KEY POINTS:
In a dark, windowless room, a projector throws up a video of a mouse darting in and out of a hole. An electronic hum blocks out the rush of traffic outside on Auckland's Karangahape Rd. This is White Australia by Hayden Fowler.
Across the corridor in another room, about 20 circular frames dominate a wall, each a porthole into the world - and private parts - of a pneumatic cartoon character. Candyland by Hye Rim Lee.
This is Starkwhite gallery. Here, perhaps today, perhaps next year, you might find the next McCahon, the artwork that will cost you $5000 but will one day finance your retirement.
Or perhaps you won't. Gallery director John McCormack has a word of advice for anyone who wants to buy art with the sole aim of making money: Don't.
"The last thing I want to do is to sound like I'm encouraging people to buy art for investment purposes, because if they do it will almost certainly go wrong.
"People who read about prices going through the roof and jump in and buy and expect to sell the works 18 months later and make a profit are going to get themselves into trouble."
Take McCahon. A canny collector who bought his works when the paint was newly dry - for probably double figures - would have had to hang on to them for decades to make a fortune.
"People forget that for most of his life McCahon was not only the subject of incredibly ill-considered and stupid comments from the wider public, he didn't find great acceptance among the art world either," says McCormack.
By this year, however, McCahon's work dominated the auction statistics. On April 4, Webb's auctioneers rapped the hammer at $350,000 for McCahon's 1962 work Koru 3, $270,000 for a Northland piece and almost $180,000 for The Calling of a Christian.
By the time the gavel was silent that April day, gross turnover had reached $2.37 million.
But despite optimistic predictions from Peter Webb, the boom did not last. In June, Webb's turnover was $1.32 million, in September $1.57 million and in December $750,934.
Art consultant and writer Hamish Coney expects this year's total auction result for New Zealand - the most reliable indicator of the wider art market - to be about the same as last year's $13,244,000. That compares with $17,363,000 in 2004 and $19,349,000 in 2003.
Webb estimates the annual New Zealand art market turnover is $40 million to $50 million and climbing. Webb's turned over $20 million in its best year.
"That was a few years ago. I wish we were doing it this year, but the market has settled back a bit. There'll be another surge in a year or two. It's definitely tracking up all the time but it occasionally plateaus."
The plateau will probably mean a relatively low amount of art will be traded next year, as collectors hold out for higher prices. But it might also mean that collectors who are forced to sell will have to meet the market.
Coney's money is on the contemporary market in 2007. With three other former Webb employees, he is setting up a new contemporary art auction house, Art+Object.
His advice to a prospective collector is to look at recent Walters and Wallace prize winners (notably Francis Upritchard, Rohan Wealleans, Andrew McLeod), young Asian/New Zealand artists (Hye Rim Lee, Jae Hoon Lee, Seung Yui Oh) and native object artists (Chris Charteris, Emily Siddell, Rangi Kipa and Jason Hall).
Digital art can be a good option for people wanting to take a risk, and photography is a wonderful entry point, he says.
"You can build a really great photography collection for $100,000, for the price of one Pat Hanly painting.
"But if you spend $150,000 on a very good Pat Hanly Figures in Light painting or a Don Binney painting I think you will do very well over time."
Gary Langsford of Gow Langsford gallery says 2006 was a stronger year for the market than 2005.
The biggest growth was in young to mid-career artists - those whose works have been selling for $20,000 to $50,000 - such as Peter Robinson and John Pule.
"I think that's definitely because they are likely to appreciate. It's almost a guarantee."
He'd suggest a buyer with $50,000 invest it in two works by promising mid-career artists. With $20,000 to spend, he says a collector could take a risk on five or six young artists.
"You'll get some great stuff to hang on the wall and out of those five or six - if you do your homework - you might get one who really does well.
"But it's much more of a gamble than if you were to buy one painting for $20,000 - then you're getting someone who's already got a track record and is probably already in some of the museum collections."
As for the top echelon - McCahon, Frances Hodgkins and Ralph Hotere - Webb says increases in value can still be obtained, but he cautions careful buying.
"The market is not terribly discriminating and it doesn't choose between a good and a bad example of an artist's work. It's very important now that anyone paying a high price for a McCahon or a Hotere buys a very good example. Their major works will continue to grow in value because there will always be people who want to own them."
McCormack says Seung Yui Oh and the et al collective are artists to watch.
"Young artists are high risk, but if you get it right you end up building great collections for a comparatively inconsequential amount of money.
"If you are a collector and you're taking risks and you're getting good advice and you've got a good eye then you'll almost certainly end up with a great collection - a lot further down the track.
"I don't think buying art for blatant investment purposes is the right thing to do. There are other, more conventional ways to produce safer, more reliable investments."
Financial adviser and Business Herald columnist Brent Sheather says art is a difficult investment.
"If you buy a BHP share you can be reasonably confident that all information that is known about BHP is factored into that price. You could buy a piece of art and someone could tell you it's worth $10,000 and someone could tell you it's worth $4000."
Marie Quinn is a financial adviser who deals in art with the caveat that if investment is a pyramid with a sturdy base of low-risk, dependable investments at the bottom, then art fills the space at the very top.
"Compared to other investments it's quite emotional. I like to give my clients something enjoyable to do. Because money's pretty bloody boring, isn't it?"
Coney says the emotional dividend of art shouldn't be overlooked in favour of the monetary gain. "There's no investment you can make that gives you so much pleasure every day."
Tips for investors
* Find out what artists are being bought for public collections.
* Talk to dozens of dealers and build relationships with a few good ones.
* Visit dozens of galleries and auction houses.
* Keep an eye on art awards and exhibitions, here and overseas.
* Read books and magazines, such as Art New Zealand.
NZ Artists
Ten highest prices achieved at auction in past 10 years:
$704,000 Colin McCahon, Let be, Let be (auctioned in 1995)
$671,000 Colin McCahon, No 2 (2003)
$506,000 Colin McCahon, I Considered All the Acts of Oppression (1993)
$451,000 Frances Mary Hodgkins, Still Life with Landscape (2003)
$418,000 Gordon Walters, Tirangi II (2001)
$357,500 Frances Mary Hodgkins, Green Jug and Jade Sea (2003)
$350,000 Nicholas Chevalier, Mt Cook and the Southern Alps (1988)
$330,000 Charles Goldie, Memories - Harata Rewiri Tarapata (2001)
$319,000 Colin McCahon, Oughts Crosses VI, Series 2 (2003)
$308,000 Ralph Hotere, Song Cycle - The Voyage (2004)
