Welcome to our Australian Aboriginal art investment online gallery in Sydney, Australia

We are an investment art gallery in Sydney offering Indigenous artworks and Aboriginal art rental. Our team of art investing and art rental advisers are experts in financial planning, art wealth management and wealth creation and can help you with art and financial advice.

Putting together a viable investment art portfolio is something that more people should do. With the wide range of investment opportunities available today, there are all sorts of investments that will fit into just about any budget and satisfy any level of acceptable risk. 

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Art as an Alternative Asset

The Merrill Lynch World Report found that twenty percent of High Net-Worth Individuals, globally, have allocated their investment of passion dollars to art collections. A lot of people were tempted to start collecting art a long time ago, but since art investments were not considered as lucrative or stable as shares or bonds, the art market was mainly controlled by a relatively small number of market participants who did it purely for passion, making the art market all the more difficult to access and become a part of.

The art market has developed greatly and continues to progress into a more innovative and highly developed source of alternative assets. Over the years, art has become accessible to all levels of investors; from those collecting art as individuals to those purchasing art through companies, trusts or even self managed super funds. But one aspect that distinguishes traditional art investors to modern art investors is the fact that new art investors look at economics and balance portfolios by considering a wider range of artists.

Diversification

Different types of investments perform better under different market conditions. By investing in more than one type of investment you diversify, which can help reduce the risk for your overall investment portfolio. The more ways you diversify the more likely you are to reduce your risk.

For example, across

• More than one investment, combining blue-chip artists with mid-career and speculative emerging art talents)
• More than one type of art medium or art style when investing in art, just like you’d use more than one type of fund and investment manager when investing in managed funds.

Let's say you had all your money in just one investment and that investment didn't perform - you would make a loss. But, if you spread your money across different types of investments you may have a better chance of including some investments that will perform.

Growth potential

The potential capital appreciation of an artwork depends on a sound analysis and research, including:

Artist - Reputation plays a major role in the arts market (Beckert and Rössel, 2004). Artists are broadly categorised by their experience and demand in the market. The leading group called blue-chip artists consists of the great Australian masters who are recognised internationally for their contribution to Australian art and culture. The mid-career artists are consolidating their reputations in the market place and are set to be tomorrow’s icons. These artists are being collected by major institutions such as the Art Gallery of NSW and major regional galleries, with a developed secondary market. Mid career artists are very active in developing their career. It is generally recommended that a portfolio includes a “solid core” of these artists.The third group broadly known as “emerging” refers to artists who are developing a name in the market.  Lesser known emerging talents usually carry more risk as the beginning of their careers, these artists have no far-reaching reputation to speak of. Itaya and Ursprung (2008) found that production declines over an artist’s career time, and various empirical studies indicate that some artists’ early work is most highly appreciated, whereas others produce their most successful work at a more mature age (Galenson and Weinberg, 2000 and Edwards, 2004). Mature artists tend to produce artworks with a lower price risk.  A good starting point is to see which artists are represented in prominent local and overseas corporate collections, Australian museums, the Museum for Australian Aboriginal art "La Grange" in Neuchâtel, Switzerland, the Musée du quai Branly, Paris, and the Museum of Contemporary Aboriginal Art in Utrecht, the Netherlands, to name a few. In Indigenous Australian arts, beginning a career in art later in life is neither new nor uncommon but the norm to start painting or sculpting as an elder, after a lifetime of other endeavours. This group represents an affordable yet exciting entry level to the primary art market, especially emerging aboriginal elders.

A recent study by Maddison and Jul-Perdersen acknowledges that the prices of an artist’s works should depend on the expected total supply which, in turn, depends on the artist’s conditional life expectancy at the time of sale.

The magnitude of the price risk suggests that there is a major role for dealers in the art market. Using historical data, Goetzmann and Worthington find that the price risk has been declining since the beginning of the painting market, indicating increasing informational efficiency, where artworks are like stocks and a dealer is like a broker.

Velthuis confirms that art dealers of major auction houses tend to stick with strategically selected artists and quote prices increasing them at regular intervals, irrespective of actual sales. This explains why the market value for certain artworks increases systematically.

Studies by Hutter, M., Knebel, C., Pietzner, G. & Schäfer, M. confirmed this relationship between dealers and price, where for works of living artists in dealer markets always increase steadily over their lifetimes.

When it comes to specific pricing strategies, Schweizer points out that there is a wide variety, depending on the artist’s particular niche. High prices tend to lead to high profits; high-profit artists provide a smaller supply, just like there aren’t as many Lamborghinis as there are Toyotas.

By going through art catalogues and checking the past art auction records on artnet.com, artprice.com or aasd.com.au, you may focus on the artists who already receives critical acclaim in their genre of contemporary art from a well-known art auction house or an art dealer.

