Friday, November 09, 2007

Art Investment

Did you know that there is a growing trend to buy Art as an investment? On a conservative estimate, investments in art can appreciate up to 20 per cent per annum, though in some special cases, it can even double or triple in value. India is experiencing a boom where art works of renowned painters have appreciated more than 300% in the last few years.
You need not buy art in its physical form. You have the option of electronically investing in units of art funds. A few examples of mutual funds focusing on art work are institutions such as Copal Art, Edelweiss Securities, Crayon Capital, and Osian's Connoisseurs of Art. These funds have attracted investments in the range of up to 2.5 billion USD.
In general the buyer needs to research as much about the subject as possible. Apart from regular research through books, magazine and Internet, he visits art exhibitions to understand the "art appreciation" art and to know more about the artist. He must also be clear about the horizons and gestation time in purchasing art. When he wants to sell art, he visits a good art gallery, who will be able to evaluate the work properly and advise him. Considering the number of fakes and cheap copies floating around in the market, one needs to be careful that he or she is buying authentic works of art.
With prices soaring, art lovers are predicting a shakeout. Another fear is that artists may be sacrificing quality for quantity. Given the growing demand, some artists have become painting factories. Art investment has very little liquidity and only selective buyers may pay the correct price. Hence only surplus money must be invested in it.

In my opinion, Investing in art should be looked at only if the investment horizon is greater than 10 years. Given the current market boom in the industry it may be worthwhile to wait a while and see if a stock market bust will bring down Art values.

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