Antique carpets: A new frontier in functional art investment
Functional art, such as these exquisite items, appeals to those with patient capital seeking unique financial growth opportunities
ANTIQUE, hand-woven carpets with unique designs represent a burgeoning area for alternative investments, providing a means to preserve and grow wealth. As family offices gain prominence in Singapore and globally, there is increasing interest in innovative ways to safeguard and transfer wealth to future generations.
Functional art, such as these exquisite carpets, appeals to those with patient capital seeking unique investment opportunities. Although the return on investment (ROI) for art assets varies widely, art is recognised as a valuable financial asset with significant appreciation potential.
Contemporary art, for example, has delivered an average annual return of 7.5 per cent over the past 25 years, according to a report by Art Market Research. This outpaces traditional investments such as bonds and commodities, although it may not match the average returns of stocks.
The global art market is substantial, valued at an estimated US$1.7 trillion, with around US$60 billion in annual transactions. Art constitutes a significant portion of the collectibles market, accounting for roughly 75 per cent of annual transaction value.
Singapore’s art market, although still nascent, is emerging as a significant player in Asia, contributing 1 per cent of global art export and import as of the end of 2023. The city-state’s art scene has grown considerably in recent years, bolstered by government support and an influx of international artists and collectors.
Singapore and Hong Kong have developed distinct strategies to position themselves as key players in the Asian art market. While Hong Kong has established itself through links to London and as a gateway to the Chinese market, driven by global players such as Christie’s and Sotheby’s, Singapore’s approach has been state-driven.
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The government has proactively invested in the art market, creating clusters of international galleries, supporting art fairs, and establishing world-class cultural institutions. Despite Hong Kong’s dominance, Singapore’s strategic investments have positioned it as an emerging centre for the arts, modestly buoyed by geopolitical tensions.
Globally, the US remains the largest art market, accounting for 42 per cent of global sales, followed by China (19 per cent), the UK (17 per cent), and France (7 per cent). These countries are powerhouses in the global art investment market.
Art investments are considered stable, with artworks typically holding value over time. They have low volatility during crises and show a stronger positive correlation with the price of gold than with other assets. Fine art has increased in value by 141 per cent over the past decade, suggesting it can be a lucrative long-term investment. However, success in art investment requires specialised knowledge, including understanding market trends, artist potential, and artwork authenticity.
Risks include market illiquidity, high transaction costs, and the need for expert valuation. Additionally, art values are subjective and influenced by cultural trends, collector interest, and economic conditions.
Antique and custom-designed carpets offer fascinating and potentially rewarding investments. Their value can vary widely based on rarity, age, condition, origin and historical significance. Well-preserved carpets from traditional rug-weaving regions such as Iran, Turkey, the Caucasus, Central Asia, Western China and India are highly coveted. Persian carpets from cities such as Isfahan, Qom, Nain, Kashan and Tabriz are especially prized for their intricate designs and craftsmanship.
Although there isn’t a standard ROI for antique carpets due to each piece’s unique nature, they can be worthwhile investments if chosen wisely. Beyond financial gain, owning an antique carpet brings immense aesthetic pleasure and cultural richness to one’s living space. Like other art assets, these carpets can appreciate over time, especially if they are rare, historically significant or from a sought-after origin.
The substantial global art market and vibrant activity suggest potential for buying and selling antique carpets at various price points. As with art, antique carpets can serve as reliable assets, often maintaining their value despite economic downturns. The significant appreciation in fine art values over the past decade indicates that long-term investments in high-quality pieces, including antique carpets, can yield substantial returns, though individual results will vary.
Investing in antique carpets requires expertise in history, craftsmanship, and market conditions. Often overlooked as an asset class, antique handwoven carpets blend the sophistication of financial decisions with an appreciation for beauty, history and craftsmanship.
As Singapore’s financial centre evolves and the number of households seeking to preserve and transfer wealth to future generations grows, increasing literacy about this emergent investment class is crucial. Antique carpets offer a unique instrument to safeguard household wealth across generations within the broader art investment space.
The writer is principal of Lotto Carpets Gallery
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