Paintings on Walls

pow

Every art expression is rooted fundamentally in

the personality and temperament of the artist.
Hans Hofmann.
 Content

3. Pablo Picasso.
4. Investing in Art.
5. The paintingsonwalls.com difference.
6.Lincoln Townley.
7.Measuring the market.
8.Breaking the link.
9.Jean-Michel Basquiat.
10.What and when.
11. Picking winners.
12.Andy Warhol.
13. Banksy.
15.Buying Art.
17.Ownership costs.
18.Pablo Picasso.
19.Limited Editon prints.
20.Beware, Speculative investment.

Women of Algiers Pablo Picasso 228 x 180 cm.
Oil on canvas. One of the the worlds most ex-
pensive piece sold at auction. The art market
Sales by dealers and galleries represented 57
percent of the overall market, rising 3 percent to
$32.5 billion. The increase was driven by the top
end of the segment, as dealers whose volume
exceeded $50 million saw a 19 percent uptick in
sales.
INVESTING IN ART
In a recent survey of wealthy individuals, almost 50% of respondenrs
own fine art and on average art.Art makes up nearly 4% of the average
high net worth individuals total wealth. Management Barclays Wealth
and Investment.
Management
Paintings by Numbers Opposite, theres Czannes The Card Players.
One of the worlds the most expensive works of art ever sold. This ver-
sion of The Card Players is the last of five he painted of the scene. If one
of the others came to market, the price record might well be broken.
London Art Group is a source of investment-grade art, original works,
fine-art photography and limited edition prints. As a business we look at
art not as something just to hang on a wall but as an asset class for those
diversifying their investment portfolio beyond the usual instruments.
We look at paintings by numbers, and the numbers are impressive.
Our viewpoint: that there are three types of investment art, blue chip,
emerging and developing. Blue chip the recent masters; think Picasso,
Miro, Chagall, Lichtenstein, Warhol, etc. Emerging names like Emin,
Hirst, Ofili, Banksy. Developing younger artists emerging into the col-
lectors spotlight; one to mention in this context at the moment, Lincoln
Townley.
We offer work from all three categories, as well as school of old mas-
ters, limited editions and fine art photography. Our sources? We work
closely with a number of international fine art dealers who provide retail
galleries with their inventories. By eliminating the overheads associated
with a prime retail location, we can offer investment art at attractive
prices. We also have extensive contacts in the international collecting
community. When collectors want to dispose of a piece quickly and dis-
creetly, they often come to us.
Buying art like buying fine wine, rare automobiles, antiques, jewellery,
watches or stamps is often described as an investment of passion. In
our view, passion should come second as a reason to invest. First should
be an assessment of the performance potential of the asset. Thats what
we address here. First, though, over the page, well give a brief overview
of why If you are planning to invest in art you should do it through
London Art Group.
 THE PAINTING ON WALLS DIFFERENCE
The painting on wals difference whether driven by personal
enjoyment or pure financial return, high net worth individuals
continue to be drawn to art as an investment. Royal Bank of
Canada/CapGemini Wealth Report, 2013
The painting on wals difference whether driven by personal
enjoyment or pure financial return, high net worth individuals
continue to be drawn to art as an investment.
Reduced overheads There are many places to buy art. All but
London Art Group have an overwhelming disadvantage. They
are high overhead operations. They recover their costs from
the buyer or seller (or both) in steep mark-ups or high trans-
action fees called buyer and seller premiums by the auction
houses.
There are also Art Funds, the unit trusts of the art world, an
as yet unproven concept. They also have overheads which
they recover from entry, exit and annual management fees,
whether or not the price of the art in the fund has appreciated.
When funds dispose of art, they take a percentage of the up-
lift. 20% is not uncommon, according to the Financial Times.
Naturally London Art Group also has overheads, but ours are
smaller and were less greedy.
Our sales contract We offer only work of investment quality.
We are so convinced of its worth that our sales contract speci-
fies that, when you dispose of a work bought through us, you
give us first refusal. We do, of course, offer a fair market price
adjudicated, if required, by market experts. We go further.
Because we are confident our clients will show a return on in-
vestment, our sales contract specifies that on disposal 10% of
the uplift is paid back to London Art Group. Think of it in the
same way
you think of an advisors, brokers or fund managers commis-
sion.
A low cost exit route If you, as an individual, want to dispose of
a work through one of the auction houses, they will charge you
a premium (a commission) on the hammer price. You may also
be charged for photography, marketing and catalogue produc-
tion. In most cases VAT will be added to these costs. The end
result? You end up with a lot less than you expected from the
hammer price.
