Not a pretty picture as value of fine art plunges

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Investors are increasingly giving fine art the brush-off and are now more in tune with rare musical instruments and photography, sending the price of many a great painting plunging.

That’s the findings of new research by leading private bank and wealth management firm Coutts. The storied firm compiled 2016 data for its newly released annual “Passion Assets” index, saying it “…endeavours to capture the changing values of assets that reflect the diverse interests of our clients, including fine wine, fine art, luxury properties and classic cars.”

Even top-level investors have parked their interest in classic cars, which suffered the largest fall in the investor index compared to a year earlier. The aged autos are down 10.4 per cent, as rare musical instruments made the biggest gain, up 16.4 per cent on the previous 12 months.

In the Frame

Last year, a large-format photograph called Art Institute of Chicago II, Chicago, 1990, by German photographer Thomas Struth, sold at auction in London for £600,890, while others went for at least $400,000. This, Coutts said, underlines the demand for photography as a hot new investor item.

As for fine art, Coutts said all categories experienced a drop during 2016 that collectively amounted to an average drop of 6.2 per cent. It said this was “consistent with the trend in recent years”, as more investors shunned fine art. This came amid lower returns and overheads that can include secure storage and fine art shipping, if collectors loan works to international exhibitions.

One art market analyst said photography was an attractive investment for the middle segment of the art market, because it was more affordable than master paintings that can sell for tens of millions of pounds. Sotheby’s chief photography auctioneer, Brandei Estes, said it was “definitely one of our fastest-growing categories”, as more people snapped up snaps as investments.

Investment Time

Other areas that experienced a drop in demand were classic watches, which according to Coutts, are now worth more than double what they were then — after a period of losing value that continued up to 2005. However, they are still down 10 per cent in the investment index compared to peak prices reached in 2012. But jewellery reached a record high last year and is currently up an impressive 150 per cent since 2005.

Elsewhere, the so-called “Trophy Property”, just like fine art’s investor woes, is also somewhat lacklustre and not fairing so well. The Coutts report said: “After rebounding strongly following the recession, Billionaire Property and Leisure Property have both delivered modest returns in recent years.”

Far East Fling

There is some bright news in the fine art investor world, however, and ancient Chinese works of art are leading the way. While impressionist and modern art, post-war and contemporary, along with Old Masters and 19th century works, are all flat or down, traditional Chinese works of art recorded high levels of investor interest in 2016.

“The value of Traditional Chinese Works of Art has fluctuated, but this is the only category for which prices have risen significantly since the financial crisis, increasing an impressive 70 per cent since 2008,” said Coutts.

“The worst performer by some margin is Old Master and 19th Century Art. Despite increasing in some years, prices are down by more than 40 per cent since 2008, making it the worst performer of all categories in the index.”

Overall, though, investor sentiment in the finer things in life was down, at just 1.2 per cent of an increase last year compared to an annual average jump of 5.3 per cent since the index began in 2005. But the collectables guide is certainly worth watching, because it has returned 76.6 per cent since its inception, Coutts said.

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