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Published on December 28, 2007

Besides snapping up valuable stocks, entrusting others to manage your hard-earned money through mutual funds or speculating on property prices, Ki Nan Tsui explores the unlikely proposition of investing in watches and contemporary art.

Your house may have cost you Bt12 million, but can you carry it around with you so that your biggest investment can bolster your social standing? Sure, you may brag about its architectural attributes, but can you flaunt it at a cocktail party while sipping a gin and tonic?

An absurd proposition or not, there are some personal investments that are exceedingly flauntable, even at the hideous risk of misplacing them somewhere in the late hours of cocktail confusion.

Take rare and limited-edition wristwatches: collectors pride themselves on being able to carry their high-value investments around with them. What's more, they say a timepiece that is worth more than an average person earns in three or four years is actually a part of their identity.

Like any other fashion item, watches are a way for wearers to express themselves, says Ong-ard Mahadumrongkul, managing executive of watch emporium C Thong Panich.

Despite a sluggish start to the year that had sellers and distributors revising their growth forecasts, sales of super-premium watches have continued unabated, says general manager Vipavan Mahadumrongkul. Watches like Patek Philippe, Breguet and Audemars Piguet continue to sell like hot cakes, especially now that demand from a new wave of multimillionaires in China, Russia and India has pushed up the prices of rare and limited editions around the world.

A banker who recently returned from a trip to Switzerland recalls how, after paying for two expensive watches, he was astounded to witness a Chinese customer "sweeping up" Rolex watches as if he were gathering jelly beans in a candy store.

The portability of valuable watches means the whole world can be your resale market, explains Thai collector Kriengsak Tantiphipop. Besides auctioning at major houses like Sotheby's and Christie's in Hong Kong and Singapore, other resale venues are online portals like www.siamnaliga.com and selling and bartering among the close-knit community of collectors.

As with stocks and bonds, selecting the right watch model is paramount to the outcome of your investment. Kriengsak, who is chief executive marketing officer for Siam Paragon and senior managing director of The Emporium shopping complex, outlines five factors for beginners to consider: budget, brand potential, market, trends and functions.

"A friend of mine bought a Patek Philippe watch for Bt4,000 and years later sold it at auction for Bt25 million," Kriengsak says.

Underlining the value of rare timepieces, the most expensive watch auctioned to date sold for US$11 million in 1999. That was a Patek Philippe pocket watch specially designed for New York banker Henry Graves Jr. It featured 24 complications - or functions that complicate its movement - something unheard of 74 years ago, when it was made.

As a watch's movement becomes more and more complicated, the number that is produced becomes smaller, and scarcity ultimately drives up the price. Premium watchmakers live and die by this principle. Fortis, for example, makes only 400 watches for each model, says Ong-ard of C Thong Panich, which imports various brands, from Citizen to Rado.

Materials are also very important and often dictate trends.

"Fifty to 70 years ago, it was gold. Then it was pink gold, white gold, and now we have palladium," Kriengsak says. All of these variations are driving towards exclusivity, but would-be collectors are advised to stick to familiar brands.

Brand names are, likewise, all the rage when it comes to investing in works of art. Pieces with familiar names like Andy Warhol and Roy Lichtenstein were sold out before the first pop of a champagne cork when Timothy Yarger brought the collections for his Bangkok gallery. Fine-quality prints of Picasso, Miro and the like have also been selling well, fetching upwards of Bt10,000.

But in most other regards, the art market in Thailand has been slow to develop. The enthusiasm of the collector elite  - mostly wanna-be-artist tycoons - has not rubbed off on the general public. The contemporary-art market alone is very different here from that in, for instance, Britain, where art has become so commercialised that a festival has been launched for commoners, or those without an obscenely lavish budget.

For local beginners, the Thai contemporary-art market is the most accessible - culturally, physically and financially. It will take at least 10 more years for the local market to pick up, says Sermkhun Kunawong, a major collector and CEO of event manager CM Organiser. But over the next three to five years, the market will see a surge in the number of middle-class buyers.

"It's like picking up a piece of furniture. Increasingly, people want to have some artwork decorating their rooms, to lend an air of individuality," says Jaturong Kengwinit, owner of Number 1 Gallery.

The gallery is one of the latest to open and has been selling consistently.

Jaturong says it is becoming increasingly common for middle-class Thais to allocate a budget for artwork - say, 10 per cent of the value of their home.

"If these people [have the spending power] to buy a Gucci handbag, then they can, for example, buy a Bt30,000 painting and hang it in their living room, to showcase their good taste to their guests," he says.

The Art Asia Pacific Almanac 2007 says Thailand has as many private art galleries as India - slightly more than 100. But the value of Thailand's art exports, at US$5 million (Bt169 million), is only a fraction of those from India, which are worth $459 million.

This means a large majority of local artwork is underpriced, Jaturong says. While many new customers are these days willing to pay Bt50,000 to Bt100,000 for a painting, the works of Tawee Rajaneekorn, the Culture Ministry's Thai National Artist of 2005, are selling for only Bt20,000 to Bt30,000 for a 60-x-80cm painting. The market value of these works soon rises to Bt70,000 or Bt80,000.

Sermkhun says besides the artist's reputation and the medium used in the work, prices for works of art also hinge upon other external factors. The government, for instance, may boost the market by commissioning artwork for official buildings or introducing tax breaks for people donating art to government galleries.

"The biggest problem is probably the lack of PR," Sermkhun explains.

He has been trying to raise the profile of local art with his free-admission Bangkok Sculpture Gallery, open to the public on the second and fourth Saturdays of each month, and the Bangkok Art Auction.

By raising the profile of the industry, galleries and dealers - whose commissions vary from 35-50 per cent - will benefit, and the artists hope some of the money will trickle down to them.

The media could play a very important part in educating the public about the true value of art, says artist Chusit Wijarnjoragij, who is known for his royal portraits.

However, the true value of art does not lie in its resale price; even the most commercial of dealers does not believe in art for purely commercial purposes.

Marc Glimcher, an art dealer and the owner of the Pace Wildenstein Gallery in New York, points out you cannot conduct due diligence on art.

"It is best not to think of [art as an investment], lest you make a bad investment," Glimcher says in the book Collecting Contemporary.

"Art as an investment is part of its nature. But if you isolate the investment aspect, it will make you a very easy target for vultures to come and get you."

Ki Nan Tsui

The Nation