From collectibles to investibles

From fine art to bottles of wine, and limited-edition sneakers to luxury watches, collectibles can be turned into investibles in the post-pandemic world. But it requires patience, knowledge, experience and an open mind before embarking on such an interesting and potentially profitable journey.

Industry leaders and experts provided these insights on Tuesday at China Daily Asia Leadership Roundtable themed “Assessing Alternative Investments in Art and Wine”, held as part of the 14th Asian Financial Forum.

“Amidst times of uncertainties, alternative investments like art or wine stand as relatively wise choices at the moment,” said Andy Hei, founder and director of Fine Art Asia and Ink Asia Hong Kong. “But it takes a very long term in practice.”

What makes some collectibles savvy investments is a world of appreciation they offer. Drawing on his yearslong experience as a well-regarded second-generation dealer in classical Chinese furniture, Hei noted that the return of value in art could reach double digits.

But it needs patience. “Basically, it’s time that will tell,” Hei stressed. “And the knowledge and experience it requires are also beyond imagination. There is no shortcut.”

Robert Sleigh, senior director and managing director of operations at Sotheby’s Hong Kong, is a firm believer that art and wine have more integral roles to play in the post-pandemic era.

“Looking ahead, traditional areas of collecting for investment, be it paintings, contemporary art, modern art or impressionist art, will continue to go quite strong. At that point, it is a question of knowing the current market, knowing what the current worth might be and looking at a long term, rather than a short-term growth on that and appreciation of that,” Sleigh noted.

While investing in collectibles can be a great way to diversify portfolios while exploring one’s own interests, it does have its drawbacks.

Patience is crucial

Adriano Picinati di Torcello, director of advisory and consulting of global art and finance coordinator at Deloitte Luxembourg, reminded investors that one of the risks when it comes to making investment in art and wine is illiquidity.

“If you look at art or collectibles in general, investors have to consider that collectible assets tend to be very illiquid. Also, there are a number of other issues that investors have to look at, such as authenticity and counterfeit,” said Torcello.

“If you would like to consider investment in those categories, do analyze and understand those risks and really get proper advice, but definitely also enjoy, especially if you’re talking about, for example, fine art,” he said.

“Investing in passive investments such as art and wine should be done with careful consideration and a clear plan,” said Johnny Hon, founder and chairman emeritus of Global Group International Holdings Ltd. “For art, in particular, it’s a long-term thing. One has to be prepared to hold the art for five to 10 years or even longer in order to build a meaningful collection.”

As the pandemic is changing how people live, work and play, the market for collectibles is also embracing trends that will essentially turn the “new normal” into the “new future”.

Sleigh highlighted Scotch whisky, Japanese whisky, China’s Maotai baijiu as markets with significant growth. The sneaker stands as a new collectible, which Sleigh described as a market that is “really something”.

Technology plays a new role

Torcello said the power of technology to help reduce investment risks and increase liquidity of collectibles merits great attention. There are also many discussions around fingerprinting, blockchain and tokenization of certain categories of collectible assets, he added.

Having seen technology wave its magic wand in many areas during the pandemic, Hon emphasized that “one should be open-minded in looking into digital arts and other collections”.

“The pandemic has motivated the art market to make a major technological shift toward the online sphere, and online sales are driving the current market, which has also shown that younger generations are becoming keener to collect and invest,” Hon said.

The rapid development of blockchain and augmented reality technologies can be the next big things to reshape the art space. One may have a visual art that uses a smart contract on the blockchain to lease it out to someone who displays it for a specific period, or one can use AR to bring a tangible painting to life, he noted.

“While all of these changes may present opportunities, I would not recommend rushing in to buy art merely as an investment. It is important to discover your passion and what you really enjoy about artworks,” Hon stressed.

Torcello added, “Art and wine are a great way to connect, establish and increase relationships with your clients on very emotional and passionate assets.”

Contact the writers at sophia@chinadailyhk.com