Aesthetic Investments

An expert from the educational arm of one of the world's leading auction houses suggests that the Thai contemporary art market may currently be undervalued. Steve Thompson reports.

Steve Thompson

I recently got the chance to attend a fascinating lecture (‘Collecting Strategies: A Question of Taste Versus Investment’) in Bangkok, presented by Phil Whittaker, director of Sotherby's Institute of Art in Singapore. Sotheby's Institute of Art is part of Sotheby's, the highly influential and successful company that organizes regular art-related auctions, private sales and art-related financing activities worldwide.

The presentation served to destroy a few myths among those in attendance at this excellent event, which was organized by Bangkok’s Thavibu Gallery. I would suggest after digesting what Whittaker had to say that while there are certainly impressive gains to be made by investing in art, a high level of expertise and experience is clearly required in order to generate any form of meaningful profit.

Whittaker began by highlighting one recent 'extreme' trend in the area of art investment. His presentation pointed out that during the period 2004-2008, the Chinese contemporary art index recorded gains of 2,500%. While that figure caused quite a few jaws to drop among members of the audience, we later discovered that following the credit crisis (late 2008), the index has since fallen by about 1,500%, although it would seem that there has been a recent uptick, suggesting confidence is returning to the market, according to Whittaker.

I recently got the chance to follow up on the lecture by conducting an interview with Whittaker, who kindly clarified several of the interesting points brought up during the lecture.

Steve Thompson (ST): Hi Phil, firstly, thanks very much for the lecture and for agreeing to answer my follow-up questions.

It was interesting to learn from the lecture the subtle differences between an art investor and a collector. Could you just reflect upon that point again for the benefit of our readers please?

Phil Whittaker (PW): Sure. In an 'extreme' sense, a collector will be buying art in order to acquire it ('possess' it, if you like), while an investor will be specifically be buying art with a view to a financial return. It's likely that most people within the market fall somewhere between these two extremes, but the dividing characteristic is really about treating art for its aesthetic quality, or as just another financial asset class.

ST: I see. You referred in your presentation to English artist Damien Hirst's 'Beautiful Inside My Head Forever' auction, which took place at the London branch of Sotheby's in 2008. During the auction, the New York-based Gargosian Gallery and White Cube Gallery bid for some of the artist's work, despite already being the representative of the artist. I think quite a few people in attendance might have been rather shocked by this.

PW: Yes, the point I was trying to make was that the 'rules' of the game within the art business may seem a little strange to outsiders.

ST: Isn't this basically a form of market manipulation, though?

PW: In the art world, this is not considered manipulation, this is considered to be normal business practice.

Auctions Houses: Two 'Big Hitters'

The Sotheby's brand is recognized globally within the art world. Sotheby's forms one half of an effective duopoly of major auction houses with Christie's. These two auction houses dominate almost 80% of global turnover. Within Asia, even the larger regional players are currently dwarfed by these two major players.

ST: In general, would I be correct in asserting that during the lecture you largely came out 'against' investing in art through so-called art 'funds'?

PW: Yes, it's my belief that base funds are a fundamentally flawed concept, and any inefficiencies in the market are only likely to be exploited by those on the inside. Basically, there is very little chance of any 'amateur' successfully investing in art.

ST: What is the situation like in Singapore for art, both in terms of sales (at auctions) and local artistic talent?

PW: The art market in Singapore is somewhat complicated and sensitive. The region's auction houses appear to do well in the city state and sales are strong, but it isn't really recognized as a major art location in the same way as Hong Kong, China.

Image (above): Narak (‘Cute’) by Nigel Price ©

ST: What advice would you offer aspiring artists in terms of trying to achieve commercial success?

PW: The keys to success, in no particular order, are: go to the best art school you can find and graduate top of the class; be prepared to wait at least 10-15 years before you achieve any serious success; never give up, and; always believe in yourself. Unfortunately, even if you do all this, you may still not succeed. The final ingredient you need is a major slice of luck.

ST: I appreciate that Sotheby's Institute of Art runs several formal degree courses. How do these courses benefit your students?

PW: Our degree programs prepare students to work as professionals within the international art world. The course you decide to study will shape your

employment opportunities in the future. However, the key elements of all our programs are 'access to insiders and insider information', and our balance of practical and academic rigor.

ST: Are there any specific artists or specific countries that would seem to offer the art investor a good deal of promise right now?

PW: I would suggest that any individuals interested in art look closely at their homegrown artists, rather than seeking potential 'over the horizon'. Almost any location has the potential to produce good art and good artists, but you have to take the time and effort to develop a sense of taste to appreciate it.

ST: Finally, are there any markets within the region that you would consider to be particularly 'bullish', both in terms of the art produced and the strength in sales and interest? PW: At the moment, I would say that the Philippines' market is somewhat undervalued, as is the Thai market. Both locations are producing interesting art and artists, but, apart from a couple of exceptions, both are yet to establish themselves a truly international reputation.

ST: Thanks very much for your valuable time.

PW: You're welcome.

Image (above): Ivor Hunsch - ‘From One Mug Punter to Another’

Investing in Art: Resources

Readers interested in learning more about art investment might wish to check out the following useful links, kindly provided by Phil Whittaker:

Http://www.invaluable.com

http://www.theartnewspaper.com

http://www.arttactic.com/

and;

http://www.artprice.com.