When 50 accountants gather for a lecture on the investment potential of antiques and collectibles, it may be a good time to check the attic and back closet for that dingy landscape that nobody liked well enough to hang, but weren't prepared to throw out either. Paintings that were sold by junk shops for a few shillings have been known to fetch thousands of pounds at auctions, 20 or 30 years later. Mr Bryan Greene is the director of Thomas P Adams & Co, the fine art auctioneers and estate agents in Blackrock, Co Dublin, and his lecture last week to the Leinster Society of Chartered Accountants wasn't arranged to help antique hunting accountants furnish their homes and offices. They were there on behalf of well-heeled clients who wanted help furnishing theirs. The buying and selling of antiques and fine art has become big business in this State and buying for investment as well as for the intrinsic beauty of an item is growing.
To put this in perspective, Mr Greene noted that between 1970 and 1990, the value of the turnover of items by the world's leading auction houses Christie's and Sotheby, etc had increased from about £31 million to £2.8 billion. "Art and money have merged, and art is now a commodity, like other commodities on the world market. In the 1950s, 1960s and even into the 1970s, it was galleries and museums which were the big purchasers of art, now it is private individuals who have the money to buy art and antiques and they can always outbid public institutions," says Mr Greene. The demand for art in the private market has often but not always resulted in high net returns. Some very fine paintings, furniture and jewellery are showing the kind of commercial returns that individuals have come to expect from pension funds and unit trusts.
A William Conor painting that changed hands for £450 in 1927 sold for £25,000 last year. However, considering that £450 was probably a year's wages back then, its value has really only kept in line with wage inflation.
The risks, needless to say, can be just as great as direct stock market punting. In his address, Mr Greene warned that the ups and downs of the art world can be as spectacular as the Hong Kong crash last October. Styles of furniture and painting can go out of fashion and owners can be badly burned if their main motive was investment alone. "Fine art prices are determined by a number of factors which can be quantified, such as interest rates, currency fluctuations and so on; but there are a number of influences which are not so easy to quantify, such as quality, fashion and the mood of the market. Anticipating these elements requires experience, taste and just a little bit of luck."
The rarity of an object, and quality will always enhance its value, says Mr Greene, but the all-important provenance is a major factor in securing that price. Forgeries of Irish art are on the increase as demand grows, especially on international markets. This is another factor that has to be taken into account when buying for investment purposes. It's another good reason to always consult expert advisers. Anything Irish even decorative pieces (like pottery, glassware and textiles) of good quality and scarcity are a good buy these days . "Our sales are not domestic affairs anymore," he admits. "There is always interest now from British and American buyers for Irish furniture, silver and paintings." And this is also driving prices up.
The halving of the Capital Gains Tax (CGT) rate from 40 to 20 per cent is likely to release more objects into the salesrooms as owners seize the opportunity to enhance their potential profit. This may also be encouraged by the rumour that the Minister for Finance may have to raise the rate again next year to bring our CGT more in line with the rest of Europe.
This is contrary to the usual wisdom that these factors might drive prices down. They could instead attract more buyers, each competing with the other for a chance, finally, to buy a piece of furniture or painting that may otherwise have remained off the market for many more years, or typically, pass to yet another generation. "There is a reluctance by Irish art owners to sell their antiques," says Mr Greene. "They often feel obliged to leave them to their children." Investor/collectors on the other hand, however much they may love their painting or chair or table, tend to be less sentimental and price inflation can often tempt them to trade up for something even more beautiful and valuable. The sting in the tail, is the cost of the transaction: auctioneers fees of 10 per cent and VAT at 21 per cent means that every sale will cost an owner about 12.5 per cent. A stockbroker will charge about 2 per cent for a similar transaction.
