Investing in arts used to be the domain of the rich and famous. But an alternative is now available and opens the doors of art investment to the masses.
By Ariel Chew
Steeped in history and cultural significance, Asian art is garnering an avid following in the art industry and world-renowned auction houses. Headquartered in Hong Kong with offices in Kuala Lumpur, Macau and Beijing, Art Futures Group (AFG) is ideally poised as the world’s leading Asian contemporary art investment broker. In addition to their investment-for-profit services, the firm also offers resale, leasing, storage and insurance services.
The firm’s practice is to acquire art at below market value to be resold to clients at the market price ascertained by an expert art appraiser and valuer. AFG’s team of experts will research on the best artwork to purchase and liaise directly with the artists. A certificate of authenticity signed by the artist is obtained upon acquisition of the artwork. AFG then recommends to the client on the merits of investing in the art work and suggests the right time to buy or sell the investment based on their extensive knowledge base of global Asian art markets. When the client wishes to exit the investment, the artwork will be auctioned or sold to other collectors or investors.
With their headquarters located in Hong Kong, where no tax is levied on the acquisition of works of art, all the profits will be channelled to the seller. AFG’s leasing programme guarantees two years of rental income to its clients. A satisfied client, Jason Kelly, testified on their website that he received a 6% interest rate per annum from three paintings by different artists that were leased out. Jon Reade, AFG’s Managing Director, sheds some light on why art can be considered as a viable alternative asset class.
Smart Investor (SI): Can you explain in a nut shell what this investment entails? When was it introduced into the global market i.e., Hong Kong and in Malaysia?
Jon Reade (JR): Art Investment is a concept that has been around for a number of years. AFG was set up for investors in Asia to take advantage of the growth of Chinese Contemporary art. We have been in Hong Kong for five years and opened the Malaysian office just over a year ago.
“The firm’s practice is to acquire art at below market value to be resold to clients at the market price ascertained by an expert art appraiser and valuer.”
SI: Can you share a little about the background of the art experts fund management team?
JR: Well, I’ve been in the art industry for 20 years and have worked in three different art markets i.e., British, Australian and Chinese. AFG uses a proven track record to find the best investment artists in the Chinese Contemporary art market.
SI: How has the response been like amongst investors in the region and in Malaysia? JR: It has been excellent, we have been working with Malaysian investors in art for a number of years and the logical step was to open an office in Kuala Lumpur.
“Asian Contemporary art is very buoyant and the growth is expected to continue for the next 10 years according to the art indexes we partner with. The price for each artwork ranges from US$15,000-US$100,000.”
SI: How long would you advise investors to hold onto this investment before cashing in on their returns? What kind of returns can they typically expect?
JR: The hold for art is around 5-7 years, over the last 5 years we have seen returns of between 10-15% per year.
SI: What type of art qualifies for the art leasing program? Who would typically be the target market of ‘renters’?
JR: It is a really good question. Generally the corporates who invest in art are law firms, private banks, PR companies and other blue chip firms in Hong Kong. The art they lease depends on the kind of brand the company wants to have.
SI: What is the outlook for this asset class and the recommended initial outlay of investment?
JR: Asian Contemporary art is very buoyant and the growth is expected to continue for the next 10 years according to the art indexes we partner with. The price for each artwork ranges from US$15,000-US$100,000.
SI: Any success stories to share?
JR: We have had exceptional growth for a number of our artists, such as Ma Dong Min, Shen Jingdong and Yang Qian. All have smashed their previous auction records and have become very strong investment artists.