How to frame your fortune
Investors looking to sink their cash in a solid investment usually head straight for the real-estate market, but those with a nose for the finer things in life are now beating a path to art galleries. Top works of art appreciate at a rate that rivals the hottest investment vehicles, and banks are now catching on to the trend by telling their clients which paintings to plump for.
Investing in art may not be the easiest way to manage wealth, but it is certainly one of the most elite, thanks to the fact that few investors have both the funds and the knowledge to turn their impeccable taste into profitable practice.
Polish tycoons who aspired to become patrons of the arts, or those simply looking for a solid alternative form of investment, were for a long time forced to seek independent advice. For many years, the only bank in Poland to offer advice on choosing the perfect piece, which would look just as good above the mantelpiece as on your balance sheet, was the Warsaw branch of Swiss bank UBS. Unsurprisingly, it guards its client numbers with the vigor of a jealous (art) lover.
Art banking, however, is now de rigueur, and Noble Bank is the latest to jump on the artistic bandwagon. The firm is relatively new to the market, and is focusing its offer on the richest people in Poland.
Backing the right horse
"We decided to introduce [art banking] in response to demand from our customers. They want to have some alternative investment options, not only works of art but also, for example, horses," says Krzysztof Spyra, deputy president of Noble Bank.
This is not a service for the masses, and it is usually solicited by the customer. However, a growing number of Poland's rich want to upgrade their investment portfolio or their image by purchasing the finer things in life, despite the increased risk.
"Works of art are a very specific kind of asset because they are unpredictable. You can't really say that a certain work of art will give you an X percent annual return on your investment," Spyra says. "Still, an educated assessment of the market can give you an idea of the current trends. The return can be very good or none at all, just the same as other investments. The difference lies in the analysis, which is based on an analysis of demand as well as of certain fashions."
A matter of taste
Dr Karl Schweizer, managing director and head of UBS Art Banking and Gold & Numismatics, believes that it is always better to buy a work of art that one actually likes. Therefore, if it doesn't gain any value, at least the investor is left with a work he or she enjoys looking at.
"In general, we maintain that art should be bought primarily because it is an object that one will appreciate and value emotionally rather than financially. Normally the investor wants to keep the piece and not sell it instantly as an investment," he told WBJ.
Apart from advice on market trends and analyses relating to individual artists or the art market as a whole, the investor can also turn to banks for details on exhibitions, art fairs and auctions.
"The service offer includes advice on buying and selling works of art and, if clients so wish, representing them at auctions. In some cases, buyers can be found privately, but the bank will also act as a facilitator when it comes to contacting art dealers, auction houses, galleries or museums," Schweizer explains.
But art is for life, not just for Christmas, and an expensive piece cannot simply be stuck in a corner while its capital value appreciates. Art-banking services usually include storage for a piece in the appropriate conditions.
Homegrown bargains
One of the major problems with investing in art is limited supply, and those looking to sink some cash into canvas could do a lot worse than check out the local Polish scene. A raft of new small galleries are working hard to promote Polish art on the domestic and international markets, and as Polish works increase in popularity, their value could skyrocket, giving collectors here a headstart on their international counterparts.
"The increased popularity of Polish art in recent years mostly concerns the younger generation and these artists would not be on the market if it weren't for several galleries which have recently sprung up, which attend fairs and attempt to exhibit their works abroad," says Bożena Czubak from Le Guern Gallery, which was established two years ago.
Michał Kaczyński from Raster Gallery says that five years ago there were no ambitious private galleries such as the one he runs with Łukasz Gorczyca. "Young artists are perfect for a small gallery like ours. We closely cooperate with a group of 10 artists and we can be superb intermediaries in their careers," he stresses.
According to Grzegorz Borkowski, an art critic from the Center for Contemporary Art in Warsaw, Polish art has been prominent on foreign markets, in museums and art magazines, since 2000. Fundacja Galerii Foksal, a private foundation, has done some sterling work in organizing shows for new Polish artists in important institutions abroad.
