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.
“Asia’s getting richer and there’s also great creativity coming from the region. On top of that people here tend to be hard working, positive and resilient ... the long-term is positive,” she added.
WALKING AWAY: At one point the world’s No. 3 smartphone brand, LG has fallen from a position as a market leader after a series of software and hardware mishaps South Korea’s LG Electronics Inc is to wind down its loss-making mobile division after failing to find a buyer, a move that would make it the first major smartphone brand to completely withdraw from the market. Its decision to pull out will leave its 10 percent share in North America, where it is the No. 3 brand, to be gobbled up by Samsung Electronics Co and Apple Inc with its domestic rival expected to have the edge. “In the United States, LG has targeted mid-priced — if not ultra-low — models and that means Samsung, which has more mid-priced product lines than
SHORTAGE: The city government said it would install water purification machines to provide drinking water to residents and would close all public swimming pools Officials, residents and businesses in Taichung have been gearing up for water cuts that are to take effect tomorrow as Taiwan deals with a water shortage. The water supply to large parts of Taichung as well as parts of Miaoli, Changhua and Hsinchu counties is to be cut on a rotational basis for two days a week, affecting an estimated 1 million customers, the Water Resources Agency said. It is the most stringent water rationing measure introduced in central Taiwan in nearly 50 years, Taiwan Water Corp (台灣自來水) official Lin Yi-hsiung (林義雄) said. The Taichung City Government said in a statement that
SPECULATION: The integrated house and land transaction income tax has been amended as the real-estate market heats up because of high liquidity and low interest rates Lawmakers across party lines yesterday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act (所得稅法) is to come into effect, with the aim of curbing real-estate speculation. The consensus was reached following interparty negotiations at the legislature’s Finance Committee to determine when revisions to the “integrated house and land transaction income tax” would take effect. The committee on Monday last week passed a number of revisions to the act, but failed to agree on when they would take effect. Under the proposed revisions, the tax would be set at 45 percent
TAICHUNG PLANT: An official said that generator No. 3 had been retrofitted and it generates 0.46g of particulate pollution per kilowatt-hour, down from 0.6g to 0.7g A spike in demand for electricity made it necessary to restart the third coal-fired generator at the Taichung Power Plant, Taiwan Power Co (Taipower, 台電) said yesterday as a feud with the Taichung City Government lingers. Taichung Mayor Lu Shiow-yen (盧秀燕) has sought to keep the generator from being used. In 2019, he revoked Taipower’s license to operate the generator. However, the state-run utility has taken the city government to court over the license revocation and won the case in February last year, Taipower manager Chang Ting-shu (張廷抒) said. “We would like to remind the Taichung City Government that operation of the third