This can be as high as 25% for lower priced (less than 50,000)
lots, and 12% when the sale price exceeds 1 million. Remem-
ber, thats on the hammer price, not on your profit. Selling a
work for 2 million incurs a premium of 222,500 plus value
added tax.
If we agree that youll realise the best price by going through
auction (it does happen) we have the leverage to persuade the
auction houses to reduce their premiums considerably. More
normally, well be able to resell the work to another of our cli-
ents a cost-free route apa from our uplift commission, de-
scribed above.
However it must be said that as an online gallery we have the
option to sell your artwork via our gallery, as an investment cli-
ent we charge no commission on this. Gallery sales differ to that
of an auction, the timescales involved in a sale via a gallery can
range from something as short as a few weeks up to 1 2 years.
The trade off you as an investor need to make is; are you willing
to wait longer to exit your investment and guarantee a profit or
do you want to assume a higher level of risk and potentially a
loss exiting via an auction.
Remember in a gallery setting we set the price and we advertise
to find an end user accordingly.
In summary, with London Art Group you can buy at better
 DIANA DIAMOND DUST ORIGINAL LINCOLN TOWNLEY
Made with crushed diamonds, the original sold for over $1 million USD. Artist Work Last sold at $ Annualised ROI Isamu Noguchi Undine
Six reasons to invest in art now. As prices smash records in the auction (Nadja) 3,700,000 190.20% Auguste Rodin Le Penseur 10,500,000
room and investors scour the globe for a safe place to ride out the eco- 189.33% Yue Minjun Gweong-Gweong 6,154,480 147.16% JMW
nomic storm of high inflation and sovereign default, there is growing mo- Turner The Lake of Thun, Switzerland 1,613,904 133.38% Frans
mentum behind the art as an investment school of thought. Investors Hals I Portrait of Willem van Heythuysen 12,433,341 114.25% Ger-
Chronicle hard Richter Abstraktes Bild 5,500,000 101.97% Alberto Giacom-
1. A growing market Over a million people worldwide now consider etti Buste dhomme 2,766,96 97.59% Fu Baoshi Lady in solitude
themselves serious art collectors. In 1980 the number was just 10,000. 1,932,217 93.82% Francis Bacon Three Studies for Self-Portrait
Thats evidence of the growing global market that now exists for art with 25,000,000 86.29% Zao Wou-Ki 2.11.59 4,648,096 65.80% Its
new, serious, deep-pocketed collectors coming from Russia, China and worth noting that three of the top ten performers are Chinese, and
the Middle East. And its not just individuals. High-end contemporary that the overall leader, Isamu Noguchi, is Japanese
art galleries and museums are the musthave sign of maturity for any city At paintingsonwalls.com we can see no evidence that the brakes are
with ambitions. New museums are opening every year, and each absorbs going on this market anytime soon. Contact us to talk about how you
hundred of works.
can invest in art today.
2. Soaring values In the first half of 2013, artworks sold at auction dur-
Wharley Farm.
ing the period had been held for, on average, nine years and produced
an average effective rate of return of 6.37%. The absolute winner during
the first half was Ribs Ribs by Jean-Michel Basquiat which after holding
period of five years returned to the market with a 54% appreciation in
value.
3. Contemporary is arts boom sector Artnews reported that 87% of the
worlds 200 leading art buyers own contemporary pieces.
4. Limited quantity Contemporary art is the only collectible art still being
produced. The majority of masters of pre-21st century investment-grade
art are no longer with us. A finite supply coupled with a growing demand
ensures that values for great work keep on growing.
5. The Chinese influence China is now the worlds second largest market
for art and antiques according to a study by the European Fine Art Foun-
dation. It reveals that Chinas share of global art and antique sales was
25% in 2012, with the USA leading with 33% of acquisitions. The UK re-
mains third, with 23% of purchases.
6. Return on investment Skates Art Market Research tracks the annual-
ised return on investment for repeat sales. Here are its top ten returns to
date.

CHRISTIES AUCTION HOUSE ESTIMATE 30,000 - 50,000
ACUTAL PRICE 81,250
MEASURING THE MARKET
Tracking sales Our starting point is the Mei Moses World All Art
Index. Widely respected as the best overview of performance for
all sectors of the fine art market, it is the brainchild of Jianping
Mei and Michael Moses. It tracks repeat sales of works of art to
provide then and now price comparisons. Currently the index
has more than 34,000 price pairs. Taking 1987 as a start point, by
2013 it had shown a 401% increase. In comparison, the FTSE100
rose by 359% over the same period.
