Bankable art

Above: Artist: Thomas Brezing; Title: ‘Made of Breath Only’. Medium oil on canvas Size: Diptych, 180 x 280 cm. Image courtesy of The Molesworth Gallery, Dublin

The contemporary art market is a curious beast, writes Ronan Lyons, but it can be an equally sound investment.

When Lehman Brothers collapsed in the autumn of 2008, triggering a global financial crash, the international high-end contemporary art market went into overdrive. Prices soared, records tumbled and a whole new generation of mid-career artists became mainstays of Sotheby’s and Christie’s fabled evening art sales.

If anything, this trend has gained momentum over the past year. The New York-based Skate’s Art Market Research cites not only an unprecedented number of auction records being set in the first half of 2014, but also a change in the make-up of the record-setters. Collectors have shown themselves willing to pay as much, if not more, for contemporary work as for artists who’ve already stood the test of time. It’s partly because their own generation’s art will always resonate with collectors in a way earlier art doesn’t, and partly a question of supply: as more and more older work finds its way into major collections – public and private – where they are unlikely to be de-accessioned or sold on, demand is generated for newer works by younger artists.

So what of contemporary Irish art, has it proved an equally sound investment? The answer depends on when your starting point is and what you’ve bought. If the base year is 2007, then the answer is no, because when the Irish economy sneezed, the art market was one of the first to catch a cold. Prices fell, galleries closed and artists abandoned their studios. That said, even with the shakeout in the market since 2007, contemporary art has held its own with residential property, outperformed commercial property, and as for bank shares, the less said the better.

If we rewind further to 1997, then the art you’ve collected may well have turned out to be a good investment, depending on what you bought and where you bought it. It’s unlikely to have outperformed property, but if the benchmark is that state-of-the-art widescreen, cathode ray-tube TV you bought at the same time, then your painting was a positively gilt-edged investment.

Arguing, reasonably, that a TV is unlikely to form part of a pension portfolio touches on a peculiarity of art as an ‘asset class’. Treating art as just another investment is as restrictive as it is joyless. Buy art because you love it and you want to live with it. It may triple in value over 10 years or it may end up being worth little more than you paid for it but, even in the latter case, it will at least have yielded a return from the pleasure of owning and enjoying it.

The market

Looking at how art affects the brain’s pleasure centres, releases serotonin, and creates a general sense of wellbeing. So does making art, however, which has led to a situation where there are too many artists for the market to support, even markets with the breadth and depth of London and New York. There are now more fine-art graduates in the US each year than there were people living in Florence at the time of the Renaissance.

In the UK, there were three times as many fine-art graduates in 2014 than there were 30 years ago. In Ireland, there were upwards of 200 fine art graduates this year, in a country that can barely sustain that number in total as full-time professional artists, earning at least the average industrial wage from their work. All of which points to the second variable in determining whether or not contemporary Irish art is a good investment and what to buy.

The large number of practicing artists in Ireland, relative to the size of the market, means monetary value, however crude a measure, will crystallise around a small number of blue-chip names, represented by blue-chip galleries. That may sound self-serving, but it’s also self-evident. Gallery owners visit hundreds of studios and wade through countless artists’ submissions, showing only those artists they’re prepared to invest time and money in. They do the legwork so you don’t have to.

In most discussions of the investment value of Irish art, however, the narrative is set by the three big Irish auction houses – De Veres, Adam’s and Whyte’s – and the three international auction houses with a presence here – Sotheby’s, Christie’s and Bonhams. They make up the secondary market, taking consignments from collectors, dealers – and more recently from receivers – selling it for whatever they can get. By necessity, they take a short-term view of the market and the artists whose work they sell.

Galleries, by contrast, who make up the primary market – independent artists and graduate shows excepted – must take a career-long perspective on the artists they represent. The work you buy in a gallery reflects the cost to the artist in materials and time to make it and the cost to the gallery of promoting it and exhibiting it for a month at a time, not to mention the ongoing support and marketing of the artist between shows.

Saleroom stars

An artist like Dan O’Neill, a central figure in mid-20th century Irish art and a mainstay of the Dublin auction rooms, is a useful comparison. You can buy a mediocre O’Neill at auction for €20,000, plus another €4,000-5,000 in fees and add-ons.

If you took the same sum of money and spent it judiciously in four or five of the country’s leading contemporary galleries, you could put together a substantial collection of maybe 10 key pieces from up-and-coming to established artists, any one of whom could become a future saleroom star. In second-guessing how the prices for these artists might change in the future, looking at trends in overseas markets is useful but so too is looking back on how the Irish market performed during the boom years. Some of the most dramatic spikes in prices came not from the market stalwarts of the previous 20 years, but rather from contemporary artists new to the secondary market and bought originally from the galleries that represented them.

The likes of Donald Teskey, John Shinnors and John Doherty found their work selling at auction for multiples of their gallery prices, quite often to people who had no idea the work could be bought around the corner for a fraction of the cost.

Shrewd collectors

The boom years are but a hazy memory now but there are tentative signs of life returning to the contemporary market. The RHA Annual Exhibition, Ireland’s biggest selling exhibition of work, recorded a 28% increase in sales this year, while more than 80% of the pieces sold went for less than €2,000, indicating a return to the market of ‘the squeezed middle’ and broadening of a pool of collectors that shrank to a puddle after the crash. Visitor numbers are also instructive. Some 49,000 attended the show, translating to a visitor to buyer ratio 214 to 1 and suggesting an untapped potential to harness a widespread interest in contemporary art.

But the market remains sluggish. The total sales figure at the RHA of €366,000 was still less than half that recorded in 2008. Galleries have seen only a modest pick-up in business since the economy began to recover and the auction houses are ticking over, at best. So, extrapolating from other depressed asset markets, now is still a good time to buy.

Taking a longer view, if the Irish market does develop along the lines of more mature markets overseas, modern and contemporary art is where the action will be and where the shrewd collectors will be found.

And if these collectors buy good work by good artists showing in good galleries, they should reap a return every which way.

 

Ronan Lyons is a director of The Molesworth Gallery in Dublin and a former staff writer with The Economist Group. The Molesworth Gallery is one of Ireland’s leading contemporary art galleries, representing some of the most accomplished and exciting artists working in the country today. W: molesworthgallery.com