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Hotere works sweep market

John Daly-Peoples

Friday 14th November 2003

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Ralph Hotere has been the premier investment artist of the past decade.

Although he has yet to gain the international recognition afforded Colin McCahon there is little doubt that in New Zealand there has been a swing to his work, which combines personal, political and environmental issues.

The investment success of Hotere's works has been tracked by the newly established Index Group, led by ex Black Cap Adam Parore.

From a pure investment perspective the ART40 database shows:

* $1000 invested in Hotere works in 1993 would have grown to $18,000 by 2002 at an average annual growth rate of 189%;

* he has accounted for 6.5% of total market turnover (16% of contemporary sales);

* in 2002 he became the third New Zealand artist after McCahon and Goldie to gross $1 million in sales a year (McCahon achieved this twice in 2000 and 2001); and

* with $1.7 million of sales in 2002 he holds the record for sales in a calendar year.

Although Hotere's popularity began to gain momentum in 1998 and 1999, the millennium marked a watershed for Hotere works. From a base of $116,000 in 1999 sales increased exponentially across all media in the 2000-2002 period.

This period was marked by a number of key events:

* global share markets corrected sharply as a result of the Nasdaq bubble, forcing investors into less traditional areas in the search for returns. Tangible assets such as art and residential property have proven to be "safe havens;"

* the "war on terror" brought a large number of high-net -worth expatriates home to New Zealand, increasing demand for art in the process;

* the booming property market has resulted in significant increases in New Zealanders' perception of their wealth, with a corresponding flow through into consumer spending including art; and

* The Reserve Bank entered a period of low interest rates and low inflation, an environment in which art traditionally excels.

There was also increased demand for Hotere's works following a major retrospective of the artist's work and with a significant reduction in the number of new works coming to market.

There has been consistent growth across all media, with particularly strong performances in drawings and prints through the period since 1998.

A recent trend has been the popularity of prints and lithographs. These have proved an attractive entry point for new entrants to the market.

From a base of just a few hundred dollars each in 1994 their average value has increased to $1700 in 2000, breaching the $4000 mark in 2001 and $7000 in 2002.

Earlier this year a record price of $18,500 was achieved by the International Art Centre in Auckland.

This year was significant for the Hotere market, with a greater number of major works being offered for sale on the back of strong recent performances.

As a result of pentup demand (few were offered for sale throughout the 1990s), record prices were achieved on a number of occasions.

By year end Hotere's work had dominated sales to an extent never before seen in New Zealand, accounting for a staggering 18% of market turnover.

Hotere appears fully priced at current levels although there is positive long-term return. Potential growth opportunities will be partly dependent on developing offshore markets.

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