You might remember 9 months ago, I commented (2/8/2007 blog) on a New York Times did a feature article in the House & Home section, revealing the dire straits of dealers suffering from a 30% fall in prices since 2002. It’s time to look at the present market conditions and see what has changed.
Decorative Arts seem to be recovering from some of the malaise of earlier this year. Conditions for selling have stabilized for all periods, as prices at auction have started to create a floor value. The results of the Dandois sale certainly confirm this for the high end European market. Along with some unexpected significant depreciation of the dollar against other currencies there is now a subtle recognition that these items have morphed into a solid asset with a reduced amount of downside risk. Compared to speculative subprime mortgages and their asset valuation, I would think assets with at least some functionality (a chair, chandelier, desk, etc.) and an inelastic supply would offer a safer haven as an investment class.
There has always been talk that antiques are a good investment, and functionality never seems to be considered as part of the dividend that these asset offer. But that’s the point so many miss. It’s also a dividend that is not taxable, another boost to their value. While there is no substitute for good design, quality of workmanship, and knowledge of its provenance and maker, aesthetic pleasure comes free of charge. Even a variety of reproductions can qualify as to their decorative value. Sotheby’s and Christie’s, along with may other auctioneers sell quality reproductions next to period pieces, and get very generous prices for them too.
Selling risky or hard to value investments by banks, brokerage firms, or private equity companies should make tangible assets like antiques a bit more compelling. I think this concept should be utilized by the trade to enhance the public acceptance of this fact. Also, the buying public is able to be pro-active in the investment decision and can control their portfolio of items. I have always been a proponent of art and antiques as a viable IRA or retirement account investment; they shouldn’t have to sit in a drawer or brokerage account. Auctions have the best opportunity to take advantage of this trend by their very public nature.
Public awareness of values, if convincing, can lead to a broader audience, which can only enhance demand, and then price. An economic opportunity for the industry is now at hand when one looks at other investment alternatives. Not having a price tag or subjecting the buyer to a secret reserve undermines any transparency. It’s our industry’s version of “double-talk”, and inhibits the potential of even greater recognition of this emerging asset class.