Medium - The term medium is also used to describe a category of painting or simply a type of paint, such as oil painting, acrylics (synthetic polymer), ochre (earth pigments) or watercolor. Aboriginal Art covers a wide medium including painting on leaves, wood carving, rock carving, sculpture, sand-painting and ceremonial clothing, as well as artistic decorations found on weaponry and also tools.  To create a sound investment art portfolio consider art works by Australian Indigenous artists in traditional or contemporary mediums, whose art works consistently outperformed Mei Moses All Art Index and Australian Art Index (AMI).

Market – Consider economic and art market trends, follow  key indicators such as art awards, auction results and media articles.

Prof Worthington found that the returns on paintings are generally lower than conventional investment markets, while low correlations of returns suggest that opportunities for portfolio diversification in art works alone and in conjunction with equity markets exist, no diversification gains are provided by art in financial asset portfolios. Diversification benefits in portfolios comprised solely of art works are possible with Contemporary Masters, 19th Century European, Old Masters and 20th Century English paintings.

Research shows that selected Australian Aboriginal artworks may offer lower price risk with higher potential for capital appreciation and form a core of any effective art investment portfolio.

Provenance - The authenticity of a work of art greatly influences its value. Find a private art dealer who has done all the research and can provide you with documentation and references from well-known sources. This will give you peace of mind that the art community has agreed that your purchase is indeed authentic and collectible. 

Authenticity and high quality provenance is critical to art and especially important when buying an Aboriginal art investment.  Provenance describes the source and history of ownership of an artwork, how the artwork was created and how it arrived in the market. The best Aboriginal artworks will always have irrefutable provenance, with a transparent history from artist to a dealer.

Many dealers and galleries try to prove the provenance and authenticity of artworks by providing photos (or video) showing the artist at work or holding the finished works. This ‘documentary evidence’ is not legally acceptable and while it may appear convincing, proves nothing. 

Can the gallery or dealer provide an artwork certificate or CV for the artist and their work?

Is the artwork accompanied with the certified official valuation by an Australian registered art specialist, who is registered with the ATO Australian Cultural Gifts Program?

Risks

Any investment involves varying degrees of risk. Firstly, there are general investment risks, which are common to all investments. These include general factors such as inflation, movements in interest rates, government policies and legislation, taxation and changes in consumer confidence.

Next, there are art specific risks. These are risks with particular relevance to the art market, like:

• market risk – this is the risk that the art market will move in an unfavourable direction or begin to show signs of volatility, so that investors begin to lose confidence
• time-frame: art is a medium to long-term investment – investing in art often means that your money is tied up for several years
• liquidity risk – art investment is typically an illiquid investment, and paintings cannot be bought and sold instantly on impulse
• valuation risk – the value of a work of art is a matter of opinion, and this value may not be realised when the artwork is sold
• insurance risk – insurance may not cover all events of loss
• works of art may be damaged or destroyed
• there is the risk of buying a fraudulent copy of a painting.

Another set of risks is added when you talk about an art investment fund or an art trust. These include: 

• lack of past performance – the investment fund may have no experience in investing in art
• risk in selecting assets – there is always the risk that the artworks depreciate in value.
• operational risk – this is the risk were problems emerge with the business processes and procedures to record and safeguard the assets. Further, when the artworks are not held by the owner, a gallery or a custodian(say when they are loaned to galleries or museums), a proper audit trail may not be maintained as needed.  
• tax – there is always the risk that tax laws may change, and impact on the investor’s outcome in the future. As with any investment, investors should talk to their own tax adviser before making any decision.
• compliance risk – if an investment trust or a fund (e.g. Self-managed Superannuation) does something to jeopardise its financial services licence issued by a regulator, this could affect investments and the fund’s sustainability as a financial entity
• liquidity risk – because of the market, you may not be able to sell your art investment when you want to, or not at all. The secondary market for art is unregulated and is fragmented.

Lastly, there are economic, political and social risks. An economic downturn can affect investments, and may affect the ability of an art trust or an art fund to buy or sell art. It is hard to anticipate changes in government policy or predict social instability and these pose significant risks for investors.

Return on your investment

Art market sales are continuing to be higher than expected, even in today’s climate – with the fall out of the global financial crisis and the sub-prime GFC crisis. There’s a high demand for art because by its nature, artworks are unique and in limited supply. Adding to the mix, most of the world’s great works of art are in art galleries or private collections. Economically speaking, this creates a collection of “goods” that are not readily converted into cash, and unpredictable.

In an era of volatile stock markets, low returns on real estate investments and the lowest interest rates on fixed deposits, investors are now considering other investment avenues. Among alternative and interesting investment options is art - which has been faster gaining popularity.  Art, like shares, real estate or an alternative investment (commodities, hedge funds, currency, etc), is a mid to long-term investment.

Moses compared statistics on the behaviour of real returns for various asset classes and found that the volatility of art market price index dropped to 21.3% during the past 50 years from twice as high in the prior 100 years, making the art index just a bit more risky than the major stock market indices.  More and more people willing to put their money into art as an investment. They’re quickly realizing that it’s less risky than playing the current stock market.

