Art Market Monitor

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The Challenges to India’s Art Market Expansion

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Quartz has some more details on the Indian art market. Specifically, Quartz points out that Sotheby’s new initiative poises it to gain ground on international hybrid online/live auction house Saffronart and local firm AstaGuru. Christie’s has pulled back from its sales in India as part of the new CEOs re-alignment of costs. Nonetheless, both Christie’s and Sotheby’s have been able to maintain significant market share (above) in the Indian art market through their New York and London sales.

Sotheby’s Mumbai sale has advantages as well as limitations:

The live auction, which will include items specially curated for Indian collectors, is a step forward for the country’s art market. Valued at Rs1,460 crore (around $219 million) in 2017, according to a recent KPMG-FICCI report , this market declined 6% year-on-year following demonetisation and the launch of the goods and services tax (GST). Under the latter, many artworks now fall under the 12% tax bracket, making them more expensive than before.

Seeing Flush New Buyers from South Asia, Sotheby’s Announces Indian Sales

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Tyeb Mehta, Durga Mahisasura Mardini ($3m)

Sotheby’s recently installed MD for Europe, Middle East, Russia and India, Jan Prasens, is making his first big move by building on some of his team’s recent successes. Last month, Sotheby’s South Asian sale of reached $15.5m, the highest total in the last three years, with a strong 84% sell-through rate. New clients seem to be streaming into Sotheby’s sales rooms in New York and London.

Now Sotheby’s is going to the source. Two years ago, Sotheby’s opened an office in Mumbai. Today, Sotheby’s and Prasens have announced plans for holding sales in Mumbai beginning in December of this year.

Although South Asian art is sold in New York and London, India has export laws that would favor holding sales domestically if there is a critical mass of buyers there. Previously, the buyer base and currency bias has favored sales abroad. But Sotheby’s has been making some noise in the press recently about the spending power emerging domestically.

“In the past five years, the number of Indians across all Sotheby’s global sales has almost doubled” Gaurav Bhatia, Managing Director, Sotheby’s India said in the release repeating comments made to the Indian press in recent months. “Indian clients have bought over $250 million of art over this period. In our most recent sales of Asian art in New York in March,” Bhatia said, “40% of buyers were new to Sotheby’s.”

“We have seen exponential growth in activity by Indian collectors at Sotheby’s,” Edward Gibbs, Sotheby’s Chairman of India and the Middle East, said in the same release, “not only in our sales of South Asian art, but also in our wider international auctions. This strong uptick is part of a global pattern of increased liquidity within the market.”

The first sale in December is entitled  ‘Boundless: Mumbai’ —echoing other sales in the Gulf states region. It will include a mix of works by South Asian artists along with artworks by western artists inspired by South Asia sourced from collections across the sub-Continent and globally, the release says.

One of Tyeb Mehta’s most important works, Durga Mahisasura Mardini has been confirmed to lead the December sale. This seminal painting was commissioned directly from the artist in 1993 and has remained in a private collection since, appearing on the market for the first time later this year. It is among the most valuable works of modern South Asian art ever to be offered at auction. Two out of the three highest prices for the artist have been set at auction within the last year, attesting to the strength of Tyeb Mehta’s market. His current auction record stands at US$3.6 million.

Yamini Mehta, International Head of Indian & South Asian Art at Sotheby’s said: “One of the most important artists in the country and a leading figure in the history of Indian modernism, Tyeb Mehta’s ‘Durga Mahisasura Mardini’ is possibly the most important work in the artist’s oeuvre. A symbol of victory of good over evil, this painting celebrates the spirit of India. It is one of most provocative portrayals of goddess Durga defeating the mythical buffalo demon, Mahisasura. The painting celebrates hope and renewal instilled in Indian mythology and reconnects with Indian values. The oblique allusion to the colours of the Indian flag makes it a brilliant and powerful ode to the spirit of the country. This painting is a prelude to the artist’s iconic ‘Celebrations’ and ‘Mahisasura’ series, making it amongst the artist’s most significant and rarest works.”

