Philip Hoffman

Does it match the wallpaper? What makes a good investment in fine art

About the event

Philip Hoffman of the Fine Art Group served up a generous helping of anecdotes about art and value.

What makes a painting worth millions of dollars? Philip Hoffman, who spent 12 years at the auction house Christie’s, related how a customer was struck by a painting of waterlilies that was for sale and asked who the artist was. She was told it was by Monet and was estimated to be worth £6 million. ‘Darling, we must have it,’ she told her husband. ‘It has got exactly the same blues and greens as our wallpaper. If we buy this for £5 million we won’t have to redecorate the drawing room.’

It sounds like something straight out of P.G. Wodehouse – but is it any worse than the people who bought a Picasso for $6 million, only to have to leave it under wraps in a warehouse when its authenticity was questioned. The woman who bought the waterlilies may have not have known much about art, and arguably would have been just as happy with anything else, but she and her guests are still enjoying looking at a beautiful painting.

Hoffman also described how, when he first started working at Christie’s, and in possession of £5000, he had come across two very similar paintings of St Mark’s Square in Venice, one for £5000 and one for £350,000. The latter was obviously beyond his means at the time, so he announced his decision to buy the former. But the director told him: ‘I won’t allow you to. Although it says 1740 most of it was painted in 1980 and there’s very little of the original picture there. This [pointing to the £350,000 painting] is the one you should buy.’

Not unlike the housing market, the fine art market seems to be complicated by the conflicting forces of what people love, and what makes a good investment. Some people can be put off buying something that they love by an expert who thinks only in terms of understanding the investment value. For some it is the idea that art is an investment that pushes up the price and encourages them to buy expensive works that they don’t actually like. Others buy what they like without thinking about the additional complications.

Hoffman told another story of a client who had impulsively bought two pictures for $70 million and wanted to take them to his house in Brazil. Hoffman told him it would cost £28 million in import taxes to do so. ‘I said he would be better off using $28 million to buy a flat in New York and take the painting there. So he did.’

Is there something about buying art that stops some people doing the due diligence that would be almost automatic for any other major purchase?

It’s intriguing to get little insights like this into the lives of people who have $28 million spare, but puzzling too. Is there something about buying art that stops some people doing the due diligence that would be almost automatic for any other major purchase?  A possible explanation is that art creates an emotional response that sends rational thinking out of the window. Another, related, explanation is that the art market is perceived as different from other markets and playing by different rules.

That is at most only half true. Although the value of art works can be upset by irrational forces (Hoffman’s colleague Ruth Knowles described in an earlier talk how bad blood between competing bidders at an auction had artificially sent the price of one picture skyrocketing), and the market is unregulated, meaning that you cannot call on an equivalent of the Financial Services Compensation Scheme (FSCS) if your investment goes wrong, it does still have ‘rules'. Experts know what they’re looking for in order to authenticate works, and there are accepted standards for how the amount and quality of restoration can have an impact on value. Organisations such as the Fine Art Group itself will advise people on buying art, aiming to ensure that you don’t make expensive mistakes and that your purchases at least hold their value.

If the related collectables market is anything to go by, though, you might find yourself making some compromises. The value of a children’s toy, for example, is well known to be in inverse proportion to the amount of love that toy received. The top prices are paid for those that have never even been taken out of the box. In the art world, Hoffman gave the example of a rare Ming vase that lost nearly 90% of its value because the previous owner had turned it into a lamp.

Maybe the lady with the Monet in her drawing room had got it right all along: forget the investment value and buy only what you believe to be beautiful and matches your wallpaper (and don’t redecorate).


Philip Hoffman, Founder and CEO of The Fine Art Group, was speaking at Saïd Business School as part of the Art at Oxford Saïd series.

Philip Hoffman, The art of entrepreneurship