Artful investing

By Rachel Nottingham

Monday 1st March 2004

Art, says Ronald Sang, is the best form of investment. He ought to know. Sang's been collecting New Zealand contemporary art for over 30 years, has moved house several times to accommodate his expanding portfolio and lives in an Aladdin's cave of Kiwi artworks. A Fijian-born architect, Sang was always a keen art collector, but after being stung in the 1987 stock market crash, he sold out of shares and invested exclusively in art. It's a decision he's been enjoying and profiting from ever since.

Sang's approach to investing in art is not scientific. "The sole purpose of buying a painting is because I love it, not because I can sell it tomorrow". That way, as he explains, "it doesn't matter if it doesn't go up too much (in value)". Having said that, Sang is adamant that he always has investment at the back of his mind. "I don't want to lose money". He admits there's definitely luck involved in art investment, but that's no excuse for lack of research - he's a fanatical frequenter of auctions and exhibitions, and considers it the best way of finding out what's hot in the art world.

He collects the top 10 or so established New Zealand contemporary artists, such as Don Binney, Pat Hanley and Michael Smither, and the value appreciation of some of his paintings would leave many fund managers feeling sheepish: one painting is worth about 40 times its 1982 price tag, and he estimates others increase in value at an annual rate of 15-20%.

While an original painting by an established artist like Ralph Hotere could set you back upwards of $40,000, Sang says buying at the lower end of the market can also be a successful strategy. For those who are more cautious with their capital and have time to burn, he recommends buying less well known artists' works for around $2000-$4000, waiting twenty years and seeing what happens. This is not as harebrained as it may sound: research from New York University's Howard Stern business school, which tracked over 5000 artworks sold by Sotheby's since 1925, indicated that the bottom 25% of art by price achieved a higher return than the more expensive works.

But whether you're at the six- or three-figure end of the art market, it's a fact that art investment in New Zealand is flourishing. Hamish Coney, general manager of Webb's auctions in Auckland, says the market has taken off in the last three years. Webb's figures show that over $11 million worth of art was sold in 2003, double the value sold in 2001 and 2002. So if you're exhausted with equities or missed the property boom, try a little creative investment. Happy shopping.

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