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Investors are being warned not to rush in to investing in art, amid reports of surging returns.

Other assets viewed as alternative investments, such as luxury cars and wine, have also been grabbing headlines.The interest is understandable given the income being paid by more traditional assets, such as bonds, or by savings accounts.The global art market is booming, with last year’s sales reaching a record £37bn, a 7pc year-on-year increase and a little above the 2007 high of £35bn, according to the most recent figures from the European Fine Art Foundation (TEFAF).Just two months ago, an oil painting by French Post-Impressionist artist Paul Gauguin titled When Will You Marry? (pictured below) sold for almost $300m (£197m), the highest price ever paid for a work of art.At the more realistic end of the art market, what can investors expect? Melanie Gerlis, author of Art as an Investment?, says combining all research on the broad market points to an average compound return on investment-grade art, held for between five and 10 years, of around 4pc. “Considerably less than gold, wine and both public and private equity,” Ms Gerlis said.

-The telegraph

 April 16 2015