The problem with a painting by Gerhard Richter is that you can’t bite it to tell if it’s real. But if it is, it’s a safer buy than gold. Paintings by the German artist have increased in value byan average 20 percent over the past year, while gold prices have fallen by nearly the same amount.
“There was a Dutch Old Master picture that we bought and sold in one day,” says Jean-René Saillard. “We made over US$1 million in profit.” Saillard represents Fine Art Fund, the world’s oldest art-investment group, based in London, UK . For a minimum $500,000, wealthy investors can buy into its expertly selected portfolios of art – Middle Eastern, Impressionist, or a less risky mix of 15th- to 21st-century – from which works will be traded back into the art market. There are plenty of opportunities to sell a painting for more money than you got it, according to Saillard, because the market is “inefficient,” meaning that not everyone has the same access to information: auctioneers regularly invent bids to drive up sales, dealers decline to post their prices publicly, and collectors buy and sell in secret.
Saillard advises his clients to invest in “pleasant” pictures, even if they will rarely see them. Their investments are crated and stockpiled within the vaults of Switzerland’s Geneva Freeport, a high-security, duty-free zone where goods can be stored and sold with no taxes. And as the art market swells with Chinese yuan and Indian rupees, artstorage freeports are popping up in Asia; the Singapore Freeport opened its seven-tonne doors in 2010, offering armed escorts and a guarantee that no list would ever be kept of what was stored there, who owned it, or how much it was worth.
From the pages of COLORS #87 - Looking at Art.