Most financial consultants wouldn´t advice you to invest in arts and antiques, unless you are familiar with it and you´d only invest a small proportion of your portfolio.

Fine and antique Asian arts are considered as long term investments. And whether or not profits are gained in the long run, is still not garanteed for any objects.

But on the contrary, there are tremendous wins for some Asian art objects. Gilt Buddhist bronzes acquired in the 80ies or 90ies might be sold for prices considerably higher today. Price ranges from ten to sixty thousand Euros for the same object are even possible within one year in two different auctions.

Objects with highly increasing prices are highlights

within masses of collectables and antiques thrown on the market in recent years.

Here are some examples of how art experts and collectors anticipate price developments in order to gain profits from their investments:

- An expert aquires and deepens knowledge about a specific area of expertise. This enables him or her to consider any buying or selling activity on a wider basis of experience and knowledge. He or she can decide about achievable prices for art objects and therefore predict price races in auctions. Such an expert is able to gain profits from his or her advanced knowledge about objects and prices.

- Collectors focus on special groups of objects. It is easy to find any good looking single piece. But it is hard to find a collection of quality objects. Some collectors try to anticipate trends and to be the first one to collect specific groups of objects. In some cases, collectors even publish catalogues about their collection or lend pieces to museums. But beware, defining a new field of collection is a costly process in terms of times and money.

- Another strategy is to collect art objects at a specific quality and price level. This was successfully shown by the British Rail Pension Fund, who reached an average rate of return of 11,8% p.a. in a timespan of 23 years. The investment strategy was defined by a simple rule: Get the very top level objects available on the market – if they are the best today, they will certainly rise in future. But even for small investors, this strategy is fairly attractive: Get the best object, which you can get for the amount of money you´d want to spend.

- Acquire a collection at once. This strategy can be very successful, but it requires patience and market knowledge. The buyer looks for opportunities, in which complete collections are offered at one time, for example at auctions. The normal market reaction would be a selective buying of the best pieces out of the collection. If a buyer acquires every single pieces of the collection, the good quality ones as well as the lower quality ones, an increasing of prices is psychologically stimulated. The fact that the collection was completely sold, will stimulate marked demand. If the same collection is offered again at a later point, maybe in another setting at another place, it will be considered as highly desireable.

- Go with economic development. This simple rule emphasises on the fact, that people from economically rising countries increasingly spend money for their cultural relics. Japan and China are the best examples for this. At times, when Japanese economy was on top, Japanese arts and antiques were sold for considerably high prices all over the world. But since Japan is faced with economic threads, Japanese collectors stopped investing in their art objects. Therefore, prices for Japanese antiques decreased. On the contrary, Chinese art prices increased as much as Chinese economy rose and made more and more people rich, who naturally started to spread their investments.

Pictures courtesy of Wikimedia Commons.

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