Valuation of an artwork, or a whole collection, is too greater temptation to resist for collectors whether the piece is for sale, bequeathment or out of curiosity in wanting to know how much the particular asset is worth. Unfortunately, analysis of artworks from Eastern Europe, in particular Russia and Ukraine, is fraught with difficulties due to the lack of reliable, and transparent, information on public and private trading. Extraordinary fluctuations exist from one auction house to another and from gallery to gallery in the absence of an industry yardstick with which to benchmark value. It is in this environment Red Art was born with the aim to provide a reliable resource in pricing and valuing works of art originating from the region.
Red Art has been active in the Eastern Europe market for 25 years with its beginnings dating back to the post 1990 economic and cultural meltdown of the Former Soviet Union. Over the years we have gathered information, gained experience and built our reputation on the local art scene; transactions, dealers, styles, genres, artists and their biographies and, above all, what is available and where.
Whatever the starting point for a collector, we must return to the salient issue of assessing the financial worth of works of fine art and, when it comes to valuation, there are many components to be considered in answering the question; “How much?” For one thing, there is supply and demand and, for another, authenticity. Our clients need consistent and reliable information quickly so we have had to simplify the pricing process into 2 parts:
1. Artworks that have primary or recurrent sales records from public auction:
- cost calculations based on the paid database of the bidding/artists
- logarithmic regression; taking into account the correlation of currency transaction/current inflation and artists’ indicators from the date of purchase
2. Without auction sales (e.g. recognized public sales) the valuation range will be more fluid. It is standard practice globally in such circumstances for the following considerations to be taken into account:
- number of similar artists (age, country of residence, studio or gallery location, awareness, cataloguing and the existence of their works in private collections and public collections)
- changes in pricing dynamics in the private market
- Fixation data (e.g. actual amount paid) concluded in the contract of past sales
- Information on pricing available in the public domain from media sources, professional and public galleries, educational websites etc.)
The second part is measured by three formulae, firstly "The Method of the Analytic Hierarchy Process" and two others developed in Europe; one of which is patented by Red Art Galleries.
In the final analysis, we aim to arrive at six independent figures:
1. Current market value or FAIR MARKET VALUE. A range depending on the size of the work and on other parameters such as paired groups, year of creation, media and so on.
2. Insurance cost or RETAIL REPLACEMENT VALUE. Primarily used by insurance companies and for real collection purchase offers.
3. Operating cost or MARKETABLE CASH VALUE. Cost of selling at auction including transportation and sale charge fees.
4. Current resale value or sale in shortest time possible.
5. Current hypothecation as in the case of placing the artwork as an object of a pledge with a bank.
6. Capitalization forecasts. Artworks in private collection supplied with provenance, proof of correct management and storage plus a list of recommendations for further works.
Red Art Galleries aims to provide professional advice and support on all matters for collecting art and the management of a collection. For corporate clients, we can create a collection either for office display or investment completely from scratch. Included is a forecasted projection in capitalization and PR activity to raise the collection’s profile in the world's art community. Our expert advice will be invaluable in adding true value both aesthetically and financially to your collection.
Acquisition and Sale of Objects of Art
We guide our clients through the maze that is the global art market to identify opportunities both for the acquisition and sale of works of art. Working with our partners, and using our industry network, we aim to provide our clients with direct access to auctions, galleries and private collections around the world in order to acquire the best works of art.
We will recommend global software programmes and supply our own bespoke system to provide an inventory count.
Creation of a meaningful collection requires planning and a thorough strategic approach; as well as other financial investments. Based on client preferences, Red Art Galleries will define the parameters for expansion, focusing and improving the quality of the collection and ensuring a financial asset with a high potential growth cost.
The knowledge of the pedigree, history, provenance, origin and value of each artwork is the basis of the collection’s success in financial terms. Exploring the art market as a whole, as well as the painting of client’s particular interest, we provide full information about the quality, cost and feasibility of further acquisitions.
Transportation, Storage and Insurance
Red Art will manage the administration for export and shipment including export licenses, certification from the Ministry of Culture, transportation, packing and storage. The most competitive insurance rates will also be found.
Red Art Galleries offers professional advice in identifying an optimal taxation scheme as well as providing conditions for preserving the value of the collection for handing down to any descendants.
In cooperation with our partners, Red Art Galleries is engaged in artistic and scientific research into works of art. We only work with the leading art experts specializing in the art of Eastern European countries (in particular Ukraine and Russia). It is paramount these institutions, organizations and individuals have proven their impartiality and professionalism in matters of examination and attribution to works of art. Our philosophy is based on conducting a comprehensive examination including art history analysis and technological analysis of the works.
Our accredited approach includes:
- Determining the artwork’s year creation using technological methodology.
- A detailed analysis of the materials and techniques that were used matching the features of the materials and techniques attributed to the particular artist or for the specific art school/style.
- Assessment of the artworks’ condition, including the feasibility for the works’ storage, transfer for the exhibition or for restoration. We will also provide evidence-based recommendations for safety improvement, preservation, cleaning and restoration.
- Creating the artwork’s Certificate of Authenticity, allowing it to be precisely identified against counterfeit objects and conducting stylistic researches - comparative analysis with the artworks of a particular artist or a specific art school.
- Creating an artwork’s profile and providing an accompanying report on the processes to confirm the artistic value and the market value of the item.
- Coordination, and notification, of the artwork’s attribution with leading internationally recognized experts, museums, committees, galleries and foundations.
Investing in works of art requires a strategic approach minimizing risk and maximizing return. Any acquisition is an investment irrespective of the motivation to buy. A collector has many motives to acquire not least of which is a simple desire to own whereas an investor, on the other hand, primarily thinks about his prospective earnings. There is room for both motivations and art is almost unique in providing both an aesthetic and financial return. Over the last 20 years art analysts have tried placing art on the same level as more familiar tangible investment vehicles: shares, securities, real estate etc. However, given the market fluctuations in commodities and financial markets since 2008, the annual reports of credible institutions such as Deloitte Art Finance, Skate Art Market Research, ArtTactic, show that, with the right approach, the yield of art is moderately positive, and, in some cases, is even superior to other investment vehicles. Increasingly frequently we see modern investors diverting part of their portfolio to works of art at a level of 10%-15% of the total volume of investments. Since 2000, according to Deloitte Art Finance, the preference of art to other objects in the formation of the venture capital investment portfolio has increased by 60%.
With our experience in the international market, Red Art Galleries provides professional support using the art values as a subject of a pledge and placing them in one of the hedge art funds. In addition, we provide professional counselling to the stock market players on the matters of purchasing shares of the largest companies that are involved in art and emerged in the IPO.