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Sunday, May 26, 2024

Invest in art!

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The Philippine art market is booming and fine art is a fine—and, possibly, the finest—investment in more ways than one. But then, art has long been a fine investment.

The Philippines has emerged as the world’s 20th art auction market in 2017, based on global auction sales, behind Belgium and the Netherlands, and ahead of Singapore and other Southeast Asian countries. The strong growth has been driven by the country’s substantial increase in wealth and strategic location.

According to Bloomberg, “Packed art auctions, luxury home sales, and exclusive resorts are among telltale signs of an unprecedented rise in rich Filipinos.”

“An outsourcing boom, record remittances from overseas workers, and low interest rates have kept Philippine economic growth above 6% for most of the past six years. High-net-worth individuals—those possessing at least $5 million [approximately P267 million]—are tipped to increase more than 80% in the five years through 2022, the third-fastest pace in the world.”

Rich Filipinos have been surging in wealth and numbers, boosting demand for treasure assets. Whether driven by personal enjoyment or financial returns, art is increasingly becoming a meaningful element of their portfolios, making it the third largest popular category after jewelry and luxury collectibles. Popular demand is driven by its attractiveness as a hedge against inflation, its potential to outperform over the long term, and low correlation with traditional asset classes.

The Philippine art market posted an impressive 90 percent increase in global sales from P737 million in 2014 to P1.4 billion in 2017. The country’s artists also posted an average auction price of P1.2 million compared with Japan’s (ranked 10th in the world) average price of P357 thousand. Recent results also show a sharp rise in demand for 19th and 20th century Filipino art, with the country’s historical and national artists often posting better results than their young contemporaries.

Surrounded by the major hubs of the world’s art market—China, Taiwan, and Singapore—the Philippines is taking advantage of the prevailing rise in wealth and competitive climate. Philippine art is building quite a following in the auction rooms of Asia—Hong Kong, Shanghai, and Singapore—while at home, the market continues to rise thanks to two auction houses in Makati: León Gallery and Salcedo Auctions. The growing Art Fair Philippines, now in its fifth year, is also contributing to the market’s rise.

The appeal of art as an investment stems from the exponential value increases that affect certain works and, in certain cases, the media coverage they attract. León Gallery’s auctions since 2017 saw plenty of examples of exceptional capital gains and world records, such as P112 million for Jose Joya’s Space Transfiguration; P65.4 million for Ang Kiukok’s Fishermen; P49.1 million for Anita Magsaysay-Ho’s Women Amidst Bananas; and P46.7 million for Fernando Amorsolo’s The Peracampos Amorsolo (Under the Mango Tree). Salcedo Auctions also saw the same for Juan Luna’s A Do… Va La Nave (There Goes the Ship), which sold for P46.7 million in 2015.

One of the top repeat sales was Mauro “Malang” Santos’ Untitled (The Jubilee Quadtriptych), which was bought for P3.9 million at Salcedo Auctions in September 2017 and then resold for P4.9 million at León Gallery in December 2017, netting the three-month owner a tidy profit.

The number of Philippine artists in the world’s top 500 artists by auction sales in 2017 grew to five: Anita Magsaysay-Ho (ranked 335), Vicente Manansala (ranked 356), Ang Kiukok (ranked 371), Fernando Amorsolo (ranked 398), and Fernando Zobel (ranked 406) from only one in 2013—Ronald Ventura (ranked 94).

Like Ventura, younger Filipino artists, who were born in the 1970s and after, are also proving popular at auction. Despite their youth, some of these artists have already had a taste of the speculative momentum that has been dominating the auction rooms. They have seen how prices can soar four to six times above their estimates, even when these estimates have been set at realistic levels for emerging artists.

The major international museums have also taken an interest in acquiring works by these promising young artists. In 2013, the Guggenheim in New York devoted an exhibition to Philippine artists (entitled No Country: Contemporary Art for South and Southeast Asia) and features a number of Philippine artists in its collections.

The market for Filipino artists continues to enjoy vitality with the rapid development of the country’s internal market and the spread of Filipino artists to a more international audience through Hong Kong’s important art market hub (mainly at Christie’s, Sotheby’s, Art Basel HK, and galleries).

The global art market’s price index, based on global auction results, has grown by 36 percent since 2000. The price index of 100 of the world’s best artists, such as Pablo Picasso and Andy Warhol, grew by 360 percent, generating an average annual return of 8.9 percent. The prices of two Philippine artists, Fernando Amorsolo and Fernando Zobel, grew over 145 percent and 1,000 percent, respectively, far exceeding the returns of the global art price indices. In comparison, the S&P 500, which represents the US stock market, has gained 86 percent over the same period, while most of the European stock markets were in negative territory. The art market is, therefore, a competitive form of investment and an alternative to traditional financial assets.

The quote of the day comes from billionaire businessman and art collector, J. Paul Getty (1892–1976):

“It remains an undeniable fact that fine art is a fine investment. The dollars-and-cents values of paintings, sculpture, tapestries, fine antique furniture, and virtually all forms of art have shown a marked tendency to rise—and even soar—over the years. Much of this, of course, is due to the increased—and still increasing awareness that art represents basic values that are not only lasting, but that become more valid as time goes on. Thus, there is competition to secure works of art—and thus their monetary value, the price people are willing to pay for them, rises.”

Like it or not, collecting art is always a form of investment. Fortunately, it’s a very lucrative investment.

Art market data are sourced from Artprice, Art Market Monitor, León Gallery, and Salcedo Auctions.


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