Art has to be viewed as a mid to long-term investment. There have
been years when the market has moved negatively. Most recently
the credit crunch of 2007/2008 caused a 22% drop in the index
(recovered by 2010). The collapse of the Japanese Yen in the early
1990s resulted a 30% drop that took ten years to recover. Time for
some optimism: in the 90s the art market had far fewer players of
whom the Japanese were a large proportion.
Today, the market is far more global and consensus opinion
is that problems in a single economy would not have such a
deep or long-lasting effect. One measure of the depth of to-
days market, much expanded by BRIC and other emerging
economies, is the number of registered bidders at major auc-
tion houses. Christies reports that buyer registrations for art
sales are up 53% compared to ten years earlier.
Another way of judging the popularity of the art market is
its overall size. The European Fine Art Foundation estimated
2012s global art market to be worth about $58 billion. This is
based on auction data and an estimate of gallery and private
sales. 20 years ago the market was worth $10 billion.
The reason for its increasing popularity? It has been suggested
by Deloitte that the current socioeconomic context creates
a demand for real assets because many lost a lot of money in
the financial crisis by investing in products they did not un-
derstand and are turning back to things that are closer to their
heart and which at the same time offer protection and a return
on investment.
We could also mention that having a recognised work by a
famous artist hanging on the wall is a better status-enhancer
than a portfolio full of financial instruments!
 BREAKING THE LINK

Risk-reducer Art has a significant benefit over conventional in-

vestment assets: its performance is uncorrelated to stock market
indices, bond valuations, property prices, precious metals and ex-
change rates. Art can rise when other markets are falling, fall when
other prices are rising. At times it can rise more steeply, or fall less
precipitously. From the investors point-of-view art acts as a risk-
reducer in a well-structured portfolio.
Investment bank, J P Morgan, found that volatility (standard de-
viation of annual returns) of art has been lower than commodities,
US and international equities over the last 25 years. Art tends to
move in slow, longterm cycles. The bank concluded that looking at
risk-adjusted performance (returns divided by standard deviation)
over the last 25-years, the Mei Moses All Art Index outpaced the
S&P500.
Diversity The art market is not a single entity. In the same way that
mining stocks perform differently from banking shares, so do dif-
ferent art sectors. Even in a sector like mining some shares will rise
while other fall. Its the same with art. There are many types of art,
and many periods when it was produced. There are major, minor IMPRESSIONIST OLD MASTERS POSTWAR /CONTEM-
and unknown artists think blue chip, small cap and unlisted in PORARY ORIENTAL TRADITIONAL
stock market terms. There is also an element of fashion, especially
in contemporary art. This years hot artist might be unsung in the S&P500 9 Dustheads Jean-Michel Basquiat 183 x 213 cm.
next decade. Someone now neglected can emerge into the lime- Acrylic, oilstick, spray enamel and metallic paint on canvas.
light. The desire for top tier art, where collectors compete with A windfall for the vendor. Dustheads was estimated to sell at
a rapidly growing number of museums and exhibition galleries between $25-35 million at Christies, New York, May 2013. In-
worldwide, continues to outstrip supply. Thats not surprising given
stead, it realised $48,843,750.
that in all sectors except contemporary, production ceased long
ago. Once you move beyond the landmark works that every deep-
pocketed institution or collector competes for, theres still potential
to add high-performance art to an investment portfolio, as the ex-
ample of Gerhard Richter, opposite, demonstrates.
 WHAT AND WHEN
STUDIES SHOW THAT ART CAN OFFER LONG-TERM RETURN POTENTIAL
THAT IS UNCORRELATED WITH OTHER ASSET CLASSES. Kyle Sommer, J P
Morgan.
Acquisition If youre looking for investment-grade art what should you ac-
quire? Obviously, you can only buy whats on the market. Largely, that means
modern and contemporary art: modern, from about 1850 1950; contem-
porary from the 1950s onwards*. Thats what is widely available. Work
from other eras Mediaeval, Renaissance, Romantic, Impressionist, Post Im-
pressionist comes to market less frequently and, if it has real merit, is hard
fought over.
*Few art historians agree on exact dates for any era, and there is considerable
overlap at the boundaries.
This concentration of todays collectors and investors on more recent art is
illustrated by figures from Christies. Its sales of post-war and contemporary
art rose 26% in 2013 to $2 billion. The auction house reports that its recent
contemporary art sales have attracted a 52% increase in new clients, mostly
bidding on works estimated at $150,000 or less. Thats a reliable sign that
contemporary art is attracting broadbased support rather than just money-
no-object billionaires, and bodes well for its continuing success.
