The art of art investment

Countless artists, whose works today command million dollar price tags, died incognito because their artistic interpretation differed from that of the society in which they lived.

Vincent van Gogh’s The Red Vineyard, now in Moscow’s Pushkin State Museum of Fine Arts, is speculated as the world’s most valuable painting, principally because it was the only one the Dutch artist personally sold. Yet, quips Sanlam art curator Stefan Hundt, art as an investment provides a natural hedge against inflation.

Walker Scott Art Advisory founding partner Dr Fred Scott says good art is shaped by someone with the requisite talent to incorporate composition, technical skills and the intangible quality that distinguishes the outcome as valuable creativity. Key is an honesty with which the artist has created his work.

He says what one person deems as ‘good art’ may have the opposite effect for the person standing next to them. The ability for art to appreciate into a valuable asset class has been a driving factor behind many private and corporate collections.

Scott feels the current environment has made it easy for collectors to accumulate an African art collection as various renowned auction houses bring these pieces under the hammer. Privately owned international auction house Bonhams experienced a 53% hike to R30 million ($2.2 million) in the sales of African artwork last year.

Professional collectors

Corporate South Africa has been a dedicated collector for decades and several vie for the top position. However, potentially leading the pack is Nando’s with more than 19 000 art pieces in its growing collection displayed across 1 000 fast food chicken chain outlets globally. On its website the South African brand argues it has the world’s largest collection of emerging southern African art, supporting over 320 artists in their careers.

The Nando’s art initiative has a partnership with the Jeanetta Blignaut Art Consultancy as curator and driving force behind the artists’ development programmes. Blignaut says the project develops talented artists through ongoing purchases and by marketing key artists to elevate their careers. Meanwhile, the Old Mutual Investment Group’s art collection, situated in the London head office, was selected to reflect the financial services company’s South African roots. Each meeting room honours a young British or South African artist with three or four pieces hanging on the walls.

The foreword to the group’s artwork booklet reflects art cannot be placed in neatly defined boxes since the viewer mentally cuts off aspects of artwork they either do not understand or that does not fit with their perspectives. In accepting art is either abstract or representational (with the potential to cross the two), the Old Mutual collection generates dialogue about South Africa both before and after democracy.

The Archival Platform, an initiative established by University of Cape Town National Research Foundation chair in archive and public culture Carolyn Hamilton and the Nelson Mandela Foundation, considers the South African Reserve Bank (SARB) art collection among the premier corporate ones in the country. Its strength lies in landscape art produced between 1900 and 1970, with SARB holding numerous historically important and contemporary pieces.

In 2005, Hollard Insurance acquired the historical Parktown home built by the Phillips mining magnate family which had been instrumental in founding the Johannesburg Art Gallery. Today the financial services group boasts an art collection of mainly contemporary South African work within the Villa Arcadia building, itself a Herbert Baker-designed property.

Almost as remarkable as its scope and size is the manner in which the Constitutional Court of South Africa’s art collection was gathered. The art was the passion and responsibility of court judge Albie Sachs and artworks were not procured via a large budget.

Hamilton says the works at the court were donations from artists, gallery owners and art patrons when Sachs and fellow judge Yvonne Mokgoro were tasked with overseeing the court’s décor. Today works from dozens of leading South African artists – from large Marlene Dumas tapestries to a Gerard Sekoto selection and drawings and a major sculpture by Dumile Feni – are on display.

Established in 1965, Hamilton believes the Sanlam art collection ranks among the country’s finest of local art. Constituting over 2 000 items (of which only 2% is displayed at one time) by some of South Africa’s most valued and emerging artists, the collection provides a representative overview of the country’s art dating from the late 1800s to today. Hundt of Sanlam says the financial services group continues acquiring local work to broaden the representative character of the collection, the estimated value of which stands around R158 million ($11.7 million).

 

Banking on prestige

Art collections also abound among the banking groups with Standard Bank, Absa and Rand Merchant Bank (RMB) proudly housing established and contemporary local artworks.

Standard Bank promotes local artists and, while owning historically significant works, recent additions focused on contemporary pieces. Comprising over 1 000 works, Hamilton says the oldest piece is an 18thcentury Jan de Reyniers painting of Table Bay. Contemporary artists include William Kentridge, Dumas, Jane Alexander, Sam Nhlengethwa and Zwelethu Mthetwa.

When Absa commissioned the Towers North building in the Johannesburg central business district in 1999, artworks were simultaneously commissioned to allow the architects and artists to collaborate such that the art was ideally accommodated.The building houses a small art gallery, but the bulk of the work hangs in offices and reception areas.

