Paintings by numbers

Building an art collection can generate impressive returns. But as with any investment, it pays to look at the big picture before buying

Globe Investor Magazine, Nov. 21, 2007

PRICES FOR CONTEMPORARY art have skyrocketed in the past three years, partly thanks to a new generation of collectors shopping for more sophisticated home decor. But, according to one experienced dealer, budding art enthusiasts should resist a quick visual fix and do their homework.

"There's a buying frenzy going on right now because the contemporary art market is hot," says Jessica Bradley, owner of Toronto's Jessica Bradley Art + Projects gallery. "So from an investment point of view, the market looks great on return for your money, but you have to make sure you're educated before you buy."

A former curator for the Ottawa-based National Gallery and the Art Gallery of Ontario, Bradley now represents a host of contemporary Canadian artists whose work is steadily ascending in value. -Two years ago, for example, Toronto-born Shary Boyle's drawings sold for $250 apiece at Bradley's gallery. But since then, Boyle has been nominated for a 2007 Sobey Art Award and both the National Gallery and the AGO have acquired her haunting porcelain figurines. Today, Boyle's drawings fetch $2,500 and her porcelains go for $20,000. "Shary always had a cult following," Bradley says. "Now she's been exposed to a much larger public sphere."

Ambitious new collectors eager to invest in art that's guaranteed to increase in value must pay a premium, Bradley warns. "You better raise your budget, because the only art that is sure to appreciate is blue-chip art." That means senior artists who have already won critical acclaim from major institutions and whose work hangs on the walls of the art world's cabal of elite collectors. Price tag: anywhere from $25,000 to $500,000.

But let's say you have $10,000 to spend and want to get the most out of it. Bradley recommends doing a lot of looking and learning. "Talk to serious collectors. Attend art openings and lectures," she says. "If you want to start collecting to a point where you're actually going to see real returns for your money, you have to inform yourself."

Bradley explains that buying smart in art is especially challenging for an aesthetic novice because it's not just a matter of taste. In her experience, the most common mistake virgin art buyers make is paying a high price for a piece simply because they like it. "Artwork has to go beyond material skill and ability to render, although it's quite natural a novice collector would look for those qualities when starting out."

Peter Boyd, president and CEO of Calgary-based Arcis, is anything but a novice-he's spent 20 years carefully building his cache of art. The big question is how to buy wisely, says Boyd, whose firm provides seismic solutions to the energy industry. "We have such great contemporary artists in Canada and the art is a bargain, so if you have a good eye and you pay a reasonable price, you look forward to appreciation."

Although most of the artists in his collection are nationally recognized, Boyd also buys up-and-comers like Calgary's Ryan Sluggett. Boyd compares such acquisitions to penny stocks. "When you buy a piece of Ryan's, you're buying the potential," the collector says. "So I have a portfolio approach. I buy both senior artists and emerging talent."

The younger the artist, the higher the risk, Boyd notes-but the greater the return if he or she gains recognition. For in--stance, Calgary artist Chris Cran might have a five-foot-square painting worth $15,000, while a similar sized Slugget painting will sell for about $3,000. "That's 20 cents on the dollar, to be crass for a moment," Boyd says. Then again, Cran has already made it to a place that will take Sluggett a few years to reach. Boyd owns two Cran paintings. "I met Chris 20 years ago, and in that time his work has appreciated by a factor of 10 times, by 1,000%-a huge -compound growth rate."

Boyd admits that most visual artists don't want to see their work treated purely as a commodity. Neither does he, but collecting art lets him accomplish two things at once. "I buy art primarily for its aesthetic aspects, but my act is not charitable," he says. "I'm buying tangible assets that have a long-term store of value, just like an RRSP."

In fact, Boyd's art collection has more value than his RRSP. For his children, the legacy will be both financial and cultural.

"Collecting art is a legitimate way to save," Boyd says. "If you wander into the Clint Roenisch Gallery in Toronto and buy a piece of art for $10,000, you want to believe that it's going to be worth more than that one day."

From his Queen Street West gallery, Roenisch has his own speech prepared for hungry neophyte collectors. His ad--vice to them: Resist the impulse buy. "I would suggest they visit as many galleries as they can and get to know the artists." Roenisch says. "As they learn, often their taste will change."

Roenisch, who sells work by contemporary Canadian, American and European artists ranging in price from $2,900 to $160,000, also stresses quality over quantity. "If someone feels comfortable spending $5,000, don't buy five pieces worth $1,000 each. Buy one great piece worth $5,000."

Roenisch says many businesspeople find the art world frustrating, at first, be--cause it's so subjective. "Everyone knows what a Maserati does and how much it costs. With art, it's hard to gauge what it is and what it's worth." But that's ex--actly what has spurred on a new wave of collectors, Roenisch adds. "We all understand the utility we get from a nice car or a watch. But the car and the watch don't say as much as about us, or the world around us, as building an art collection does."

In the end, appreciating the art you buy may be more important than watching it appreciate. Roenisch first exhibited work by Marcel van Eeden two years ago, when the Dutch artist's drawings went for $1,600 each. Now the gallery sells them for $2,900. "The collectors who bought two years ago are very happy, of course," Roenisch says. "But they also have no intention of selling. In fact, they bought more this year. After all, when you sell the work, then what? They'd rather enjoy the art." - JOSHUA KNELMAN