your in that sense, your typical pictures, uh flat art on the wall that always has a place at the end of the day, I do think a great deal of people still think of art collecting in the most conventional way, keeping physical works. But and then it requires as we've talked about earlier, that kind of physical maintenance,
the old money still tend to prefer the masters. But increasingly collectors are supporting contemporary artists in particular living artists because it's a reflection of the times we're in and also reflects the culture, political landscape. So contemporary art tends to be more of the focus these days rather than traditional old masters. Younger collectors are also looking at contemporary art, younger collectors, some of my clients, Children. Yes. Uh You know, we all know who the old masters are,
but they are not interested in that. They are the ones that will go to contemporary art fairs. So the Arts Street is a contemporary art fair. Collectors also like to get to know the artist and you journey with them as they get older and move on to different mediums. So yeah, younger collectors tend to prefer contemporary artists.
So how do you identify a good investment piece?
A few years ago, I did my masters and my thesis was whether contemporary art is a good investment. And that's my personal thesis. And my conclusion in short was to go into an art and viewing it as an investment is very high risk. And unless you have a lot of resources at your disposal, I really would not advise looking at it as, as an investment, looking at past records. I think the easiest the most accessible medium for collectors in general will be paintings that's
still traditional. You go to museums, you still see a lot of paintings, sculptures is another traditional medium which is still highly collectable and digital art is something that I find very interesting, but I haven't ventured personally, but that is also growing in importance. So one reference financial collectors could look at is what's happening in the secondary market and what are the art pieces that are
exchanging hands and setting a benchmark there? I think that's the best you can get in the art world to look at secondary prices. I would really turn the question around and think of a good investment piece as an artwork that fits along with one's determined direct
in collecting art. We do talk about art collecting as a kind of discovery of oneself and the collection as a reflection of your beliefs, your philosophy, many times, conventionally, people think of art collecting as trophy gathering, the most desirable things of the present, what other people are collecting.
We may want to acquire the same, but it can be quite risky sometimes because trophies and the value that people scribe to these trophies do change over time, maybe not in the short term, but definitely categories rise in popularity and they wane in popularity. So a very sought after artwork from perhaps half a century ago, it might not have value that it was yesterday today. It might be more, it might be less. So when we think about investing, we are thinking about
alignment with our own beliefs. Art collecting is a nearly as creative and exercise as you know, the art that one collects. You can pin a lot of different agendas onto art collecting. Do you maybe you know want to collect and support uh emerging young artists from your generation? A lot of people do, do you have a particular cost? A lot of art reflects a certain political cause? Certain social cost is really very fulfilling to collect in this way when an art collection bears a certain attitude
or reflect certain ideas. And it's very tight. The overall value of the collection can can enhance the art historical and probably financial value of single respective works in the collection.
So we've been talking about the five things you need to know about investing in art. As with all other investments, you need to do your research before committing your cash. This is especially important as market information about art is not always accessible or transparent. So start small commit to a budget and take your time to make your decision for physical artworks, don't underestimate the cost of installation and maintenance.
And while prices can go up, our experts say the priority should be an emotional rather than a financial return. I've been speaking to Wan Zang, founder of art agenda and veteran art collector Stephanie G catch Money Mind on C N A and online at me, watch C N A dot Asia and youtube.