As you walk up Hollywood Road you will see a lot of top-tier galleries that has sourced some of the best artworks from around the world for local connoisseurs to admire and collect. These art pieces are not simply a collector’s item, but also an investment vehicle for a new group of buyers – art investors. 

“Art investors are usually those who have a strong investment portfolio and they are looking into new and diversified areas to invest in. Obviously, at the moment, in Hong Kong, stocks and property are not their top selection for an investment tool, so they buy art to make money,” said Jon Reade, managing director of Art Futures Group, who just opened the first art investment brokerage in Hong Kong 10 months ago.

Click here to read our interview with Stefan Sagmeister.

Art Futures Group (AFG) is Asia’s first company to provide services for investors wanting to access growing opportunities and profits in the art market by introducing basic principles of art investment to helps them navigate the market and make informed purchasing decisions.

 

 

How art investment works is that someone buys the art, holds the art and sells it for a profit. Art investors do not personally keep the art and find secondary parties to keep them for storage until the price is right to sell.

Alternatively, some companies that help store the photos will also host a lending service, where the artwork (in the period of storage) can be rented out to private individuals, corporate clients and other institutions from the F&B industry. Art investors can earn up to an additional 6% per annum on top of their investment’s capital gains, which have an estimate of 12-18% return per year.

Contemporary Chinese art is making waves as investment art. They have been receiving a good steady growth in the past couple of years and thanks to China’s ever growing, prices are predicted to keep rising.

For example, during an auction in May this year, a painting with a couplet by Chinese artist Qi Baishi set a record for Chinese modern art and calligraphy when it was sold to a Chinese buyer for RMB$425.5 million, while the previous owner acquired the painting for less than RMB$20 million in 2005.

Shen Jingdong, one of the very strong mid-career Chinese contemporary artists on the market
 

When evaluating Chinese investment art, one thing to keep in mind are the three categories of Chinese contemporary artists: emerging new artists, the mid-career artists and the “blue-chip” artists, who has already made a name for themselves in the market.

Read more about top artists to look out for here. 

In the current market, the mid-career Chinese contemporary artists are the biggest growth area. Artists such as Shen Jingdong, Luo Jie and Liu Chunhai are the three very strong mid-career contemporary artists that are highly recommended in this category.

Shen Jingdong’s earlier works sold for around HK$160,000 to HK$170,000, and within seven months, the same piece is selling for about HK$202,000. “[Chinese contemporary] art pieces will rise about 25% per year in compound in the next five years, conservatively,” said Reade.