Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 5:43pm ET

Preparing to Buy

We are in a time where access to information is greater than ever before.  The violin industry has plentiful opportunities one can indulge in to gain a basic understanding of instruments, makers and a range of values.  The online resource Cozio offers articles from scholars and experts in the industry, detailed pictures of instruments, auction prices and industry news.  The maker archive on the Amati website also offers articles on makers and auction sales records.  A printed resource; “The Red Book” culminates the sales results of all auctions in the violin trade.  “The Fairfield book of Known Violin Makers” is another among innumerable books that can help provide insight.  All of this information is readily available and can help become more educated in this field.

In addition to familiarity with the product, a relationship with an industry expert is highly advisable.  There are many dealers and advisory groups in the industry that cater to collectors and understand the process of finding the right instrument for the investment period within the funds available.  Documents such as provenance, certificates of authenticity, condition reports are an important part of the process and help to provide reassurance in an investment.   Technology has even entered the buying process, but does come with additional costs.  Reports such as dendrochronology reports and CT scans further help to identify an instrument and review it for hidden damage.  

Considerations

There are some important decisions to make about becoming a steward of an important instrument.  Some investors prefer to keep their investment in a secured vault until they are ready to sell.  On the contrary, others loan their investment to concertizing musicians.  Both options have their upsides. 

An instrument that is stored in a vault (preferably with the controlled humidity) cost less to insure (approximately .2% of the value each year).  Storage of the instrument means it will not sustain any damage, which is a risk when it is being performed on, further preserving its purity and value.  On the counter-side an instrument that is being performed on and featured in prominent recordings is gaining allure and exposure, which when partnering with the right musician can significantly increase its value.  In this scenario, the investment period is more long-term and insurance can be closer to .4% of the value of the instrument each year.

Selling Your Investment

When preparing to sell your instrument it is important to establish a timeline of when to sell.  How quickly one needs to sell and the expected return play significant roles into the sales strategy of the item.

In the violin trade purchasing violins through auction was previously primarily a wholesale environment, while musicians and collectors worked primarily with retailers.  With the development of the online market, purchasing through auction has become more common to those who previously would have been retail buyers.  This has yielded higher prices at auction, especially on the fine items.  Even with the shift, the general assumption is that auction prices are still approximately 50% less than retail.  Auction is an excellent option to expose an instrument to a large, international buying market and move the item quickly, though it is unlikely to yield full retail value. 

Notable Violin Sales At Auction In 2016

Giovanni Battista Guadagnini Violin

$1,253,000

Giovanni Battista Guadagnini Cello, the “ex-Havemeyer 1743”

$1,505,000

Jean Baptiste Vuillaume String Matched String Quartet “Evangelists”

$1,361,015

Antonio & Hieronymous Amati Cello

 £407,500

Tommaso Balestrieri Violin 1788

$366,097

A Violin Case by W. E. Hill & Sons, 1887 from the “Apostles” collection

$17,220

 

The past few years have seen phenomenal growth for 2nd and 3rd tier makers in the stringed instrument market, according to Jason Price, founder & director of Tarisio Auctions. 2016 in particular has brought surges in demand for instruments in the $100,000-500,000 range, Price explains, as most of the famous 17th and 18th century Italian makers have now exceeded this range. Accordingly, new attention and interest is been given to makers like Vuillaume, Rocca, Balestrieri, Storioni and Pressenda.

"Investors who take a long view and are interested in slow-steady growth can find great opportunities in this segment of the violin market," Price says. 

The retail environment is more intimate.  Each dealer has their own relationships with buyers and collectors, and has their own approach when presenting an item for sale.  They are motivated to help optimize the sale, which will prospectively yield a higher dollar amount when selling (that is if the item isn’t a recent acquisition known on the open market), but it can be expected to take more time (approximately 1-2 years).  

Potential Risks

There is very little downside to investing in rare and fine instruments.  The areas of the greatest risk include damage to the instrument during time of ownership, unknown damage and compromises to the instrument or misidentification upon purchase.  

The Endangered Species Act has caused some concern over the ability to transport and sell certain items, due to their composition including materials such as ivory.  Other materials such as ebony (which is used on the fingerboard of violins and for the frogs on bows) and Pernambuco (for bows) are materials that are also endangered.  There is an active lobby within the violin industry that has received the recent support from the work of the NRA lobby, who likewise has interest in protecting antiques made with materials such as ivory before the act was signed December 28, 1973.   Recent definition to the legislation has helped to assuage the concern of possession or transportation of these items that contain endangered materials, however, should the legislation change to hinder the ability to sell items containing endangered species, it could complicate the transportation or sale of an item.  

An Active and Demanding Market

The market of rare and fine instruments is not only very active, but one that continues to grow in frequency and movement.  In 2004, Orchestrated Investments, Inc. cited research conducted by Nobuyoshi Ozawa at the University of Cincinnati that estimated the market capitalization for rare stringed instruments (those made over 150 years ago by the top 270 makers) to be approximately 12.3 billion, and 100% of this market turns over every 30 years, making this market not only financially lush and viable, but also liquid.

Restricted supply and increasing demand from markets such as Russia, China and Korea have accelerated the gains for rare and fine instruments.  Large institutional buyers have not only created more competition, but have placed pressure on the rare stringed instrument market by reducing the number of instruments on the open market, which undeniably accounts for the continued increase in prices on the international scene, and escalated demand.

Conclusion

The violin trade can be an intimidating industry to approach.  Though there are several outlets for good information, as with any major investment it is important to align yourself with trusted experts in the industry.  Investing in violins can yield personal satisfaction, alongside the preservation of an art-form that has been cherished throughout several centuries, while offering a stable and rewarding return. 

 

Emily T. Lane is Founder and Curator of Elan Fine Instruments, helping musicians buy and sell fine instruments, curating violin auctions, and developing innovations for the industry.  Additionally, she serves The Open String Foundation, which provides instruments to children in need. 

Special thanks to:

  • Jim Warren of Kenneth Warren & Son, Violin Dealer & Expert
  • Paul Becker of Carl Becker & Son, Violin Maker & Dealer
  • Philip J. Kass, Expert & Author on Fie Stringed Instruments & Bows
  • Donald M. Cohen, Bow Maker and Publisher of the Red Book, Auction Price Guide of Authentic Stringed Instruments and Bows
  • Jason Price of Tarisio Auctions, Founder, Expert & Director

 

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