Home' Trinidad and Tobago Guardian : June 22nd 2014 Contents SBG22 | INTERNATIONAL
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JUNE 22 • 2014
The main thing that s driving the growth of the
art market is the demand for a good investment
for the very rich, art adviser Todd Levin said.
Levin, standing outside the convention center
in Basel, Switzerland, was referring to the brisk
sales inside at Art Basel, the world s largest
modern-and contemporary-art fair. A self-portrait by Andy
Warhol sold for US$32 million within 15 minutes of the fair s
start on June 17. Other numbers were impressive: US$4 million
for a David Hockney landscape; US$3 million for a Fernand
Leger painting; $250,000 for a towering sculpture by Thomas
"It s about the need of high-net worth investors to park
their excess capital," said Levin, director of Levin Art Group
in New York. "They don t want to keep it in cash in the bank.
They can t put it in a mattress. Art has historically provided
the greatest intergenerational return of any asset class."
The Artnet C50 Index, which combines performance data
from 50 top contemporary and postwar artists, advanced 434
per cent from the start of 2003 through last year, beating asset
classes including gold, fine wine and stocks.
Art sales increased 8.0 per cent from 2012 to 2013 to 47.4
billion euros (US$65.9 billion), nearing the high reached in
2007, according to an annual report published by the European
Fine Art Foundation in Maastricht, Netherlands. Auction
houses in New York sold a record US$2.2 billion of modern,
Impressionist, postwar and contemporary art last month.
Wealthy art collectors may be a step ahead of other investors.
Multimillionaires have a high allocation to cash, according
to a survey released today from US Trust, a unit of Bank of
America Corp. Sixty per cent of respondents, who had at least
US$3 million in investable assets, said they had at least 10
percent of their money in cash. Last year, 56 per cent of those
surveyed said they had a large amount in cash.
These investors may have taken notice that their parked
cash isn t earning much as central banks globally push down
interest rates. About 17 per cent of millionaires said they plan
to move some money out of cash in the next 12 months, the
In Basel this week, bearish outlooks were a rarity as dealers
reported strong sales and broad international attendance. First
time visitors from China, India and the Middle East are among
the 86,000 people expected to attend through the fair s end
on June 22, organisers said. About 284 galleries from 34
countries offered as much as $4 billion worth of art, according
to an estimate by insurer AXA Art, a sponsor of the fair s 45th
Alberto Mugrabi, whose family owns one of the largest
Warhol collections in private hands, routinely buys and sells
art, and he wants values to rise.
"The same way an investment banker analyses a company,
we analyze a work of art," he said. "When you are paying
money like that, you have to think about it as an investment."
During the first two days of Art Basel, Mugrabi stayed away
from purchasing Warhol, instead going for a 1981 drawing by
Willem de Kooning for $450,000 at Matthew Marks and a
1960s painting by Joan Mitchell for US$1.5 million at Cheim
"You see prices of the young guys today and de Kooning
looks cheap by comparison," he said, taking a break on a bench
by Gagosian Gallery s booth, where Warhol s painting of 10
skulls was still available for US$22 million. "For US$450,000
I can buy a de Kooning drawing or a Mark Grotjahn drawing.
It s a no-brainer."
He hasn t brushed off the "young guys." He collects emerging
artists with blazing speculative markets including Joe Bradley,
Alex Israel and Lucien Smith. In November, Mugrabi paid
$389,000 for Smith s painting inspired by Winnie the Pooh
and made while he was in college. The price was a record for
the 24-year-old artist.
Philip Hoffman, chief executive officer of The Fine Art Fund
Group in London, also shied away from Warhol.
"It s a waste of our time," he said. "We don t make money
buying what everyone else is buying."
The firm manages $300 million of art assets and expects
to reach US$500 million by the end of the year, he said.
Walking through the fair on opening day, Hoffman said he
was alerted that another buyer was interested in an artwork
the fund had agreed to purchase earlier that morning. By the
end of the day Hoffman resold the work to the new buyer.
Ten per cent
"We made 10 per cent on the deal," he said, declining to
name the artist or reveal the price. "We never paid for the
work. We just netted the profit."
Hoffman, who started the company in 2001, said he con-
signed several works to dealers at Art Basel, selling almost
US$5 million worth of art and averaging compound gains of
10 per cent to 20 per cent.
Most of the art the fund acquires is valued at US$1 million
to US$10 million, Hoffman said. He looks to buy works by
artists whose prices are on the rise.
Christopher Wool was in that category five years ago,
Hoffman said. In 2007, the fund bought a Wool painting for
clients for US$800,000. In November, the artist s text-based
painting sold for US$26.5 million at auction. But like the
financial markets, there are ups and downs in art investing.
In 2009, Hoffman told his clients that the value of the work
dropped 50 per cent to US$400,000.
"If I had to sell it then, it would have been a major loss,"
he said. The fund held on until last year, when it sold the
work for US$2 million.
"Now these investors are happy people," he said. Bloomberg
A visitor walks past to the artworks by Martin Creed in the gallery section of Art
Basel on June 18, 2014.
A 2014 diptych by Los Angeles-based artist Sterling Ruby, SP278 (1) SP278 (2)
sold for US$900,000 at Xavier Hufkens gallery at Art Basel.
About 86,000 people are expected to attend Art Basel in Switzerland.
Billionaires at Basel bet art is
better investment than cash
Links Archive June 21st 2014 June 23rd 2014 Navigation Previous Page Next Page