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Oct. 21, 2005
Making an investment in art
Gallery owners offer advice on what to look for when buying.
MONIKA ULLMANN
If you've ever wanted to own or invest in a Chagall original but
thought you couldn't afford one, Susanna Strem can help you. The
co-owner of the new Chali-Rosso Art Gallery on South Granville comes
from a Jewish Hungarian background. Chali-Rosso is the only gallery
in Canada specializing in original Chagall lithographs, as well
as etchings and engravings by other European masters like Picasso,
Miro, Dali and even Rembrandt.
Strem and her husband, Zoltan Kulley, a specialist in European antiques,
decided to open the gallery because they love the great European
masters and want to make original works available to the average
Canadian collector. Offering limited edition original lithographs
and etchings makes that possible. But art isn't like other investments.
There are both esthetic and monetary considerations.
"When I give talks about how to invest in art, I always say
first you have to like the work, second you have to like the work
and third, you should think about its provenance and value as a
long-term investment," Strem told the Independent. "So
instead of paying half a million dollars for a Chagall painting,
you pay somewhere between six [thousand] and 20,000 dollars for
an original, limited edition Chagall lithograph. There are even
a few available for less than 2,000 dollars, and a Dali can cost
even less."
According to Strem, there is a lot of interest in Chagall –
considered one of the greatest Jewish artists of all time –
and not only from Jewish people. In fact, the international art
market is currently behaving a lot like the local real estate market.
High demand and new buyers are pushing prices up. Jeanette Langmann
of Uno Langmann Fine Art, just across the street from the Chali-Rosso
gallery, says that the Canadian art market is "very volatile"
and urges caution.
"There are a lot of people out there willing to sell Canadian
art at prices that aren't justified," she said.
Uno Langmann, well known to Vancouver collectors and viewers of
The Antiques Road Show, agrees with Strem that collectors should
buy what they like – that is, not for investment purposes alone.
Anthony Westbridge of Westbridge Fine Art Auction House said Canadian
art is finally getting the price it deserves and the current boom
isn't about to bust any time soon.
"There's an allure to art," he noted, "and especially
among younger buyers, there's still an enormous amount of money
floating around out there. After people have bought their homes
and cars and stocks, they turn to art, because it's prestigious
– and who wouldn't want to be seen to own a great artwork?"
This is especially true if one buys an established "name"
like Chagall or Picasso. "The value of their work will never
decrease, because history has already put the stamp of approval
on it," said Strem.
The price of a lithograph or etching is determined by the edition
size, whether it was hand-signed by the artist and the overall size
and condition. But what if you have dreams of actually owning a
one of a kind original, like a watercolor or an oil painting by
one of the great European artists? Until recently, only billionaires
could afford that pleasure. That's where art investment management
companies come in.
ArtInvest Management Inc. – founded by Strem and Gabriella
Solti – enables art collectors to directly own a piece of a
high-end painting of a famous 19th- or 20th- century artwork in
a shared ownership model. Solti said this structure enables art
enthusiasts and investors to enter the stable and profitable high-end
art market at a very low entry point. As with mutual funds, art
fund investors buy into the management of the fund, not the painting
itself. Today, more and more people are investing in a piece of
a famous art in the same way that they used to invest in a company's
stock.
"We make it possible for people with as little as $25,000 to
invest to come on board," said Strem.
Art is generally considered a very conservative investment. Solti
said it is becoming more attractive because it represents something
timeless. The number of collectors for a given art work are kept
small, capping at 49 with the management company owning one "share,"
for a total of 50. Shareholders become members of the gallery where
the work resides. Every two years, the gallery issues a valuation
certificate based on current markets.
This type of art investment is relatively new and dealers are watching
it with interest. Westbridge regards it as "difficult to pull
off," and Langmann said her company doesn't advise clients
to buy for investment purposes alone. But Solti and Strem are optimistic
that they can convince art lovers to consider their model.
"The value of a Picasso or a Chagall is already established,"
said Strem, "history has spoken, so why not invest and enjoy
it?"
Monika Ullmann is a freelance writer and editor living
in Vancouver. She can be reached at [email protected].
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