If you decide to invest in earlier art there are opportunities, although the
chance of acquiring an old master by the master himself are limited. There is
a considerable volume of work traded as school of, studio of or follower are unlikely to perform as well as major ones because they will less sought
of master painters. Rembrandt is an example. Aspiring artists would pay to
learn at his side, often painting the same models or still lifes as he did. The
master benefited from tuition fees and took commission on the sale of work: a
piece approved by Rembrandt even if from an unknown hand would sell artists that have a real following. Check who collects their work, in which
for more than the same work with no endorsement. An example of school of
work is Portrait Of A Bearded Man, In A Fur-Trimmed Coat And An Oriental
Hat, Holding A Walking Stick by a follower of Rembrandt, which sold at Chris-
ties London in 2012 for $39,950, against the high estimate of $15,000.
There are other art investment possibilities. Although they dont command
the prices of paintings, photography is collected and has appreciated in price.
16 images have achieved $1 million plus prices, with the most expensive
yet being Andreas Gurskys Rhein II. Made in 1990, it realised $4.3 million
against the high estimate of $3.5 million when auctioned by Christies New
York in 2011. Its one of six from this series. Four of the others hang in major
public galleries, including New Yorks Museum of Modern Art and the Tate
Modern, London.
Limited edition prints also attract investment interest and for many are
the ideal entry point to art investment. We discuss photography and prints
later.
PICKING WINNERS
IN TIMES WHEN PAPER WEALTH IS SEEN TO BE MORE RISKY, INVESTORS
ARE DRAWN TO REAL, TANGIBLE ASSETS.
Vikram Mansharamani, Lecturer, Yale University
Selection Selecting winning art, like choosing winning stocks or horses, is
not easy. In the past, the art business advised people to buy what you like.
That goes back to investments of passion, which we believe is the wrong
way to approach art investment, as opposed to art ownership. Buy-what-
you-like is some compensation if the work youve chosen fails to perform
at least youve got something hanging on the wall that you admire if
you can bear looking at your mistakes! And it absolves the art profession of
blame Well, you chose it.
You need to be more analytical. Our tips, and they are only that because in
any market unknown factors outweigh known ones are:
Buy artists with a track record of good price performance. This can be
judged from auction prices, which are always reported. Private sale and
gallery prices are sometimes reported, sometimes speculated about, some-
times deliberately misleading. Trust only price information that is verifi-
able. Buy the best piece you can afford of an artists work. Minor works
after. Avoid buying an artist where there seems more hype than talent.
There are bubbles in artist popularity driven by agents and gallery own-
ers. Wait to see whether an artists popularity will last. Look for work by
galleries it hangs, in which exhibitions they have been included, in which
publications they are cited. The bigger the collector, the gallery or the pub-
lication, the more likely the artist has staying power. Look for works that
have interesting provenance. One that has been exhibited, won prizes or
been owned by a respected collector has added cachet, and value. If buy-
ing at auction, buy work that meets or beats its high estimate. Its an indica-
tor that there is unfulfilled demand for that artist. However, works that beat
their estimate by a large amount might be too overpriced for investment
purposes. Be wary of getting involved in bidding wars. Look for artists
who are brands in their own right; artists like Andy Warhol, Damien Hirst,
Banksy and more. Names like these achieve recognition beyond art aficio-
nados, broadening their market appeal outside of the traditional collectors
markets. Above all, buy with your head, not your heart
 ANDY WARHOL
ELSEWHERE, THERE WERE RECORD AUCTIONS FOR PAINTINGS
SUCH AS ROY LICHTENSTEINS I CAN SEE THE WHOLE ROOM ...
AND THERES NOBODY IN IT! WHICH SOLD AT CHRISTIES IN NO-
VEMBER, MAKING GAINS IN EXCESS OF $40M FOR ITS SELLER,
WHO BOUGHT IT FOR $2M IN 1988. ANDY WARHOLS DOLLAR
SIGN ALSO MADE BIG RETURNS WHEN IT SOLD FOR TWICE ITS ES-
TIMATE AT $698,500 IN 2011, HAVING BEEN BOUGHT FOR $27,000
23 YEARS EARLIER. Financial Times, January 8, 2012
Controversial Andy Warhol, 1928 1987, was born in Pittsburgh,
Pennsylvania. Americas most famous 20th century artist, he studied
commercial art in Pittsburgh before moving to New York and a ca-
reer in magazine illustration and advertising. During the 1950s, he
began to work outside of illustration and slowly built a reputation
as a sometimes-controversial artist. He held exhibitions at smaller
New York and West Coast galleries, introducing works that have
since become icons dollar bills, Campbells soup cans and Coca-
Cola bottles as well images of celebrities like Marilyn Monroe, Elvis
Presley, Marlon Brando and Elizabeth Taylor.
