AFG plans to add more art brokers as HK gears up to be a collectors’ Mecca, writes Bhavna Sakhrani.
Hong Kong’s reputation as a cash-rich emerging market for art investment was reinforced earlier this year as armies of art lovers flocked to the three-day Art Basel event held in the city in March.
Collectors have made handsome returns from buying works by the most sought-after contemporary artists and treating art as another branch of finance.
While vast price fluctuations indicate investing in art is not for the faint-hearted, the Asian market is certainly becoming an investor favourite. Art shows have seen sales growing steadily thanks to increased access to emerging talent from China, low taxes and more high-net-worth individuals.
Art enthusiasts are well catered for when they visit Hong Kong. Big international players such as Gagosian Gallery, Sundaram Tagore and White Cube have set up shop here, and the government has committed to cultivating a cultural district in West Kowloon, including a massive undertaking called the huge M+ Museum, which will span 40 hectares and focus on integrated art, design and architecture.
Investors talk about emerging markets and alternative assets, but consultants in the art investment sector are required to look more carefully at the both the profitability of the market and the emergence of new talent.
Art Futures Group (AFG), led by Jon Reade, is a Hong Kong-based brokerage art firm that turns the latest data on mid-career artists into investment recommendations and creates tailor-made portfolios of contemporary Chinese art for wealthy investors. AFG has seen growth in interest in Chinese talent, especially mid-career artists who have a good track record in terms of output and auctions.
“When the rest of the world was in recovery in 2010, China took over as the largest market in the world for art investment,” Reade says. “Hong Kong typically wasn’t an arty town, but things are changing. Once museums like M+ are built [at the West Kowloon Cultural District], they’re going to be the most popular places to go on the weekends.”
The new cultural district is a key part of AFG’s success in Hong Kong. Reade says AFG chose to open in the city because of the number of investment options in Asia – especially mainland China – through Hong Kong.
Reade says investors are looking to make discoveries outside of the typical blue-chips, focusing on edgier works by mid-career artists.
“In Hong Kong, the attention had previously been on foreign artwork. Despite local galleries opting to sell prominent art from around the world, there is certainly a hyped interest in Chinese art traditions as the economy continues to grow,” he says.
Auction houses report that more than 40 per cent of art collectors now come from China, compared to 4 per cent five years ago. They also report a more than 25 per cent increase in sales recently, citing landmark transactions in Chinese art.
Investors were astonished in April when a Chinese collector bought an ancient ceramic cup from Sotheby’s for a record breaking HK$281 million, paying for his purchase with his American Express credit card.
With Hong Kong poised to become a vibrant international art centre, promising bigger and better infrastructure, space for galleries, museums and arts organisations, Reade believes there are certainly new opportunities in the industry.
“Working as an art investment consultant does have a certain amount of glamour to it, but it’s important to figure out exactly what you want to get into because there isn’t a particular course for this line of work. If you are interested in the creative side, such as actually becoming an artist, or if you want to become a researcher, historian, curator or consultant, you have to network extensively and talk to people in the industry.”
As the Hong Kong art market continues to expand, AFG is looking to hire art brokers with a passion for the industry, who resist the notion of art as a purely financial product. “Investors are more open to putting their money in illiquid assets like art, but that requires a passion and an appetite for the business,” Reade says. “When hiring, we look for people who not only have a sound understanding of financial markets, but also an affinity for art.”
He adds, though, that the market can be tough and unpredictable. “Behind every successful business is a lot of hard work,” he says. “In Hong Kong, it’s important to cultivate relationships locally, and our focus on the mainland market means we are always searching for people with the aptitude for the work and the linguistic skills to communicate with buyers. Cantonese-speaking brokers who are interested in art are our major talent pool. Saying that, we look for inspired individuals with a passion for contemporary art and practical sales and business experience.”
Who’s in the frame
Jon Reade on what it takes to succeed in the industry.
Single-mindedness: “First and foremost, I look for people who are focused enough to know what they are interested in doing, if it is in the primary market or secondary market, and if they have the drive to attain what they want. Understandably, it’s a difficult industry to get into in Hong Kong, and takes a certain amount of grit.”
Art and investment knowledge: “We provide recommendations on a vast selection of contemporary paintings, so having an appreciation for modern art and an understanding of its cultural value as well as its potential investment yield is important.”
Sales and finance skills: “Candidates don’t have to have years of experience as art consultants, but we are looking for natural-born salespeople [with] a sound interest in finance and a background in investment, which shows a successful track record that is adaptable. At the end of the day, our objective is to make our clients as much money as possible.”