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The art market requires some unusual metaphors to account for spurts of growth. Kim Gurney investigates the recent rise in value of earlier twentieth century South African art

Recent auction results have indicated a spike in the value of artworks by esteemed earlier twentieth century South African painters. Topping the scales at Sotheby’s in March was Pieter Hugo Naudé’s Springtime, Namaqualand, which fetched a hammer price of R1.3-million. Irma Stern’s A Still Life with Arum Lilies also broke through an expected R750,000 ceiling to fetch a hammer price of R950,000. What do these results mean for collectors?

The general consensus among art dealers is a wait-and-see approach. In the words of Graham Britz, owner of Graham’s Fine Art Gallery, one swallow does not make a summer. Nonetheless, the value of earlier twentieth century works seems to be rising from the bottom up. The prognosis, perhaps unsurprisingly, is that so-called South African Masters (or pre-war painters) are undervalued relative to other comparable genres. Furthermore, current market forces of increasing demand and limited supply are likely to be supportive.

This upbeat trajectory is tempered, however, by what some consider a problematic notion of viewing fine art through a purely financial lens. Even Sotheby’s Stephan Welz conceded at a recent art investment seminar at the Klein Karoo Nasionale Kunstefees in April that collectors were in fact paying for the intellectual insight an artwork offered rather than for a commodity per se.

Louis Schachat, who runs one of Cape Town’s oldest dealerships, Die Kunskamer, is renowned for handling South African masters of last century. He strongly holds a contrarian view that art should not be acquired with investment in mind. “I believe art should be bought on the merit and appeal of the work to a buyer,” he says.

Schachat concedes that an artwork bought with judgement could turn out to be a good investment but he views this possibility as a corollary rather than a raison d’etre. He says the art market is not a fluid one with free demand and supply and so it is not comparable to other asset classes.

Warren Siebrits, owner of Warren Siebrits Modern and Contemporary Gallery, agrees that the South African art market is a “microclimate”, inwardly orientated and therefore easily affected by broader change. He says of recent auction levels: “These prices are quite exceptional but it will be interesting to see if they can be held mid to long-term.”

Siebrits says the spike in value for earlier twentieth century painters has been across the board and artists have kept their rankings. But he is cautious about any real increase in value: when investors takes inflation into account, what may at first appear spectacular returns could be tempered. He also says gains should be weighted against the financial axiom that investments double in value every five years.

Graham Britz says a number of recent auction houses have returned some significant indications of top works fetching sound prices and agrees this knock-on effect has been felt through the market. Private trades undisclosed to the general public are also reflecting increased values, with one JH Pierneef canvas sold recently for R2.5m. He is confident that the South African art market is still under-valued relative to artists in other comparable emerging markets: “This is just the beginning, when you compare us to art of the same period around the world in developing countries … What is expensive today is [regarded as] cheap tomorrow.”

Bullish market sentiment, low interest rates, a property boom, increasing art ‘hype’ and more bidders coming into the market on the dual tide of increased art awareness and disposable income are feeding demand, says Britz. More emphasis both locally and internationally on art as an aesthetic is also helping: “It is a living entity in the home and more people are aspiring to own paintings … People are investing in an aesthetic, in the process of building a collection that describes their own taste and aspirations.”

Simultaneously, the supply of good quality works is being squeezed over time. Most already belong to museums, corporate collections or private estates, leaving little over for other collectors. “There is a lot less good quality art in private hands so when it comes to auction it’s chased hard,” Britz adds. All this amounts to a sustainable rise: “We are really coming back to 2000 levels. There is a firming of price from the bottom up in both early and late twentieth century works.”

So where does this leave collectors? Britz says art should always be evaluated in a broader context: market sentiment is also affected by economic, cultural and socio-political factors. He recommends collectors get familiar with the market before buying: “The general rule is: quality, quality, quality. Over time, the man who has the blue-chip painting will always make money. Goedkoop is duurkoop.” He also says collectors should identify their motive for buying art: “There is a collectible instinct in all of us … but art is a language, a feeling. Art is a niche … a marginal market because few people relate to it or acknowledge its importance … One does not buy art purely speculatively. If you can’t afford a top quality work you are trading at the bottom tier.”

Andries Loots, co-owner of 34 Long Gallery in Cape Town, says numerous factors like condition, uniqueness and provenance affect value and could lead to an anomalous price being fetched. He also says auction prices are relatively easy to manipulate and suggests prospective buyers follow a number of them to see how sustainable any spike is. He adds: “It will be interesting to see where [the market] is going to now.”

Art, money and hughes

“The art market we have today did not pop up overnight. It was created by the great liquidity of late-twentieth century wealth. Sell a block of shares, shift the money elsewhere. But liquids do not flow where you want them to unless you dig channels, and this patient hydraulic effort has been, since 1960 at least, one of the wonders of cultural engineering. The big project of the art market over the last 25 years has been to convince everyone that works of art, although they don’t bear interest, offer such dramatic and consistent capital gains along with intangible pleasures of ownership — what Berenson might have called ‘untactile values’ — that they are worth investing large sums of money in.”Robert Hughes, from ‘Art and Money’ (1984), reprinted in Nothing if Not Critical (Penguin, 1992)