Index changes the market



By Ian Fife and Gabrielle de St Clair

SA’s investment art market has a new source of price discovery similar to that of a stock exchange. Artvault.co.za’s art sales data is available to subscribers on the Web.

Its price index of about 25 000 sales since 1996 (see graph) shows that the average hammer price of art at auctions has risen 1 000%, from R5 400 in 1996 to R54 000 in 2008. This is much better than the Absa property price index that rose 550%, from R176 000 in 1996 to R962 000 in March.

While world markets seem to be collapsing, local artworks are fetching millions at auction houses.

But it’s early days in the art cycle, which lags all other asset classes, and there are signs of softening demand. Unlike property, art is not income-producing and owners can’t borrow as much or as cheaply against it.

Artvault’s digital database can be drilled into for details on artworks and artists, giving a history of high, low and average hammer prices and the number of sales: for instance 80 works for George Pemba, 159 for Frans Oerder and 280 for Maggie Laubser (see graphs).

Brothers Scott (31) and Dale Sargent (33) have built their database over seven years after a friend asked Scott to help him prepare a catalogue of his assets for insurance. “I decided to do a little program for it,” says Scott. “It’s this program that has become the basis of the database.”

They also digitally photograph and catalogue private, corporate and institutional art collections. This helps curators, investors and collectors to value their collections, trade their works and keep abreast of art market trends.

The price index is limited to the auction hammer price because it is factual and accurate. The auctioneer’s commission – usually 10% of the price plus Vat – should be added to get the total cost.

“Artvault is brilliant,” says Rand Merchant Bank and FirstRand’s art consultant, Steve Bales. “This is an advisory system that will offer the new investor or collector who might have been afraid to buy at auction a new confidence. It is based on reality and not a perception of what art prices are fetching.”

It should also speed up the broadening of the market.

Art dealers and galleries are unlikely to approve of Artvault. They usually buy their art at auction and then mark it up before selling it in their galleries. Bales has pointed out that new investors are often prepared to pay that premium for the guidance they get and because they are nervous of auctions, fearing that an inadvertent nod could cost them R1m.

But Artvault can give them the confidence to go to auctions, meaning gallery owners and dealers could be left out of the loop.

Cape gallery owner Johan Bornman, for instance, says auctions are always regarded as important indicators of value but are “misleading in many ways, as record prices are often the result of a battle of egos. And prices for a particular artist’s works are not always comparable because of differences in quality, condition, period or subject matter.”

But the transparency of auctions deserves closer scrutiny.

Bales has this to say: “The open bidding principal of the auction dictates the true value of art works.” Auction results are the most reflective and accurate measure of the value of art sold and of market trends for various artists and their works.

Artvault’s growing scale of data on each artist will enable buyers to compare prices of similar works. A subscription to Artvault costs R1 500/year.

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An exhibition of South African Masters from 1853 onwards, on 29 May 2008 at 7pm.

The exhibition will be opened by Dr Federico Freschi, Senior Lecturer: Division of visual arts, University of the Witwatersrand. The exhibition concludes on the 29 August 2008

RSVP: Brad on 011 465 9192; or Sarah on 084 568 5639