Bożena Czubak says that until recently Polish artists were unknown in the West, appearing only in low-ranking galleries and selling at low prices, but the tide has turned. Among the new wave of Polish artists, Wilhelm Sasnal (b.1972) is thought to be the most popular abroad. Last year, the influential Saatchi Gallery in London gave Sasnal its seal of approval, when it displayed his work as part of an exhibition entitled The Triumph Of Painting 2. In June, Christie's auction house in London sold Sasnal's Terrorist Equipment for £50,400 (zł.293,000), while Untitled (Planes and Bombs) sold for $204,000 (zł.628,000) at the Phillips de Pury auction house in New York in May.
Michał Kaczyński says these are regular prices for a top artist. However, the most expensive artwork sold by his gallery to date was an installation by Rafał Bujnowski (b.1974), consisting of a number of small paintings, which were bought by a German collector for EUR 24,000 (zł.95,600). Kaczyński says that Raster's most sought-after artist is probably Zbigniew Rogalski (b.1974). This year, the gallery sold his painting Friends for EUR 21,500 (zł.85,600).
Not a mass product
"Generally speaking, demand is higher than the number of pieces we have on sale," Kaczyński admits, and he explains that the role of the gallery is to protect artists from the pressure to create what the market demands. "This is not a conveyor-belt production," he says, stressing that Raster is not just a shop with paintings.
For example, Kaczyński says that the gallery has one of Zbigniew Rogalski's paintings on offer and there are some 30 people interested and ready to pay the gallery's asking price. However, Raster has been considering who it will sell the picture to for some four months now. "We want it to be a museum or a serious art collector. We want the paintings which we sell to still exist in the public sphere," he explains.
In the vaults
Polish banks might appear slow off the mark to try their hand at art-banking services, but this is not because they are a bunch of philistines. On the contrary, they control some of the country's most valuable collections. BPH's collection of over 150 works is the largest.
"The jewel in the crown of our collection is Józef Chełmoński's Four Horses Before an Inn, kept in the National Museum in Warsaw. Our collection also includes the works of Edward Dwurnik, Henryk Waniek, Zbigniew M. Dowgiałło, Ryszard Grzyb, Marek Jaromski, and the sculptures of Zofia Wolska," says Władysław Kołomański, from BPH's PR department. When asked about the value of the collection, Kołomański is coy - it is against the bank's policy to quote figures related to their art investments.
Another lender with a large collection of paintings is ING. It boasts its own Polish Arts Foundation, comprising 60 pieces by contemporary Polish artists, such as Edward Dwurnik, Stefan Gierowski, Zbigniew Makowski and Jerzy Nowosielski. The collection hangs on ING's walls, but paintings are often borrowed by Polish and international museums and are presented at exhibitions. The bank also cooperates closely with art experts before deciding on a new purchase.
"We're bankers, not art connoisseurs. That's why we cooperate closely with the National Museum and Zachęta National Gallery of Art. We always ask for their recommendation and they tell us which artists we should follow," explains Marek Chomka, president of ING's art foundation.
Sound advice
The recommendations ING received seem apt, as a piece by Wilhelm Sasnal, which the foundation bought for around EUR 1,000 (zł.3,970) at the end of the 1990s, is now worth EUR 20,000 (zł.79,400). ING's latest purchases include works by Paulina Ołowska, Robert Maciejuk and Rafał Bujnowski, all of whom now enjoy great success on both the Polish and international scenes.
The Polish branch of ING doesn't offer art-banking services to its private-banking customers, but Chomka says it's not something the bank has ruled out for the future. Not every businessmen will be able to gather a collection similar to those of Wojciech Fibak or Zbigniew Niemczycki, the famous Polish businessmen/art connoisseurs, but based on their banks' advice, some investors may buy one or two pieces for their own enjoyment and, hopefully, see a good return.
Still, it will probably be a long time before any Polish investor trumps Ronald S Lauder, the American cosmetics tycoon, who in June spent $135 (zł.423) million on Gustav Klimt's Portrait of Adela Bloch Bauer, the highest price ever paid for a painting.