In the 1970s he became less radical and more entrepreneurial
spending much of his time canvassing new, rich patrons for portrait
commissions including the Shah of Iran, Mick Jagger, Liza Min-
nelli, John Lennon and Diana Ross. He worked intensively using silk-
screens to mass-produce images, reflected in the volume of work
traded in the market. Warhol has been the second top-selling art-
ist in the worlds sales rooms, with over $1.58 billion of work sold,
beaten only by Pablo Picasso, with $3.02 billion.
Warhol at Auction Between May and August 2013, over 200 works
by Andy Warhol were sold at open auction. The record for a Warhol
is Silver Car Crash (Double Disaster), which sold for $105.4 million
at Sothebys New York, November 2013. On average, Warhols works
sold at 115% of high estimate, implying that despite ample supply,
there is still a continuing healthy demand.
BANKSY
THE BUYER OF PETER DOIGS PAINTING THE ARCHI-
TECTS HOME IN THE RAVINE AT AUCTION IN 2002 FOR
314,650 COULD BE FORGIVEN FOR FEELING SMUG. ON
WEDNESDAY NIGHT THE PAINTING SOLD AT CHRISTIES
FOR 7.7M. Daily Telegraph, February 18, 2013
Anonymity Little is known officially about Banksy, who pre-
fers anonymity. Rumoured by the Daily Mail to have been
born in 1973 to a respectable Bristol, UK, family he is known for
his work rather than his personality. He became noticed in Bristol
as a graffiti artist in the early 1990s. His technique incorporates
freehand work, stencils and spray paint. He claims he was con-
verted to stenciling as a quickgetaway technique when hiding
from police under a truck, where he noticed its stencilled serial
number.
His stencils feature striking and humorous images, often with
anti-war, anti-capitalist or antiestablishment slogans. Subjects
frequently include rats, apes, policemen, bombs, soldiers and
children. His prowess as a street artist drew the attention of the
mainstream art business and in 2002 he had a small exhibition
in the 33 Gallery, Los Angeles. His work began appearing at
auction, where it attracted bids well over the high estimates, and
sold to celebrity collectors such as Christina Aguilera. Another
sign of his respectability he contributed a work Protect From
All Elements to a charity sale organised by Leonardo de Caprio.
The high estimate was $100,000. It sold for $315,000.
Banksy at Auction During the 12 months September 2012 to Au-
gust 2013, 97 pieces by Banksy were sold at auction. The high-
est price paid was $617,286 for Think Tank.
On average, Banksys works sold at 116% of high estimate, im-
plying that demand exceeds supply. This is more so with his
original paintings, which sold at 143% of high estimate, as op-
posed to his prints that sold at 108%.

Turquoise Marilyn
Andy Warhol
102 x 102 cm. Silk screen inks and acrylic paint on canvas.
In May 2007 Turquoise Marilyn, one of Warhols many
portraits of Marilyn Monroe, was purchased by art col-
lector Stephen A. Cohen in a private sale via the Gagosian
Gallerey for a price believed to be $80 million.
Street Art Banksy
182 x 157 cm. Spray paint. Classic Banksy, demonstrat-
ing his mastery of Street Art. A graffiti painting shows
acouncil worker washing away a pre-historic cave
painting. Banksy has made the move from the street to
the gallery. His most expensive work sold at auction in
the last year (2012-2013) was Think Tank. It realised
$617,286 at Sothebys, London, February 2013. It had
been previously sold at Bonhams, London, April 2008
for $308,146. The record for a Banksy is $1.87 mil-
lion, realised in February 2008 at Sothebys New York,
for Keep It Spotless. Banksys work has gone up over
2000% in last 12 years and 216% in the last 3 years
alone and still rising.
 Buying Art.
Buying Art.
