The key to a good investment in art is timing. Ten years ago prices for water lilies and sunflowers soared as everyone clamoured for a piece of the impressionist painters' legacy. Today the investor has to find the Monets and Van Goghs of tomorrow, and buy when no one else is looking.
A relatively new field of art is emerging from modern China, whose artists have captured the dichotomy of their nation in art and are currently showing it off to exhibitions in New York, Mexico and Tokyo.
Twenty years ago, seven-year-old Zhu Wei watched his country open the front door to economic reforms, while keeping the back door on political freedoms and human rights firmly shut. Described as 'the Chinese diarist of the moment', Zhu is one of the most popular artists in Hong Kong today.
'Contemporary Chinese art is still very elementary, very affordable and it has a great future. There is a lot of pop influence, social realism, cubism, all integrated with the traditional Chinese approach, and that's what people like,' says Henry Au-Yeung, director at Hong Kong's Plum Blossoms Gallery.
Plum Blossoms, which discovered Zhu's talent six years ago, has staged three exhibitions of the painter's work, and watched his prices almost double. His records of political and social changes in China, using the classic medium of ink and colour on paper, command HK$25,000 to HK$200,000 (about US$3,200-US$25,600) a piece. 'He's found the middle ground,' says Au-Yeung of a style that appeals to Eastern and Western audiences.
Another artist finding middle ground and rising prices is Wei Dong. With a growing portfolio of exhibitions around the world, the 30-year-old artist from Mongolia has seen his prices double in the past four years, with sales ranging from HK$30,000 to HK$180,000.
The appeal of these artists lies in their ability to intertwine East with West, to reflect their reactions to the outside world without forgetting the traditions of their mother country. Even their exhibition catalogues are bilingual, echoing the influences of the West on China. This new attitude in Chinese art is in stark contrast to the traditional style, which demands knowledge of the country's language, poetry and literature for a true appreciation and understanding.
Despite a growing worldwide audience, the big question for today's investors is where will these artists be tomorrow? What they have to say now is important, but how they say it may be more important in the future. 'This is still a new field without consistency or direction. It's like stock, it could go up or down. It's impossible to predict,' says Au-Yeung.
Tides turn and art, as with any investment, is fickle. Who is in and what is out is shaped largely by rumours, auction houses, museums and art galleries.
The art of big business
'An artist's talent is not enough, he also has to have a good PR machine; a gallery that will produce decent catalogues for his shows, publicity for his exhibitions, a gateway into museums,' says Alice Yuan Piccus, managing director of Marlborough Fine Arts in Hong Kong. 'You want to make sure the artist you're collecting has this backup service, so he is not distracted from his painting by a need to make a living.'
An artist with a gallery's backing will make for a more secure investment. Their support will help build an artist's reputation and push him into the league of established and respected artists. It will also raise his prices. 'If the price is a little on the high side it doesn't matter because the market will catch up as long as it's a good example of the artist's work. You never regret what you buy but you always regret what you didn't buy,' says Piccus.
Manfred Schoeni, director of Schoeni gallery and patron for contemporary Chinese artists, invests in the more established contemporary oil painters who use Western techniques to produce paintings with European overtones.
Even with today's weak regional economy, a painting by neo-realist painter Wang Yi Dong, 44, fetched a price 60% above the original selling price at auction, says Schoeni. Another artist, Zhang Li, 41, who specialises in portraits depicting China's minority groups, sold all 20 paintings before the opening of his exhibition. 'We took Zhang on about two years ago and his prices have increased 35%. I think they will double in the next three to four years. You can always sell his work and the biggest problem is buying something which you can't sell,' says Schoeni.
A recent auction of Chinese avant-garde work in London sold less than a third of the pieces.
'Some of the avant-garde artists are fabulous because they have new, fresh ideas, but where do they go from here? I can't see their prices increasing because they are already expensive. Zhu Wei is overpriced, and it's only ink on paper. He paints so many and it's all the same thing. I'm not criticising his work, I'm saying I can't see him sustaining this for the next 20 years,' says Schoeni.
