Classic cars and new art next gen in wealth

City Talk | Cheng Huan 10 Sep 2018

The local property market is wobbling.

A few buyers have walked away from million-dollar-plus deposits while government figures say prices, and rentals, are still on the rise.

I suppose the figures reflect the past, and the reality is that the property boom is over at long last.

That is the only explanation for developers cutting asking prices.

I wonder where we will go from here? Will the market behave as it has in past downturns and fall as steeply as it has risen?

That is the most likely course and one that may cause financial hardship to investors with debts they cannot repay.

However, Hong Kong is home to lots of what I call "hidden wealth."

For the first time in at least 20 years there is not one serious property market anywhere where prices are rising.

They are falling anywhere that matters, and making investment profits is becoming more problematic by the day. Cash is king once again, but what to do with it is not an easy question to answer.

There are a few very lucky investors who bought famous sports cars years ago and are now reaping huge profits.

Sotheby's has auctioned off a 1962 Ferrari 250 GTO for about HK$370 million, a world record.

Bidding opened at HK$270 million and it took just three increments to hit HK$370 million.

In 1993 you could have purchased the same car for a mere HK$35 million.

The price was nearly 50 percent more than the record HK$23 million paid for a similar Ferrari four years ago.

If you were very old-fashioned and had bought HK$23 million worth of gold bullion in 2014, you'd have made no profit (or loss either), but the Ferrari would have made you HK$14 million richer.

The art market is also entering difficult times, with growing evidence the young are more interested in new art.

Christie's is about to auction the first-ever oil painting created by a computer. It's a portrait of a fictional man.

The programmers are three 25-year olds living in Paris, and they've named it Portrait of Edmond Belamy.

One of the three, Gauthier Vernier, has reassured the art world he is not trying to put artists out of business.

What he and his colleagues hope to do is to create a totally new art form that can thrive alongside old-fashioned art.

AI art will be a new branch of art in the same way that photography became a new art form in the 1880s.

They placed data of 15,000 14th and 15th-century portraits into a computer system that they called the "generator."

It then produces a printed artwork using the data it has learned.

The result is like an abstract painting with clearly defined brush strokes.

A second system called the "discriminator" then assesses if the image was created by a machine or a human.

The hope is that one computer will create a portrait that another computer truly believes to be a human painting.

To date 11 portraits have been generated, some of which have sold privately for HK$100,000 each.

It'll be interesting to see what price Christie's achieves.

It's tempting to bid for the first-ever AI portrait to be auctioned off. It could be a lot of fun and we need fun in these difficult times.

Cheng Huan is a senior counsel and an author who practices in Hong Kong

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