LIKE ANY INVESTMENT, HOWEVER, ART INVESTING CAN BE CONSIDERABLY
MORE COMPLICATED. AS A RESULT, MANY INVESTORS WHO WISH TO INCLUDE
A CZANNE WILL NEVER HAVE A VALUE OF ZERO AND NOR, FOR THAT MAT-
ART IN A PORTFOLIO WOULD NATURALLY GRAVITATE TOWARDS CHOOSING AN
TER, WILL A WARHOL, GERHARD RICHTER OR SIGMAR POLKE. THE LIST OF
EXPERT TO PICK IT FOR THEM Jenny Lowe,
ENDURING ARTISTS FOR WHOM THERE WILL ALWAYS BE A NICHE MARKET
GROWS WITH EVERY PASSING WEEK. Jim Grant, Grants Interest Rate Observer.
Financial Times Investment Art If youre investing in equities, you go to a stock-
broker. Investment art comes from rather more sources. Before we describe these
Buying at Auction The major advantage of buying at auction is that the auction-
channels lets remind you that, at London Art Group, we offer a range of high po-
eer has done much background work for you; the catalogue will give provenance
tential contemporary art for sale. Talk to us about what is currently available, and
details, previous owners where known, where the work has been exhibited and
what is expected soon.
publications in which it has featured. The major disadvantages? Youll be com-
Galleries Major cities, especially national or regional capitals, have a wide range
peting with others, so you have no clear idea beforehand what the price will be.
of commercial galleries. Big-ticket investment art is the specialty of a just a few,
Do your research, set an upper limit, and stick to it. As well as the hammer price,
though. In London these include Gagosian, Hauser & Wirth, Victoria Miro and
youll pay a buyers premium. On smaller sales this can be 25%. On seven-figure
White Cube. A day spent exploring a citys major commercial (rather than public)
sums, 12%. Depending on the source of the work, you may also be asked to pay
galleries provides a good grounding in what is available and price levels. Be aware,
VAT or sales tax on the hammer price and the buyers premium. Your purchase
though, that you are unlikely to find unbiased advice and you need to do your own
price is public. While its possible to remain anonymous as a bidder, the price at
research to verify or otherwise what you hear or see.
which the work sold will be publically reported. This doesnt suit all purchasers.
Apart from high-end contemporary art galleries like these, youll also find those
If youd like to acquire at auction, attend a few sales beforehand just as a specta-
that specialise in niches. Again, taking London as an example, these tend to congre-
tor. Then youll be familiar with the atmosphere, the process and the terminology
gate in an area. Walk the streets of St James and youll pass twenty or more such
when your turn comes. And, apart from the learning process, its good entertain-
galleries. One might specialise in English landscapes, another in marine art, yet
ment!
another in the Scottish colourists. If you decide to buy from a gallery, bear in mind
Private Sales Just as there are buyers who prefer the discretion of not buying in
that it is a retailer, and will be taking a considerable markup on the sum the artist
public, so there are sellers, too. The private sales route provides discretion for
or previous owner will receive.
both sides of a transaction. Discretion is not the only advantage. A private sale
Art Fairs There are annual or biennial art fairs around the world. Many of these
can be organised far more quickly than an auction, which is scheduled months in
like the Affordable Art Fair (now established in 14 cities in the Americas, Asia and
advance to allow catalogues to be researched and marketing to take place. If ven-
Europe) offer art to the mass market for the wall, rather than for investment. Big-
dors need the money now, a private sale is ideal. Then theres an established price
ticket fairs, like Art Basel, Art Basel Hong Kong, Art Basel Miami, The Frieze (Lon-
which might be negotiable downwards, not upwards as in an auction.
don and New York) and The Armory Show (New York) bring together the worlds
The disadvantage of a private sale for the vendor is that it doesnt ensure that
leading contemporary galleries. As a place to take the markets pulse they are effec-
every interested purchaser knows the work is on the market. The consultants, gal-
tive, but for first-time visitors they can be overwhelming. They also create a buy-
leries, and auction houses* that broker private deals pride themselves in knowing
ing bubble, so its tempting to acquire work there without due consideration of its
who might buy, but with positive growth in the numbers of high-end art buyers,
investment merit. It might be sensible to leave your chequebook at home and use
do they really know everybody?
fairs to learn about the artists and works that are making waves and have invest-
At London Art Group, were in the private sale market. Our sales teams have ex-
ment potential.
tensive contacts outside of the collector market. We can find buyers that more
Auction Houses Auction houses, like Sothebys, Christies, Phillips and Bonhams
traditional routes cant.
process about half the sales of high-end art. They hold regular sales especially in
* Most galleries have a private sale arm but recently auction houses have moved
the spring and autumn. Almost exclusively they sell pre-owned works, and with de-
strongly into
tective work is often possible to find the price at which a piece was previously sold,
compare this with the estimates, and reach a price performance judgment. As with
shares though, past performance is no guide to future value.
