The art of the art sale

PORTFOLIO POINT: A long-time gallery owner, Hank Ebes is eschewing the traditional auction, for a system that benefits buyers.

Hank Ebes wears his passion for Aboriginal art close to his heart: his bespoke tie was painted by four women whose work was featured in the first of a string of unique auctions that could give investors’ collections a head start.

The expatriate Dutchman, who owned one of the first Aboriginal art galleries in Melbourne, has demonstrated he cares little for convention. Also unusual is the way he plans to sell off a collection of 3000 paintings by prominent indigenous artists over the next five years.

Ebes (left) owns all the paintings and is auctioning them from the warehouse in Cheltenham, southeast of Melbourne, that doubles as his home. This has allowed to him to dispense with adding GST and a buyers’ premium to the hammer price, which he says is 20–25% in Australian auction houses. This equates to a total saving on the artworks, many of which are painted by indigenous artists also featured in Australian and international galleries, of “at least” 50%.

Savings on printing catalogues, insurance and transport mean the reserve price is also lower and Ebes is continuing the policy he used in his now-shuttered gallery of allowing buyers to exchange paintings for others up to the same value.

“They’re not something we desperately want to get rid of,” Ebes says, but because he’s 68, semi-retired and doesn’t want to leave such a huge burden to his two daughters, the first auction on November 20, of 366 works, was the first of at least 10. The next will be on March 18.

Yet for investors, even if you can buy a painting by a renowned Aboriginal artist at a steep discount (Ebes is selling artworks by artists such as Rover Thomas Joolama, Clifford Possum Tjapaltjarri and Emily Kame Knywarreye, the only Australian woman to sell a painting for over $1 million), it means nothing if the market is not going to recover from the king-hit of the 2008 downturn.

Art valuer Brenda Colahan has handled a considerable number of Aboriginal artworks over her two-decade long career and says Aboriginal art is an exceptional area to invest in.

She says it’s one of the greatest art movements of the 20th century but in the run up to 2008 the market was over-hyped and needed a correction. “I think now we’ll see more quality and more realistic pricing.”

Prices for Aboriginal artworks are about 50% off their 2007-08 highs, so Colahan expects dealers will focus on higher quality Aboriginal art and the market won’t be flooded with “mass-produced” works. She also thinks there will be better prices for individual artists and paintings will be judged on their aesthetic value, rather than the general assumption that’s prevailed in the past that works from outback communities will automatically fetch better prices.

Investors should look at paintings and artefacts from Arnhem Land, East Arnhem Land, Maningrida, and Tiwi Islands rather than just Central and Western Australia as artworks from these areas are starting to attract more interest from the art world.

“I think there’s a focus on more ethnographic looking pieces again, rather than Westernised abstractions. They’re still highly sought [abstract Aboriginal pieces] but I think that people are more confident in buying things that look a bit more tribal, and consider that art as well. It once was considered anthropological, now it’s considered art as well, which is great, and I think that’s going to be an area to invest in.” (Ethnographic art is the traditional art produced by indigenous people anywhere in the world).

Colahan says the next 12 months will be crucial as the art world is waiting for confidence to return.

At the November 20 auction, Ebes sold over 200 paintings and in the days afterwards that figure hit 220 as buyers returned to look for pieces that were passed in. A Rover Thomas piece fetched the highest price of $40,000; the second-highest was $37,000 for a work by Ginger Riley, the subject of a recent dispute after a Melbourne dealer and executor of the Riley estate said it was misattributed to the artist. Ebes says the painting is fully documented and comes with photos and video of Riley painting it, as are all the others he has commissioned since 1987.

Ebes is convinced that Aboriginal art is set to surge again and his assessment that it’s overseas buyers who will drive prices up is backed by Colahan. She says the French, in particular, love it and it will be the Parisian auctions that push values higher.

Currently the whole Australian art industry is suffering from the heightened restrictions on SMSF art investments and from the resale royalty tax introduced in 2010, which gives artists a cut every time their work is commercially resold.

Colahan, also one of a handful of SMSF art valuers, says that Aboriginal art was popular with SMSFs before 2008 and was already suffering from a heavy fall in value after 2008. The new SMSF regulations that came in on July 1 and the uncertainty that preceded them then further slowed the market.

The rules makes it clear that SMSFs cannot lease art back to the trustees’ own business or to any related party, and trustees must sign a document that states where the artwork is – either who it is leased to or where it’s in storage – and have it insured within seven days of purchase.

“The whole idea now is that you get good advice from an art adviser up front on what is an appropriate art investment '¦ So I think people would be getting better advice and putting in things that are of a little bit higher value. That’s not to say that people can’t put in things worth a couple of thousand apiece, but it just means that they need to be fairly sure that it will increase over time or hope that it will,” Colahan said.

She is still valuing about 10 works a week for SMSFs, though not solely Aboriginal pieces, so is hopeful that the SMSF demand for indigenous art will bounce back and bolster the market.

Ebes, living among millions of dollars worth of Aboriginal art (which doesn’t include his private collection of 500 paintings nor his eclectic assortment of Chinese artefacts, tin children’s toys or antique prints) says the 2700 paintings left for sale are his retirement fund. But by buying artwork through his unique sale process investors can also give themselves a head start, and potentially start their own retirement fund too.