Sunday Business Post - August 31, 2008
Ros Drinkwater

During the present economic downturn the global art market re mains confident, with records showing 10 per cent growth in worldwide sales in 2008, compared with the first half of 2007.

That said, the works breaking records are the créme de la créme. For the first indications of how the Irish art market is likely to fare over the year, we must wait for the Dublin Art Fair next month, followed by Whytes Irish and British art sale on September 29, and de Veres Irish art auction on October 13.

While art is acknowledged as a blue chip investment, there are many potential investors who have the inclination and the hard cash, but lack the requisite knowledge, to guarantee wise investments. A new managed art fund designed to cater for them will be launched by Waterford art dealers Solo Arte at the Dublin Art Fair in the RDS from September 11-14.

After a decade working in Europe, husband and wife team Pat and Claire Keegan returned to Ireland six years ago to set up Solo Arte. Having been a bank manager for twelve years, Pat Keegan has an acute understanding of the financial side of the art market.

"The prime benefit will be access to the expertise of the fund manager, plus the purchasing power of the fund in acquiring works of art at attractive prices," he said.

"The focus will be on Irish art with a proven track record in major auction houses in Ireland and Britain - in other words, artists who deliver an average growth of 10 per cent per annum such as Arthur K Maderson, Kenneth Webb, Mark O'Neill, Pauline Bewick and Martin Finnan. The investor will take possession of the art works in question and will be under no obligation to dispose of them at the end of the investment term."

The minimum investment unit is set at €25,000, and according to Keegan, individual investors can expect potential gross returns up to 49.5 per cent over three years and 315 per cent gross over eight years. Company investors can expect potential gross returns up to 49.5 per cent over three years and 142 per cent gross over eight years.

So how exactly will the fund work? "Investors will receive paintings with a combined market valuation equal to the investment unit of €25,000. This is based on present day average valuations and present market conditions," said Pat Keegan.

"They will be offered arranged lots on an artist by artist basis, and may, on request, have a combination of artists' works in their investment portfolio subject to availability. As to exit strategy, we will offer free advice on disposal of paintings through the established auction houses and will also assist with the sale of works for a negotiated fee, based on profit achieved on the sale, rather than the hammer price."

Potential business investors should take note that tax benefits include the Wear and Tear Allowance S284 TCA1997,under which works of art that are used to create a certain ambience in a business premises can be treated as plant, where the creation of that atmosphere is part of the trade.

As to the risk factor, Keegan points out that, in recent years, the risks attached for the art investor have been far lower than for those who opted for the stock market and property.

"All Irish art sales are recorded in A Buyers Guide to Irish Art, which has been in publication for the past ten years, so investors can keep track of the market. They can also visit the web site of Art Price, which gives details of art sold on a worldwide basis," he said.

Solo Arte, 051-355758, www.soloarte.ie Dublin Art Fair, September 11-14, RDS, Ballsbridge, Dublin 4, www.dublinartfair.ie