Quantity is not an attractive trait in an artist's portfolio. Work by a prolific artist will often fetch less than that of a less productive painter. It is the quality of an artist's work that will determine whether it has the staying power to appreciate over time. Schoeni warns against buying a painting based purely on the artist's signature; even the most successful painters have bad days.
'Concentrate on one particular artist that you like and buy his best pieces over the years,' says Schoeni. Finding your artist takes time, but a good place to start is the exhibition catalogues, which carry an artist's biography, a list of his exhibitions and publications. Work that has appeared in a museum or been written about in the academic world will be of increased value to collectors and more attractive to a secondary market.
The exhibition catalogue also has a page for the artists' seals, which are used to authenticate the painting. The red seals, which are part of the artist's signature but not necessarily his name, could be the studio name, a mood or a style. However, seals can be scanned or replicated, but the risk of forgeries is limited because China's contemporary artists are still alive.
The blessing of youth is not always on the artist's side. Investing in a young, relatively unknown artist may initially be cheaper, but the risks may be greater. For some however, putting their money on an artist on the eve of a promising career can be more exciting than running with the crowd.
Shui Mei, a 30-year-old artist from Beijing, was willing to lower her prices for her first solo exhibition at Schoeni Art Gallery in Hong Kong and sold 18 of 20 paintings on show. 'Her prices have almost doubled in a year, from HK$30,000 to HK$55,000,' says Schoeni. 'The next collection will definitely be more expensive than the ones at the beginning, but she's only done one exhibition, so there is always the risk that she might get pregnant tomorrow and never paint again. But that's the risk we run.'
Galleries are your ticket into the art world, but the decision of who to invest in and what to buy has to be yours. A gallery can give advice, but it represents its choice of artists, which is not necessarily yours. 'When buying art, use your eyes, not your ears. Listen to what people say but you're the one who has to live with it, so you have to like it,' says Au-Yeung from Plum Blossoms. Bear in mind your investment may not produce any return until the artist dies, which may be a long time to have something you dislike hanging above the fireplace.
It is in the gallery's interests to carry work that will sell, which means the gallery believes the painting has a ready market, the artist has a future, and your investment is more likely to make a profit in a secondary market.
Knowing when to approach the secondary market is as crucial as knowing when to buy. 'You have to observe the field, and sell when your painting is hot,' says Au-Yeung. However, predicting future tastes and trends can defy even the most experienced eye.
An abstract painting by artist Zhang Daqian, Sunshine after the Rain, was bought for HK$77,000 (US$10,000) in the 1970s and sold for HK$2 million (US$250,000) last year. At the time, Daqian was more popular for his traditional paintings like Red Lotus in Wind, which also sold for HK$77,000 in the 1970s. Recently, the paitnting fetched HK$280,000 at auction.
Search for quality
But it is not enough just to wait for the painting's subject matter to come back into vogue or for your artist to die; art is not a passive investment. By the time your painting comes under the hammer it has to speak for itself. 'You have to make it grow, you can't just sit on it. It is important to always buy quality, as a good example of an artist's work will always be sought after for exhibitions or collections. This will give your investment a history, or a provenance, which will help to raise the selling price,' says Piccus. 'You have to sell when the selling is good, not because you need the money.'
Reselling comes with a price. Christie's will give your painting a free estimate, but will then charge 1% of the reserve price to cover insurance costs; HK$5,000 for a single page illustration of your painting in the catalogue; and 10% of the hammer price.
Investing in art takes passion and patience, but it is a dual venture, in money and in you. 'It broadens your mind and relaxes your soul, and is much more pleasurable than buying stocks and bonds,' says Piccus. 'It's a risky investment, but I'd much rather hang a painting on the wall than my share certificate.'