Real Estate Japan recently conducted an email interview with Ms. Chiho Igarashi from TriCERA, an e-commerce platform and art advisory that connects Japanese artists with a worldwide audience. Ms. Igarashi answered readers’ questions on investing in contemporary Japanese art and why it is a market with enormous potential for growth.
Q: Investing in art seems like something that only the very wealthy can do. Can you tell us why this is something that the average investor should even consider?
The art market is still in its early stages and is expanding rapidly. This is why art is one of the best choices for investors. Compared to equities, forex, or real estate, the return on investment in art is higher.
There is one downside to art investing, which is the trading commission.
Art commissions can be as high as 15-20% at an auction house, which is very high compared to other financial products. This makes art unsuitable for short-term investments.
However, unlike stocks, new “shares” of a piece of art cannot be issued. Since the artist is a person, the number of pieces that they can create is limited. Therefore, if the popularity of their artwork increases, the price of the work often rises dozens of times or more in a few years.
Much of the artwork created by famous artists, or artwork traded by Sotheby’s and Christie’s with a price of more than $10 million per piece, are more for the wealthy class. So if you’re looking to build wealth through art investment, I recommend buying works by young artists who have the potential to grow in the future.
Some works by young artists can be purchased for tens of thousands of dollars, making them a reasonable investment.
Q: Can you give us a brief overview of the Japanese contemporary art market? For example, why is now a good time to invest in Japanese contemporary art?
Japan’s contemporary art scene is richly diverse, home to pioneering artists who have transformed the industry’s landscape on a global scale. From Takashi Murakami’s Superflat movement to Yayoi Kusama’s polka-dotted universe, to collaborative and performative approaches to visual media and the futuristic use of technology in art practices.
It is said that the price of art by being produced by young Japanese artists is currently at a low point, which makes this a good time to buy their work.
Even five years ago, Taiwanese collectors often bought Japanese artists’ works at art fairs in Taipei because of their low prices.
After the global financial crisis, works by Japanese artists became cheaper than their Chinese counterparts, while the quality was higher.
The Japanese contemporary art market is about 40-50 billion yen, which is a small pool of buyers. We believe the market can double to 100 billion yen in a short time. The art market in China is said to be worth 1.5 trillion yen, which is 30-40 times larger than that of Japan. If you think about it, there is still a lot of room for growth.
We can say that the method of buying a large number of reasonably priced artwork is suitable for the current Japanese market.
Q: Can you tell us about some of the Japanese artists you work with? How many artists are represented by TRICERA?
TRiCERA currently has about 1,850 artists from 85 different countries participating, of which 550 are Japanese. TRiCERA’s top artists are attracting more and more fans through Instagram, with the total number of followers having grown to over 50,000. Through social media and other channels, we sell five to ten pieces of art a month.
Q: Can you tell us a little about your in-house art advisors? How does an advisor work with clients to help them find pieces that are right for their taste and/or as an investment?
We have various ways of connecting with our clients, including LINE, WhatsApp, and a chat system on our website, so customers can contact us at their convenience. In case there are questions regarding the artwork or anything related to art such as how to store a piece, etc., we’re always there to help out so our customers will be comfortable purchasing art online.
Q: What are the main risks involved in investing in art and are there ways to mitigate these risks?
There are a few risks when buying art as an investment:
- Buying art based just on its appearance. ==> In fact, basing your decision on background information is more important.
- Buying multiple pieces from the same artist. ==> You need to diversify risk.
- Buying from an unreliable dealer outside a commercial gallery. => There aren’t many artists whose prices are likely to go up because that gallery itself isn’t at a high level.
By gathering the right information (such as who has sold and bought the artwork and what kind of trends it represents) you can make a better decision about buying a piece for investment.
If you are interested in learning more about investing in Japanese contemporary art, we invite you to join us for our December 5, 2020 webinar on Why and how to invest in Japanese contemporary art. Real Estate Japan is pleased to partner with TRiCERA for this event.
The seminar will be held live online from 10:30AM to 11:30AM on December 5th (JST). Attendance is free but registration is required. Please learn more and sign up for a space here!
Lead image: iStock stock photo