China Guardian’s $50m Beijing Sale Reveals Shift in Market

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Enid Tsui follows up on China Guardian’s coup last month when it made a massive sale in Beijing of Huang Binhong’s Yellow Mountain (1955) for 345 million yuan (HK$396 million.) Huang hasn’t been among the platinum-plated names in Chinese classical ink painting like Zhang Daqian and Qi Baishi until now. But Tsui suggests there’s a bit more going on behind the scenes with this sale than simply the emergence of a new name in Chinese Classical painting.

First of all, the sale marks the arrival of China Guardian’s Guo Tong as powerful force in Mainland sales. Second, the Mainland is showing strength again after years of sales migrating to Hong Kong. Finally, the return of big prices in art in China itself may be a signal that other asset sectors are too clogged with government controls. The spillover is coming back to the art market.

Controls on capital leaving the country mean cash has to be stored in China at a time when there are fewer assets that can be accessed. The Huang was bought be a company, not an individual, adding to the speculation.

Here’s Tsui speaking to Guo: Continue Reading

Indonesia’s $365bn Windfall Looking for Places to Invest

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800x-1

Bloomberg has a report of private banks vying for the newly revealed mountain of money in Indonesia. Others will surely take notice considering the report considering the list of assets the cash might be redirected toward includes some that trade like art:

an Indonesian wealth-management market made more alluring after the nine-month tax amnesty spurred individuals to reveal some $365 billion of previously undeclared assets. About $289 billion of that total is parked onshore, money that the government recently permitted to be invested in assets including gold, property and infrastructure projects.

DBS Seeks to Tap $289 Billion Opportunity in Indonesian Wealth  (Bloomberg)

Poly Culture Rises 29% in IPO Trading

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Poly Auction

Poly Culture’s IPO in Hong Kong was up 29% on the first day, according to the Financial Times. The shares priced at HK$33 before the rise even with a prospectus that warned of the real problems with payments in the mainland auction market:

One report by government and industry bodies found that of the items with a hammer price of more than Rmb10m auctioned in 2012 by Poly, only 34 per cent had been paid for by May 2013. That compared with a 47 per cent average for the mainland auction industry and an 83 per cent record for rival China Guardian.

But while Poly says in its prospectus that it is “well-positioned” to benefit from the expanding art market in China, one risk it highlights is that there is “no assurance that we will fully recover consignor advances or prepayments of auctioned artwork, which may have a material and adverse effect on our business”.

Poly issued a statement recently saying: “We admit that there are some problems in China’s art auction market . . . such as payment defaults and payment delays.” It said delays for some high-priced items were significant at the end of 2011 and into 2012 “due to the gloomy economy and tight liquidity”.

Poly Culture paints bright China art market picture (Financial Times)

How Rich Chinese Use Art to Move Money Abroad

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CNN Money on Chinese Art and Money Laundering

Following a recent report in The Art Newspaper on an academic study of the discrepancy between import and export values of works of art leaving and entering China, CNN takes a broad look at the ways in which the international art trade is being used by wealth Chinese to export capital. The art market is useful vehicle for these capital transfers because it regularly makes cross-border all-cash transactions in objects that have “fuzzy” value and opaque ownership.

What’s especially significant about the report is the way in which the global art trade infrastructure must be complicit in this activity.

The rush of money out of the country is taking place in spite of Beijing’s strict capital controls — which limit the amount of money an individual can move out of China to $50,000 per year. […]

Here’s how it works: Rich Chinese purchase a piece of art in mainland China, then sell it at a hefty price across the border. The profits — in foreign currency — are then pocketed.

Another method is to buy artwork from outside China — often at an inflated price from an associate. The associate, who’s in cahoots, takes a cut and then deposits the remaining payment in an offshore bank account of the buyer’s choosing. If the authorities come knocking, it’s easy for the buyer to produce a receipt and the art — even if it was fabricated for the laundering scheme. […]

That makes it difficult for anyone reviewing purchases, including the Chinese government, to accuse a buyer of over-paying, said Steve Dickinson, a China-based lawyer with Harris & Moure.

