A brush with greatness

A way of making money from art is to invest in big-name artists before they're famous

19/11/18

Art as an investment is a risky business, but provided you only buy works you like, there’s enjoyment – and sometimes even profit – to be had in trying to spot the next big star, as Alastair Smart explains.

For anyone who dreams of making an instant fortune without leaving the house, finding a long-lost Picasso in the attic has become a pretty unrealistic cliché. A more achievable, albeit longer-term, way of making money from art is to invest in big-name artists before they're famous – while their works are still affordable.

The question is, however, where to find – and how to spot – such artists? Currently, there are around 60,000 artists at work in the UK and a self-evident genius like Picasso doesn’t come along every week (the Spaniard showed his first major oil painting, First Communion, at Barcelona's most important show – the Exhibition of Fine Arts and Artistic Industries – aged just 15).

Perhaps the best tactic is to visit some of the many graduate shows each year – from Falmouth School of Art, in Cornwall, to Duncan of Jordanstone College of Art and Design, in Dundee – in a bid to catch talent while it’s young. Charles Saatchi did just that in the early Nineties, when he hoovered up the work of the then-unknowns we now refer to as the YBAs (or Young British Artists) – in the case of painter Jenny Saville, purchasing every single work in her degree show. (One of Saville’s early canvases, Shift, sold at Sotheby’s last year for an artist record £5.95m.)

One can usually expect to buy work for anything between £100 and a few thousand pounds at graduate shows. MA courses, incidentally, are often deemed a safer bet for investors than BA ones, given the added maturity and expertise of the artist in question. At that stage in his or her career, they will have demonstrated a commitment to art over a longer period of time and are likely to have developed a personal, visual language. All are factors that tend to be reflected in higher prices going forward.

In the past 12 years, Glasgow School of Art has produced four Turner Prize-winners; and in 2014, three out of the four nominees (including eventual winner Duncan Campbell). Might we take this as a sign that that particular school is where to look first for art’s next big thing? Well, maybe. But the contemporary art world is notoriously fickle; trends and tastes change fast.

According to the QS World University Rankings, the Royal College of Art in London’s Kensington (David Hockney’s alma mater) has been the best art and design school in the world for the past three years in a row. So surely we’d be better off investing in a graduate from there?

The truth is it’s tricky to predict which of today’s up-and-coming artists will become tomorrow’s stars. Almost impossible, in fact. "It is a little like looking for a needle in a haystack," says Sarah Ryan, director of New Blood Art, a successful online gallery selling work by emerging artists. Which is why, above all, “it’s important to invest in a work you like,” she adds. "If you invest in wine, you only have to drink it once. But art is something you drink every day, so make sure you enjoy the taste."

Works by graduate artists may never go much beyond the relatively low price at which you first buy them. So liking your purchase as a piece of art in its own right, rather than seeing it purely as an investment, is helpful.

Unlike, say, shares or bonds, art doesn't produce an income. But on the plus side, there are tax incentives: an artwork sold for anything under £6,000 is exempt from capital gains tax, for instance. Given the relatively minor correlation between the art market and the financial markets, certain investors have also turned to art in a bid for diversification as part of a broad investment portfolio – especially since the global economic crisis at the end of the last decade.

As for which type of art to buy, it seems sensible to stick to traditional media (such as paintings and prints) rather than relatively new media (such as video) because the market for the former is established. And if it is paintings you purchase, it’s advisable to check ostensibly minor things such as whether the canvas has been stretched properly and that the artist has used paints with a high pigment content (to ensure the works will still be vibrant in decades to come).

Such concerns, of course, might seem rather uninspiring for anyone whose wish to buy an emerging artist's work is based, at least in part, on the romantic idea of catching a future virtuoso still finding his or her way on the path towards greatness.

All of which points to the wisdom of Ryan’s advice to invest in a work you like. If it makes no leap in value, you’ve spent relatively little and are left with something you won't mind hanging on your wall. And if it does achieve that leap, the result is what you might call picture-perfect.

KEEP IT COVERED

“In terms of insurance, buyers should keep a keen eye on the market to check in case their purchased work increases in value,” says Amanda Harman of Aon. “Valuations should happen every three to five years and be done by an expert in the type of work you have. Bonhams and Christie’s are good places to start.

“Once you have had a valuation performed you can have ‘desktop’ valuations done – a kind of top-up by the person who originally valued the item. They will use the information they have on file in between full valuations to keep your cover up-to-date.

“Good-quality collections policies will allow for art in transit and the loan of works to museums, but you must keep a broker informed of what is happening.”

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