The RMB collection comprises nearly 1 500 pieces with the merchant banking group considering the investment as “contributing to a greater vision of thinking that can change the world”. The portfolio is an intentionally eclectic mix ranging from internationally acclaimed artists like Kentridge to youthful expressions by emerging artists aspiring to global graduation. 

Both iron ore company Exxaro and minerals group BHP Billiton’s renowned art collections are procured from local contemporary artists, while the South African Broadcasting Corporation (SABC) began informally acquiring artworks more than 50 years ago. When the corporation restructured in 1994, the collection was formalised and funds allocated to purchase works reflecting South Africa’s new democracy.Sasol established its art collection in 1983. It currently has over 2 000 pieces by mainly contemporary, young and emerging South African artists including Luan Nel, Clive van den Berg, Kevin Brand, Stefanus Rademeyer and Marco Cianfanelli.

MTN founded its art collection 20 years ago and today owns over 1 400 African and South African works, with Hamilton indicating the collection has been “energetically researched, published, travelled, exhibited, discussed, debated and admired”.

Art and wine

South Africa’s wineries are prolific art collectors. Not only presenting art in a bottle for the world to judge the country’s winemaking skills, leading producers like Holden Manz, Saronsberg, Hazendal, Groot Constantia, Oude Libertas, Graham Beck, Steenberg, Glen Carlou, Grande Provence and Delaire Graff proudly acquire local and international masterpieces.

The La Motte Museum has its largest room dedicated to Jacobus Hendrik Pierneef, while the collection also displays a vast selection of contemporary art by other distinguished artists.

The Rupert Museum showcases the Anton and Huberte Rupert private art collection. Begun in the 1940s, this collection continues growing under the guardianship of the Rupert Art Foundation.

The gallery boasts leading South African artists like Maggie Laubser, Irma Stern, Alexis Preller, Walter Battiss, Elza Dziomba, Jean Welz, Pierneef, Lippy Lipshitz, Moses Kottler, Anton van Wouw and Coert Steynberg as well as major European works by sculptors Auguste Rodin and Käthe Kollwitz and French tapestries by Jean Lurat.

Spier Wine Farm is acclaimed to boast the most comprehensive collection of contemporary South African art and only a small selection is displayed in the buildings and spaces around the farm. The winery regularly commissions large-scale pieces from selected artists including Paul Emanuel whose piece Transitions was viewed by 2 500 visitors before being exhibited internationally.

International appetite

Globally, the concept of corporate art collections also has its place. One example is the Munich Re art collection that dates to 1912 when company founder Carl von Thieme, who was also a patron of the arts, commissioned various contemporary regional artists to design pieces for the newly completed Main Building at Königinstrasse in Munich.

Among that work was the 20m2 fresco Kampf der Elemente by German artist Reinhold Max Eichler designed for the entrance area. Today the insurer’s collection boasts more than 2 500 works from international artists and is continuously expanded to accommodate new pieces.

However, the reality is that owning valuable art collections demands insurance against mishap. Stonehage Fleming Family & Partners chairman for South Africa Eddy Oblowitz says managing an art collection is challenging and involves cataloguing, storage and insurance; cross-border implications of taxation and governance; high-risk transportation; conservation; museum loans; acquisition and disposal. “It is paramount to be aware of the [art market’s] potential pitfalls,” he warns.

Sanlam broke new ground in South Africa when it launched the Sanlam Private Investments Art Advisory Service in 2010. The initiative provides art collectors with independent, expert advice on buying art and managing their investments. “The art market is unregulated and there are no best practices or statutory requirements, which means there are a number of risks to take into account,” Hundt says.

The partnership between Hollard and Artinsure Underwriting Managers provides another product for dedicated collectors. Artinsure MD Gordon Massie says while art collections may be irreplaceable, owners still want financial compensation for their loss or damage.

The tailor-made art and antiques insurance policy covers private and corporate collectors including antique and fine art dealers, auction houses, restorers, specialist packers, shippers and artists.

Traditionally art insurance preserved the heritage, but Massie says as the collecting community grows to include those purchasing art as a wealth-creating investment, it is increasingly being viewed as a strategic risk protection solution.

Short-term insurance group CIB has Vertex, an insurance policy CEO Douglas Donnelly says specifically targets high net worth individuals. The solutions asset-based policy offers various tailor-made features to provide clients with all-risk cover, meaning that unless it is specifically excluded or limited, items are covered.

 

Source: RiskAfrica