Is art ‘safe heaven’ in today’s tough times?

A recent Reuters report (‘As markets plunge, Asia's wealthy flock to art’) discusses the pros and cons of investing in art, considering the various aspects of it. Here’s is what the news report has to say in context of the contemporary art market:

Despite bamboozling price trends of Chinese art now reflecting some strain from ensuing global economic uncertainty, a section of collectors like to believe that its value will continue to go up steadily largely due to continued demand and limited supply. They are betting on more affluent Asian collectors to push the demand.

Despite the art market's vulnerability to shocks, including the 2008 Lehman Brothers collapse, when unrealistic estimates left scores of unsold lots amid tepid bidding even in the red-hot Chinese ceramics market, Asia's rapid wealth accumulation will likely see more and more money flow into art and alternative investments such as wine.

"As East and West get into more of a confluence in taste and in the market place, it will still go up," said Lo, a Cambridge-educated writer and jewellery designer, a slim, elegant woman famously known for wearing mis-matched designer shoes. She is one of Hong Kong's leading art collectors -- her home is stacked with rare Chinese furniture, stone carvings and paintings, including an inkbrush panorama of the Grand Canyon by Chinese 20th century master Wu Guanzhong.

Hong Kong has played a key role in Asia's art market boom. Its auction market turnover -- anchored by Sotheby's and Christie's -- skyrocketed 300 percent from 2009 to 2010, powered by a wave of Chinese millionaires buying art with avid fervor. "Hong Kong has became the sales centre of the world," said Patti Wong, chairman of Sotheby's Asia, with revenue in the former British colony on par with New York and London.

"If you get good works of art, then without any question it is (a safe haven) but it doesn't have the liquidity. That's the difficulty," revealed Sundaram Tagore, whose galleries in Hong Kong and the United States feature a stable of culture-bridging artists.