 OWNERSHIP COSTS

Guideline The cost of owning investment grade art varies widely but as guideline
you should budget between 1% and 5% of the value of your works a year. The ex-
act amount depends on the art itself, and what you want to do with it.
Insurance comes high on the list of overheads, and its importance shouldnt be
overlooked, as the page opposite shows. Costs can be less than 1% of the price
of the work, and specialist fine art insurance is essential. Without it you are un-
protected from the moment you buy the work. The actual percentage premium
depends on factors like security and location as well as the nature of the art. Por-
celain might cost twice as much to insure as oil on canvas, bronzes half as much.
Insurers may also insist you install extra security, obviously with cost implica-
tions.
Then theres the problem of finding a home of the art. Many works can suffer from
exposure to light, heat and humidity. If you dont have climate controlled exhibi-
tion space at home or in your boardroom, youll have to provide it. Its a once-only
expense, apart from maintenance and running costs, but it will be expensive and
the bigger the space the more it will cost.
If a work is bought unframed then the right frame can cost thousands. For a work
from an earlier period, a good frame from the same era as the artwork could be a
valuable antique itself.
If a work of art is damaged it happens, ask Steve Wynn then it must be re-
stored. A complex tear in canvas could cost up to 30,000 to restore to museum
quality. Other work especially mobiles and installations will benefit from oc-
casional cleaning and readjustment. Expect to pay a specialist up to 1000 a day.
A common cause of damage is packing and transport. Those who decide to swathe
a work in bubblewrap and move in the back of their car are often faced with re-
pairs. The answer is to get a proper transit case made up to 1000 or more for a
large or complex work and have it moved by specialist (and insured) shippers.
An alarmed air-ride van and two handlers is standard. Extra precautions might La Rve Pablo Picasso
iclude a security car following the van.
If work is to be moved by air, its wise to send a courier with it who will charge 130 x 97 cm. Oil on canvas.
anything from 200 upwards. For the transport company to gain access to the A famous work, but most famous for an accident.
plane to supervise loading and unloading could cost another 500.
One way of minimising ownership costs especially for art bought as an invest-
The owner, casino magnate Steve Wynn, was show-
ment is not to display it, but to keep it in secure storage. At INSERT NAME HERE ing it to friends, when he put his elbow through it.
we can arrange this, with prices beginning at about 25 per week for a small When repaired it went on to sell for $155 million. It
painting. Secure, dark and with temperature and humidity controls, specialist
shows why specialist insurance is essential.
 LIMITED EDITION PRINTS
YOUNGER INVESTORS ARE MORE WILLING TO ADOPT HIGHER-RISK
STRATEGIES AND THAT MAKES THEM WELL SUITED TO SEEK FINANCIAL
RETURN FROM COLLECTIBLES AS PART OF AvDIVERSIFIED PORTFOLIO.
Rachel Pownall, Adjunct Associate Professor,

Tilburg School of Economics and Management.

Entering the market For those interested in investing in art, but without the
funds or the inclination to commit large sums, limited edition prints offer a
low-cost, low-risk way of entering the market.
Original limited edition prints can be a good investment vehicle providing
you research carefully and follow certain criteria. Most artists produced lim-
ited edition prints at some stage in their careers. It means there is a wide
choice of work available, at a lower entry point than an original painting or
drawing. Genuine fine art limited editions provide the benefits of purchasing
work by leading artists. Its worth knowing that many of the leading contem-
porary artists sell a far larger portion of their work as limited editions, com-
pared with originals. A case in point is Picasso, probably the most famous of
the modern artists. Amazingly 61% of all sales of his work are prints/multi-
ples while 30% are ceramics, 7% drawings and only 2% are paintings!
Limited edition prints use processes like woodcuts, etchings, engravings,
lithographs and collagraphs to reproduce an image. An essential factor is the
degree of involvement by the artist in making plates and printing. For a print
to be considered original it should have been produced from a surface like a
Banksy
copper plate or a woodblock worked on by the artist. Love is in the air
Another important factor in the determining the value of a print is the size 50 x 70 cm. Silk Screen. Limited edition
of the edition. Look for an edition of less than 100, although for well-known
contemporary artists like Tracey Emin or Banksy then larger editions may be
prints offer the opportunity to acquire
a good investment. You also need to be sure that after production was com- work from famous artists for a four figure
pleted the plates were destroyed, so that no further prints can be made. sums.
