CNBC Europe looks at the global art market and Diane Mehta finds some surprising reasons to be hopeful . . . in Asia and the Gulf States:
The global art market, which includes auctions and private sales, grew 95% from 2002 to 2006, hitting a high of €48.1bn, according to Dublin-based researcher Art Economics. Last November it all tanked. At that month’s auctions in New York, Christie’s and Sotheby’s ran up $63m in losses from guarantees they had given on artworks that didn’t sell.
The trends pan out at the London-based Art Market Research, which tracks price movements. Its Contemporary Art 100 index shows that for 28,000 works sold from 1987 to 2009, it went up 993.3% in dollars; in the same period for the Old Masters 100 index, only 18,092 works were sold, increasing 517.8%. To compare with less aggressive sectors, Rolex watches increased 160.4% and Belle Époque and Art Deco jewellery 205.9%.
Meanwhile, in the last few decades, the whole structure of the art market has changed, and might need to change back before it can be restored to health. It used to be that the galleries representing the primary market (living artists) and secondary market (resales) were king. Then art became a luxury item. Shopping mall mogul Alfred Taubman bought Sotheby’s in 1983 and luxury goods magnate François Pinault bought Christie’s in 1998 — both took an aggressive, retail approach to art. (Mercury Group, the Russian luxury distributor, bought Phillips de Pury in 2008.) Auctioneers put out glossy catalogues and threw parties to attract Wall Street wealth and new money; speculators flipped art at auction, which drove prices up. Meltzer says the emphasis on marketing to high-end new buyers, along with financial guarantees, attracted trophy seekers and took business away from the private market: “New wealth was more comfortable bidding in the auction room, fighting it out in that arena, rather than buying from dealers.” […]
But while economic globalisation kept prices at unsustainable levels, it’s that global audience that may help the market bounce back. “Dubai and Hong Kong encourage free trade, and these will be the centres people sell and buy from,” says McAndrew. New centres, together with the internet and art fairs, diversify the market, so insulating it from what might have been a worse downturn.
George Sutton, senior research analyst at Craig-Hallum, agrees: “In past cycles you saw the US and Europe as the predominant markets — today, add the Middle East, Russia and China. I think demand can come back more quickly than people realise, and may be driven from outside the US and Europe.”
However, looking at the results of Christie’s Yves Saint Laurent sale in Paris in March, one might think there was no credit crisis. It was the highest total for any single-owner collector, with several record-setting sales, including a Matisse painting that went for $40.9m. And, most of the buyers were European.
For Meltzer, it proves that, for serious collectors, a good opportunity trumps day-to-day economics: “These type of assets trade generationally; they don’t trade daily like stocks and bonds. Therefore, does it matter what you pay for it right now? Of course it matters, but enough great collectors know rarely when they passed on something did they get it later for less.
Hammer Horror (CNBC Europe)