WELL
HUNG ASSETS

Despite huge potential, the culture of buying art as an investment in South Africa is very limited. Words: Beezy Bailey

Extremely mediocre art and posters are to be found on the wall of multinational business and in the homes of most South African millionaire businessmen.

.....With property and stocks at a premium, what to do with spare cash for good returns is becoming a subject of much consideration.

.....I continue to buy while values increase, in most cases dramatically. A R4,000 Vusi Nkumalo I bought in l996 is now worth R50,000. I have not has the experience of anything I bought devaluing.

People and businesses in South Africa who could afford original Picassos hanging on the wall are likely to spend more on curtains than paintings.

I applaud the redressing of the past in buying black art, but feel that excluding paintings by white South African to be rather racist and definitely unconstitutional...

... It thus falls to us, the artists, the arts community and big business to educate South Africans to understand that art is fundamental to our development. People need educating as to the value of any investment, be it property, share or art. It would be interesting to see how much a diamond has increased in value over the same period of time as Picasso. My guess is that art would win every time! Art bought as speculation would create the right market to allow market forces to drive prices up, thus creating the same viable art industry as in all other Western countries.

extract from articles by Simpiwe Piliso - 2006

High-fliers splash out on works of art

Corporate executives spend millions on their collections

....Art dealers this week estimated that buyers were spending from as little as R500 to as much as R1million for a single painting to hang in their homes and offices. "Some people buy art for investment purposes and others buy it to decorate their homes", said Alice Pitzer, who owns a gallery in Roodepoort, west of Joburg. She said Joburg boasted the country's largest number of classic art buyers...

Art is the new blue chip

Art is big business in Joburg - and the city's super-rich are splashing out millions on works to hand in their homes.

"The growing number of art buyers have bought their luxury houses and expensive cars ... and now they want to put nice this into these houses".

Art dealers this week estimated that the value of private and corporate collections in the city could amount to more than R2-billion.

Dealer Alice Pitzer said her list of corporate clients was overwhelming. "Most importantly, art is excluded (from) capital gains tax and therefore is a very attractive investment".

Art auctions in the city in the last two years have attracted record turnouts. And at one a fortnight ago, an astonishing 14 records were broken, according to auctioneer Stephan Welz.

"There's a lot of money floating around" ... One Joburg bidder spent R1.4 million on a painting by South African artist Pieter Hugo Naude.

The painting, "Springtime Namaqualand" sold in l988 for R70,000.

Another painting that left the Rosebank aution floor was Irma Stern's "A Still Life with Arum Lilies" which fetched over R1-million ...

Bina Genovese, an art dealer at Sephan Welz & Co, said one of the highest prices fetched in Joburg was R1.7 million for Stern's Cape Girl with Fruit, seven years ago. Welz predicted art could fetch eight-figure amounts in South Africa within seven years.

extract from Sunday Times, February 1 2004 by Shanthini Naidoo

Investors develop an eye for SA art

Paintings by established South African artists double in value as buyers swop the stock market for aesthetics

Forget stocks and bonds - the clever money right now is on South African paintings.

Investors and art lovers are clamouring for works by established artists because they see them as sure-fire winners - and because the art does not depreciate.

The demand is driving up the prices of paintings, with some having doubled in value in just a year.

... "People are always looking for other investment opportunities an d they've only now, much belatedly, realized that good South Afrcan art is a great investment", said Wessels.

She said buyers ranged from avid collectors to first- timers.

... Michael Bernardi, of Bernardi Auctioneers, said well-known artists were fetching "exceptional" prices.

... "The market is buoyant and it always will be for good-quality artworks by South African masters,"Bernardi said.
Cape Town fine art gallery owner Johans Borman said buying quality South African art was a safe investment because it was not as volatile as shares.

The bigger picture

Works by SA artists are set to break new records.....

.......The global art market is even more superheated.  In November last year mida mogul David Geffen sold a Jackson Pollock to David Martinez, a managing partner with debt management Fintech Advisory, for a record-setting US$140m.  Other abstract work by Gustav Klimt and Willem de Koonong fetched similar prices a few months earlier.

Though such results tend to made the prices paid in SA seem polite, these headlines sales are not without import locally.  The Laubser sale might represent a record at auction, but it is at private sales that new peaks are being mapped and scaled.  Locally, a buyer recently concluded a R5m private sale for a work by Gerard Sekoto.  While such sales are indicative of a buoyant local art economy, they also suggest a disturbing trend for some observers.

"I would never have dreamt the Laubser would have fetched R4, or R4,4 with the buyer's premium added, and even less so the Stern gouache," Welz admits.  "The jump was slightly disturbing; it was just too big".

It is a view shared by Cape Town dealer Michael Stevenson, who is now dealing almost exclusively in contemporary SA art.

"At present it is difficult to trade with integrity in the market", he says, "because the values are so difficult to determine......Once some clarity appears on the relative values, I will be more active".

In a market that is fundamentally irrational (Welz characterises it as "based on perceptions and fashion"), such clarity might still be far off - or just around the corner..........

Like Stevenson, Welz does, however, concede that the depth and wealth of the market locally makes it hard to predict.  "There is a new generation of collectors coming into the market," says Weltz, "who are willing to chase up prices on significant works."  Both warn that lots of money does not necessarily buy quality........

Welz agrees, diplomatically offering this bit of advice to unschooled trophy hunters: "As a rule of thumb, when the crunch comes and you have to sell, you are always going to do better with a good painting by a lesser artist than with a bad painting by a major artist".

Viewed more broadly, the acquisition of trophy art has long been a pursuit of individuals marking their arrival at the pinnacle of society.  The recent conflation of collecting to mean clever investing indicates a disingenuous new spin on this time-honoured ritual.. Like so many who work with art as a daily routine, Welz is emphatic in his repudiation of this trend.  "Art is not a investment," he states.  "To my mind, it doesn't meet the criteria of the definition of an investment:  it doesn't pay a dividend, in fact it costs you money to keep it; and it is not easily transactable.  I prefer to call it a form of wealth".

Extract from an article by Sean O'Toole from the Financial Mail February 9 2007