Goetzmann found significantly out-performed both stocks and bonds during 1900-1986 sample periods.  Dedman’s AMI (Australian Art Market index) returned over 12% per annum compounded over the twenty-year holding period, with selected indigenous artists further outperforming AMI up to 9 times.

Why Use a Private Art Dealer?

Some of the world’s largest wealth management companies are starting to realize the importance of art as an investment. However, brokers who specialize in fine art investments are trained in art and not in investments or financial planning. They are great resources to help determine how much of your portfolio should include art, but not when choosing the individual art pieces. Find a private art dealer who is very knowledgeable about their art and investments overall, who has financial planning experience and can educate you about various asset classes.  A good private art dealer is one who will explain to you everything they know about the artwork, art market, economic and investment environments, tax treatment and provide you with a sound evaluation where an artwork may or may not fit into your investment portfolio. 

Before You Buy a Piece of Art

What does art mean to you? Does this only mean a stylish haircut done by your stylist? Or does art mean something more than that? Maybe you have some pieces of art on your walls, but does that mean you are a lover of art and understand all about it? When buying a piece of art you should consider whether or not you have a taste for it and should know which artwork will enhance the look of your apartment.

However, believe it not, art is more than a means of decorating. It can be a form of investment as well. In fact, there are investors who rank art just after property as far as investing money is concerned. Now, a question that can arise in your mind is how can one really locate a true piece of art that is highly valuable?

Some tips are mentioned below that will help you make art a part of your investment portfolio. In this regard, you should ask yourself the following questions:

Do you really like art?

This is a basic and simple question you should ask yourself. It has been observed that sometimes the novices enter this art market even if they do not have any passion for this form of investment. This in turn makes them select pieces they do not like and thus lose money.

How much do you know about art?

If you have done a course about the origin of art from any college, then it’s fine. However, you should not be of the opinion that all you know is enough and need not know anything more about art. The world of art resembles any other type of market. It exists on factors that occur at the present juncture and it looks out for what is going to happen in the future.

If you want to find out whether you really love art or not, visit art museums and galleries. You can learn about the art field through the museums. On the other hand, you can also learn about the world of art from the galleries.

You should consider the shows and galleries as a marketplace of art. Attending these places or finding out what is going on in the world market of art is a wise decision. The added advantage is you can solve many of your doubts regarding art from these galleries. However, always remember these are salespeople.

Are you a novice buyer?

As far as art or any other investment is concerned, you should know exactly what you are doing. When you see some successful people, you may think, ‘Why can’t I be successful?’ Like property, art also has a business perspective but here the taste of the buyer is considered to be of primary importance. As far as an investment is concerned, it plays a crucial role. Just because a novice buyer cannot understand why and how a market fluctuates on the basis of taste does not mean he will lose anything. 

Where do you start?

If you are thinking about putting together an art investment portfolio, here are some ideas to keep in mind:

• Develop your goals for the portfolio. What is it you want to gain by creating the art portfolio? 
• Evaluate your level of comfort when it comes to risk. Some people are by nature risk takers while others tend to be more conservative. There are art investment options that will complement both extremes as well as any mix in between.
• Learn about the many types of art investments. You may consider such items as art funds, investing in shares of art auction houses or art investment vehicles, buy a portfolio of artworks, or start with a single art piece and grow your art portfolio over time. 
• Set limits on how much you can invest in art and your overall investment portfolio. Investing should be done with net income that is not earmarked for food, clothing, rent or mortgage, travel and other common budget items. Check your payslip for any deductions (except tax) already made, for example superannuation, health insurance, company car. For the most accurate picture, add these amounts back on to your income and then include them in your expenses. Leave out any irregular income that you would not usually receive, for example overtime that is not regular or bonuses for unusually good performance. Look at what you have left over after taking care of your other financial commitments and only use that for your investing activity. 
• FIDO's budget planner sorts your income and expenses, and calculates your weekly, fortnightly or monthly surplus or deficit. Download a print version of the free budget planner or use Online version 
•  Ensure purchasing top quality paintings, i.e. a painting by a renowned artist. However, don't cross your budget for this purpose. Try to look for good paintings that are within your budget. .
• Get professional advice. Especially for newcomers, you need the counsel of someone with experience in the financial world. Hire an art adviser
• Diversify your art investments. You may want to go with a couple of mid-career artists, toss in a speculative emerging talent or two, and perhaps put your money into blue-chip artworks. By diversifying your art holdings, you help to create a situation where one investment may help to offset a temporary loss you may experience with another investment.

• Keep yourself updated on the latest information pertaining to art. In other words, educate yourself
• Select a new direction or dimension for your collection
• Consider the longevity of the chosen artist's career
• Purchase work you find challenging
• Be sure to differentiate between commercial and critical prestige
• Take adequate care of your collection
• Devote sufficient time to choosing your collection  

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