“It’s just beautiful, because no one can challenge you on the prices,” he said. “It could be five bucks; it could be 50 million bucks.”

Chinese snap up fine art for use in laundering schemes (CNN Money)

Sotheby’s: Indian Buyers Show 33% YoY Growth in Value of Purchases

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Sotheby's India Photo

Robin Woodhead explains why Sotheby’s is taking their time in India focusing more on developing relationships with buyers than holding auctions in country:

Do you regret not being in Christie’s place in terms of having a sale here?

No. I don’t think that we need to hold auctions to be successful in the Indian market and the fact that we are still auctioning some of the great works of Indian art is a testimony of that. We will certainly watch the space and other auctions that are held here to see what pattern emerges out of it.

When will Sotheby’s conduct an auction in India?

We did have an auction in the 90s here. However, having said that, it (Christie’s success) does not mean that we will necessarily have a sale immediately in India. Right now we are principally focusing on connecting with collectors. We do it all the time. We make long-term commitment to the market. But, one of the facts that we are watchful of is that many of the buyers are actually from outside India.

At what rate is the number of your Indian clients growing?

Among the established collectors, we are seeing a 33% growth in the value of things they buy year-on-year. This reflects that our focus is not just on new buyers but also developing relationships with the existing ones. The new client base is also growing at an average of about 25% every year.

Sotheby’s to open India office soon, in no hurry to hold auction (Economic Times)

Romania’s Art Market Grows to €15m in 2013

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Stefan Luchian, Doua Fete (€300k)

A report on the Romanian art market in 2013 says there was €15m in sales clustered around works of “national importance.” like Stefan Luchian’s Doua Fete (Two Muses) which sold for €300k. The contemporary market in Romania rose 10% to €1.4m or slightly below 10% of the overall Romanian market:

“However, despite the significant increases in the last three years, the Romanian contemporary art market is still in a process of gradual understanding and appreciation, far from the potential reached by other countries in the region, such as Poland, Russia, Ukraine and Turkey,” reads the report.

Romania’s art auction market reaches EUR 15 mln in 2013 (Romania Insider)

Gaitonde Estimated at $2m Leads Sotheby’s March Sale

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Vasudeo S. Gaitonde, Painting No. 3, estimated in excess of $2 million

Sotheby’s announces a significant Gaitonde for its Asia Week sales in New York this March:

Leading the Modern & Contemporary South Asian Art sale in New York on 19 March 2014 during Asia Week, Vasudeo S. Gaitonde’s ethereal Painting No. 3, estimated in excess of $2 million, is a major work by the artist coming from an important American collection. Included in one of Gaitonde’s earliest New York exhibitions in the 1960s, this work captures a pivotal moment in the artist’s career when he turned away from his earlier geometric works and began to experiment with using a paint roller and palette knife. Gaitonde is hugely celebrated internationally, with his works achieving ever-higher prices at auction. Reflecting this success, Gaitonde will be the subject of a major retrospective at the Guggenheim Museum in New York this autumn, making him one of the first Modern Indian artists to be honoured with a retrospective in the United States.

Bringing Rules to the Chinese Art Market

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Zeng Fanzhi, Mask Series 1996 No. 6

Alex Errera founded a Chinese Contemporary Art sales site Artshare.com and has become an advocate for the Chinese market by writing for Forbes on the subject. His most recent piece is Five Myths About Chinese Contemporary Art. Here’s just one of them:

There Are No Rules

The Myth: Put a work at auction in China, and pray to be paid. Buy a work at auction, and pray to get delivered. Forget about rules in the private sales market. And good luck taking your claim into a Chinese court.

The Reality: This is changing fast. Why did China recently welcome Christie’s and Sotheby’s in their territory? It’s not for charity. It’s to learn and adjust. As Mr. Zhang, Head of the Auction Associations in China said: “Bringing Western auction houses was like putting a crocodile in a pond. It makes the fish swim faster.” As the Chinese market opens up, it will have to embrace more standards and rules in order to compete globally, not just locally. That will, in time, create a more transparent market.

Five Myths About Chinese Contemporary Art (Forbes)

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