Bidding for investments

  • Business
  • Saturday, 11 Apr 2009

AUCTIONS involving anything other than properties and cars are rare in Malaysia. For the general populace, the term auction carries negative connotations, largely due to the auction of foreclosed properties and cars by financial institutions.

The younger crowd, on the other hand, may be more familiar with online auctions, given the popularity of Internet auction sites such as eBay,, Allegro and uBid.

Items up for bidding can range from expensive to cheap trinkets, or everyday household goods. In eBay, they have categories ranging from “Antiques” to “Everything else”.

But for the serious collectors of objets d’arts, auctions are a serious business. The items put on the block can be investments that, if put up for auction or sale later on, may net plump profits.

In this sort of auction, one never needs to fear the miasma of bankruptcy or foreclosure. This is usually the domain of the venerable auction houses such as Sotheby’s and Christie’s, both of which have offices in Kuala Lumpur.

Of course, one may ask, what fool will purchase expensive art or other collectibles in such times?

But perhaps this is the best time to look for these items as they may be cheaper due to the scarcity of bidding from investment bankers, or even old-money types, who have seen their fortunes shrink.

Following the blow-up of the financial system on the back of the subprime mess last September, a number of news networks such as CNN carried stories on the world of auctions.

Recently, there have also been stories of Bernard Madoff’s New York Mets baseball tickets up for sale on eBay, while the month Lehman Brothers Holdings Inc went under, British contemporary artist Damien Hirst made £111mil from 218 of his works.

Christie’s Malaysia consultant Lim Meng Hong says investing in such items takes a bit of legwork as collectors need to do research on quality, rarity and pricing, among others.

“True collectors will look for the rare things,” she tells StarBizWeek. However, Lim says it is a fallacy among many that the prices of collectibles auctioned by Christie’s or by other auction houses start at stratospheric prices.

“People often hear of the record-breaking prices, but if they were to go to our website, they’ll see that the price range is very wide,” she points out.

Lim says 80% to 90% of the sales that Christie’s make are between US$10,000 (RM36,500) and US$1mil (RM3.65mil). She adds that there are contemporary art pieces priced from as low as US$300 to US$400.

“Items for auction are across the board. In Malaysia, people look for antiques, watches, jewellery, art and wine, among others,” she says.

On whether one can put a price on an investment picked up at an auction, she says it is all very subjective and depends a lot on when somebody acquires a particular item.

For example, Lim explains, in these recessionary times, the prices of Southeast Asian and Chinese art have fallen the most, as they had risen the most during the boom times.

“The prices shot through the roof in the past five years, but have now lost something like 40%,” she adds.

It is all about buying wisely. “Of course, the serious collector will always go for the most that they can afford in terms of the item being auction-quality pieces,” Lim says.

As for investment-grade property auctions, unfortunately, they do not exist locally.

“Owners of such properties will always go to agents instead of auctioneers,” Henry Butcher Asset Auctioneers Sdn Bhd general manager Kok Seng Hoe says.

He admits that generally, people shy away from voluntarily putting their property on auction because of the perception that auction properties are linked to bankruptcies or foreclosures.

“Most times, we usually work with banks to put up foreclosed properties on the block and they’re usually in the middle-low cost range,” Kok says.

In the more matured property markets such as Australia or Singapore, there is no stigma to voluntarily putting properties on auction in order to get better prices.

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