Arts: Investments in Paintings

Abstract

The demand for art today is higher than ever before. Auction houses report record turnovers and absolute top prices are paid in increasingly rapid sequence. Only some years ago, Turner’s Seascape: Folkstone had an auction price of $9.8 million at Sotheby’s London. A little later van Gogh’s Landscape with Rising Sun was sold for $9.9 million at Sotheby’s New York, and Mantegna’s Adoration of the Magi sold at Christie’s London for $10.4 million. Enormous publicity greeted the sale in April 1987 of van Gogh’s Sunflowers, which was sold at Christie’s London to the Japanese insurance company Yasuda for $39.9 million. In 1907, 17 years after van Gogh’s death, Sunflowers was offered at an exhibition in Mannheim for DM 12,000 (roughly $3,000). Two years later, again in Mannheim, it was offered for DM 28,000 (roughly $7,000). Edith Batty is said to have acquired it in 1934 for DM 63,000 (about $24,000) from the Parisian art dealer Paul Rosenberg. After the deduction of all costs involved, the investment of DM 63,000 yielded a yearly rate of return of 11.4%. This return is far above the rate of inflation which was approximately 6.7% per annum in that period. The real rate of return of 4.7% per annum is also higher than the return from most kinds of financial investment, say in gold or in securities. Wendell Cherry, the last owner of Picasso’s self-portrait Yo, Picasso, a 1901 post-impressionist painting, did even better. In 1981 he bought the painting at an auction for $5.83 million; he sold it by auction in 1989 for $47.85 million, achieving a real net rate of return of 19.6% per annum.