20th century art investments rocket

Investments in contemporary art and furniture have rocketed in value, according to a new report.

The Zurich-AMR Art & Antiques Index has found that a taste for loft-style living has seen growth in the value of 20th century British, American, Scandinavian and Italian furniture.

"This year we've been monitoring trends in the alternative investment markets and our forecasts show that 20th century furniture should continue to be lucrative for investors this year," said Kris Coombes of Zurich Private Clients.

However, more traditional English furniture fell in value with falls in the sale prices of pieces from the Regency, Victorian and 18th century periods.

The market for paintings has seen heavy shifts, with English sporting paintings doing well while English watercolours fell 18 per cent in value.

Bruce Addison, spokesperson for auction house Bonham's, said: "Modern furniture is proving to be a lucrative investment this year. Whatever period you wish to buy from doing your homework will play dividends."

Zurich's index also released a series of predictions for the alternative investment market. It found that vintage Bordeaux wine, contemporary Chinese painting, contemporary Indian painting and modern first editions, including JRR Tolkien's The Hobbit and Ernest Hemingway's Death in the Afternoon, are set for growth over the next five years.

Last week Barclays Capital found that in periods of high economic growth art is one of the best performing investments.

In the latest edition of the company's Equity Guilt Study the investment banking division of Barclays Bank has found that art is now offering an attractive alternative option for investors.

Interest in investing in art grew in the wake of the stock market crash, although art has been outperforming investment in gilts and cash since 1955.

But people looking to invest in something outside the traditional suite of equities, bonds, and cash have been given a warning by Barclays Capital as well.

The report warns that since art has no intrinsic value, its value is extremely subjective and based upon perceptions and tastes that change over time.

"Real returns of art versus other assets may initially look quite healthy, but this does not take into consideration steep transaction costs, insurance and cost of caring for the art," says the study.

"These have been estimated to be as high as 20 per cent per sale."