When an artist ‘pours’ out his heart on canvas, what you find is an artwork that is as close to his heart as his new born baby can a collector really pay for that soul of the artist? If not, what them is the real value of such an artwork can it be an alternative investment? These and more puzzles were resolved recently in Lagos by a team of financial experts collectors and auctioneers Read on!
‘If I give my artwork to GT Bank as collateral for a credit, assuming the bank accept it, how will it value the artwork? How do you convince bankers that art is worth investing on and how do you value the artworks for insurance?
These were some of the questions raised by Nigeria’s former Permanent Representative to the United Nations, Ambassador Arthur Mbanefo, the Odu of Onitsha, at a business seminar organised by the Ben Enwonwu Foundation in Lagos.
Ambassador Mbanefo, a renowned art collector, said he paid one pound for his first artwork a used envelop on which the late Ben Enwonwu sketched some drawings. The artwork, he said, was, however, lost to the civil war in the late 60s.
He regretted that but for the civil war, the old envelop would have fetched him millions of naira today. “If that art piece is still with me today, it would have fetched me lots of money up to an annual salary of a senator in the National Assembly. But each artwork I acquire, I find it difficult in disposing because it is like a baby to me,” he said.
Mbanefo, who was chairman of the seminar, said he started collecting artworks in 1962, because of two reasons. “I collect for sentiment, which is a way of supporting the artists. I also collect because of the aesthetics of the artworks,” he said in a remark to set the tone for the discussions.
Participants were drawn from various sectors of the economy to jaw-jaw on the topic: Art as an alternative investment? Leading the speakers were the Director of Contemporary African Art, Bonhams Auction House, London, Mr Giles Peppiat; President, Omooba Yemisi Adedoyin Foundation (OYASAF) Prince Yemisi Shyllon; Chairman, Philips Consulting Group, Mr Foluse Philips, founder of Femi Akinsanya African Art Collection (FAAC), Mr Femi Akinsanya, and founding. Executive Director, Communicating for Change, Mrs. Sandra Mbanefo-Obiago.
Peppiat, a chartered arts and -antique surveyor, said art could he a good investment, adding that sound judgement and good fortune are both needed for this to be so. He, however, noted that only a small fraction of all the art ever produced around the world, sells at a value above its initial purchase price. The majority of this, he said, is bought solely for enjoyment and not for investment.
“I do believe that for the long term, art can be the best investment that a collector or individual can make. If astutely bought, correctly maintained and properly sold, the returns will easily outstrip any other asset class,” he said.
Peppiat recalled how Pablo Picasso’s Nude, Green Leaves & Bust was bought by its owners, Mr and Mrs Sidney Brody of Los Angeles, US for $17,000 in 1950, and was later sold for $106 million in May 2010. “I will leave you to do the mathematics to calculate how good an investment this was,” he said.
In any investment, he noted, dividends are important, pointing out that, unfortunately, artworks not pay investors any dividend except for their long term appreciation in value. “The most important fact is to remember that art is an investment that does not pay a dividend. The non-tangible dividend to the owner is the enjoyment and appreciation. Buying an asset in the hope that someone else will pay more for it in future is ‘speculation’. But speculation with considerable benefits, he said.
Peppiat explained that establishing insurance value is a difficult task, advising that it should be done by in independent party. On how art can transform into an alternative investment, he said art collectors must determine what to buy and sell and take curatorial decisions that would shore up the value of his collections, which could, ultimately become an investment alternative in future.
“Buy what you know about and like, knowledge of the artwork is very important. Collector should attend auctions and talk to professionals to know more about pricing. There is, however, the international effect on art pricing. For instance, the five highest prices of Ben Enwonwu works were set in Bonhams sales. But any art market needs a domestic platform to thrive,” he said.
The buying of artworks, he said, should be an investment of passion, made with the heart not the head. He said it is for this reason that enormous prices are paid at auction. Collectors, he said, are thinking with their hearts and not solely in pecuniary terms.
The Bonham chief said collectors should buy what they could afford and not be fearful of asking questions about pricing. He noted that buying works with good provenance is as vital as the -quality of the work. “Aim to acquire works with good provenance, preferably traceable back to the artist. It also helps if works have previously been in an eminent or famous collection,” he said.
He added: “Selling is important in many ways as this will stimulate new collection and entry of new artworks into the market. The timing of selling is, however, important but difficult. Timing should be when sales are strong because taste changes.”
He advised collectors to always loan their works for exhibition as well as research their artworks to record the valid details about the pieces. These, he said, would add value to the collection. Buying into fine art funds such as the British Rail Pension Fund, according to Peppiat, is one surb way of investing in art without buying artworks.
On his part, Akinsanya never saw art collection as a business but a hobby. He noted that for art to be an alternative investment, there must be lines of interested participants in the business of buying and selling. According to him,
“We have to create a network on how works change hands. There are different tiers of collections. Artists should set their minds on globalisation when creating artworks because art is one way to cross borders, We need to have staying power to remain productive. So, gallery owners should provide means to boost artists’ productivity.”
Philips called for the creation of a structured market that allows artists to focus on practice. He charged the artists to develop brand and add value to their works. Shyllon, who noted that the British Pension Fund example would not work in Nigeria, said investment is not always about returns. He noted that other variables like risks should be considered when examining arts as an alternative investment.
He said: “I did not start collecting arts from the point of view of investment. I am enjoying the arts. But what happens when collectors die? In Europe, private collectors donate their works to galleries and museums for keep before they pass on.”
He said Nigeria does not have a befitting gallery that could house the private collections. Apart from that, he said preservation and conservation are vital to the sustenance of value of artworks.
Obiago challenged investors to look at the long term investment opportunities in the local creative industry as investing in arts makes sense.
Courtesy: The Nation Midweek Magazine