Make sure that the print was produced by a reputable and well-known print
maker, that each work has a certificate of authenticity, is individually num-
bered, and is signed by the artist. Numbering takes the form of a fraction,
with the prints number shown over the edition size thus 7/25 is print 7
from a 25 print edition. There should also be an embossed mark (called the
chop mark) that is, effectively, the logo of the print maker.
At London Art Group, we have access to a wide variety of original limited
editions from some of todays most exciting artists, as well as past masters.
Contact us to check current and upcoming stock and prices.
 BEWARE
THE GLOBAL ART MARKET CONTINUED ITS EXPANSION IN 2012,
INCREASING THE FOCUS ON ART AS AN ASSET CLASS Deloitte/Art-
Tactic Art and Finance Report, 2013.
Deception As Corots example opposite shows, not everything in the art
world is what it seems. Forgery creating and selling works of art false-
ly attributed to other more famous artists has a long and deceitful his-
tory. It has happened for millennia. Roman sculptors copied Greek work:
did the contemporary buyers know that they were not genuine?
Amongst students, copying a work of a master was not only part of the
learning process but was considered a tribute, not a forgery. Many paint-
ers had workshops where apprentices studied painting and sculpting by
copying the techniques, work and style of their masters. Some of these
works have later been erroneously or deliberately attributed to the mas-
ter, not the student.
Forgery rather than flattery became prominent in the Renaissance when
it became apparent that collectors interest in antiquities increased their
value and made them worth counterfeiting. This extended to living and
recently deceased artists. Durers printmaking style, for example, made
him easy to imitate and a cunningly added signature increased the value
of counterfeits considerably.
In the 20th century artists like Dal, Picasso, Klee, Warhol, Pollock and
Rothko became easy targets for forgers. Such work usually enters the
collecting chain through galleries that fail to thoroughly check the prov-
enance of work offered to them.
If youre investing in art then its vital that you know what youre buy-
ing. Older works will have a record of ownership and sale going back
some time. Certificates of authenticity from the artist or their prime gal-
lery will often accompany contemporary and modern work. If not, there
will some other paper trail that attests to their originality.
At Paintingsonwalls.com we are scrupulous about demanding and veri-
fying the authenticity of the work we offer. You can buy through us with
confidence.
SPECULATIVE INVESTMENT
THE DOW JONES INDUSTRIAL AVERAGE STOCK INDEX CLIMBED BY AN
AVERAGE OF LITTLE MORE THAN 1% A YEAR FROM 2001 TO THE END
OF 2012. PRICES FOR ARTWORKS AUCTIONED IN NEW YORK DURING
THE SAME PERIOD ROSE BY MORE THAN 5% A YEAR.
The Economist price Performance At paintinsonwalls.com we know
theres money to be made by investing in art. The question is What art will
make money? Our mainstream advice is to go for blue chip work, where
there is a proven market, where price performance has been positive and
where demand is ahead of supply.
However, like all investment decisions, the assets you choose should re-
flect your risk profile, and the structure of your investment portfolio. If you
were putting money into equities, you might allocate funds between stock
types; defensives, recoveries, emerging markets, blue chips, small caps,
IPOs, takeover targets, special situations, dividend earners.
So with art. There is a role for part of a portfolio to be more speculative;
work from new artists with potential. Remember, Charles Saatchi bought
Damien Hirsts stuffed shark for 50,000 when Hirst was starting out, and
later sold it for $12 million. Thats an impressive return on investment.
Can you replicate that? You can go around the art colleges graduate shows
and pick artists you think have potential not merely for the quality of
their work but also for their ambition and their commercial awareness. For
the price of one solid piece from a blue chip name, you could buy dozens
of works from new artists the equivalent of investing in penny shares. If
just one of your choices becomes a star, even a minor one, then the returns
would be worthwhile; the stuffed shark effect. Thats why we advise you,
if it fits your profile, to hold part of your art assets it neednt be much in
purchase price terms in speculatives.
We monitor the up-and-coming market closely. We do the shows so that
you dont have to and we visit the fringe galleries. When we spot unknowns
with the potential to become big names, well bring them to your attention.
At paintingsonwalls.com theres one artist we currently like, not only for
his work but for his entrepreneurship Lincoln Townley (opposite) is per-
sonable, well-represented and very market-aware. Just like Hirst, just like
Emin, just like Warhol. He has recently sold an item for over 1 million
pound, this being such a ground breaking achievement for a British artist
that there was recently an article in the Evening Standard regarding this.