PAI’s The week in focus: Separating price and value

Magritte's À la rencontre du plaisir (Towards Pleasure). Courtesy of Christie's.

Let’s start with the words of Oscar Wilde: “A cynic is a man who knows the price of everything and the value of nothing.”

A cynic might, then, ask why one should buy works of art when they have little or no tangible value? Or should I have used the words ‘invest in’ rather than the word ‘buy’? Investment implies the expectation of future growth in an asset’s price (there is no regular income to be derived from an artwork). And if it’s simply cold cash rather than aesthetic pleasure that you are after, what do you choose?

That initial rambling brings us to the recent article on the surreal works of René Magritte carried by The Art Newspaper, which offers something in the way of how prices achieved for the artist’sworks have progressed over recent decades. Last year (2019), and in round figures, pieces by Magritte were averaging some £2m each, while 30 years before in 1989 with more pieces being auctioned their average price was in the region of £0.6m – in other words an increase of 230% or 4% a year compounding.

An increase of 230% or 4% a year

Yes, 4% annual compound growth, hardly an exceptional advance rate, particularly when the cost of protecting, buying and selling your art is taken into consideration. But what is that when set against the sheer visual pleasure of looking at the piece? Of course, there can be snags to ownership as billionaire Spanish businessman Jaime Botín is discovering. According to Robb Report the octogenarian banker has been slapped with a three-year jail sentence and a $101m fine for attempting to smuggle a Picasso painting which he owned out of Spain.

The lesson? Well, it could be not to buy art in Spain or, for that matter, bring it into that country and then try to move it abroad unless you have watertight export permits. Botín had bought the painting in London in 1977, but it had been found in 2015 on his yacht in the Mediterranean en route from Spain to Corsica and confiscated by the Spanish authorities as being a national treasure and, therefore, not to be removed from Spain. Life can be difficult.

You might also want to avoid buying art in China while the coronavirus goes rampant. According to ARTnews and others, Gallery Weekend Beijing, one of the country’s larger art shows, has been postponed and might possibly be dropped altogether this year.

Attract new and younger collectors

While Beijing might be going into reverse gear, Christie’s has been innovating to attract new and younger collectors to the art market. Take a look at the report by artnetnews on the auctioneer’s move into online selling and offering pieces at prices starting for as little as $100 – yes, one hundred bucks. Would-be buyers flocked to the site in their hundreds and the presumption is that they will be the buyers of other, major works as time goes by.

And, in London at least, there are other changes in the air. According to the New York Times Sotheby’s first post-Brexit sale attracted fewer bidders and a lower value of total sales than had been expected. Uncertainties over Brexit’s final outcome have apparently been taking their toll. Certainly, works by the likes of Pissarro and Signac were outstanding and attracted spirited bidding at the sale, but those by other artists were less favoured.

So, here’s a question – should serious collectors buy now while auction prices are in something of a flat period. The same newspaper article quotes art dealers as saying that Sotheby’s, Christie’s and Phillips are focussing more of their auction business on New York or on selling to private buyers. But this latter strategy can denude the open auctions of some of their finer offerings. The first months seem to have indicated that it’s not just a matter of knowing what to buy, but of knowing where to go to buy it.

And remember Oscar Wilde.