Unnerved by a febrile stock exchange and persistent rumblings of a potential dip in property prices, Hong Kong investors are seeking refuge in art and the lure of both financial and cultural rewards.
Hong Kong, already the world’s third-largest auction hub, has seen a slew of big name galleries open their doors, including White Cube and the Gagosian, to tap the pockets of the region’s new rich, and the studios of its ever-deepening talent pool of artists.
In turn, new investors, wealthy but not super-rich, are taking a punt on art, many for the first time.
For seed money of HK$180,000 (US$23,300), Levenza Toh bought a painting by Chinese contemporary artist Liu Chunhai (劉純海), which she hopes will rise in value by 20 percent each year — a strong return compared with last year’s stock market slump of 25 percent.
The territory’s bourse has rebounded so far this year after the eurozone-driven losses of last year, but Toh said her investment also brought an aesthetic bounty.
“If the painting loses value I still have something beautiful to pass on to my children,” she said.
Art brokerage The Art Futures group said its client base has grown in step with Hong Kong’s burgeoning reputation as the heart of Asia’s art market.
Art investment has become a relative “safe haven” in stormy markets, said AFG’s Jonathan Macey, adding that the fundamentals of artists’ work can be analyzed in much the same way as a stock, with “mid-career” artists favored over total newcomers or top-priced favorites.
“It is also enjoyable for people in a way that buying property for purely investment purposes isn’t,” he said.
While Macey stresses art is not a “get-rich-quick” scheme, he says clients can expect gains of between 12 percent and 18 percent over a three-to-five year period.
In the interim they can lease their paintings to hang in company and hotel lobbies, providing a dividend of about 7 percent that outstrips most bank interest rates.
Eye-popping sales at Hong Kong’s big auction houses underpin the city’s surge to the heart of Asia’s art scene.
Buyers are particularly enamored by Chinese contemporary art, reflecting China’s rising economic and cultural power, with artists such as Liu Wei (劉煒), Luo Zhongli (羅中立) and Zhang Xiaogang (張曉剛) attracting multi-million US dollar price tags.
Last year, Christie’s Asian arm in Hong Kong saw total sales of Chinese modern art reach about HK$650 million, out of total sales of HK$7.04 billion.
Not to be outdone, Sotheby’s this month hosted an Asian contemporary art sale that sold HK$211 million worth of work — its -second-highest total for such a sale in Hong Kong. The money is also cascading into Hong Kong’s galleries as the profile of art buyers shifts from the high-end collectors who dominated a decade or so ago — many of them European.
“We’ve seen collectors from Asia, Southeast Asia, Indonesia and Taiwan come into the market,” said Nicole Schoeni of the Schoeni Art Gallery, who says her client base has widened over recent years from purely big European collectors.
“They are passionate about art. Investment is an added bonus of course, but they don’t tend to ‘flip’ paintings every two or three months for profit,” she said.
As with any investment, art buying carries a risks as markets fluctuate, but Schoeni said the future looks good for Asian art.