Avoiding a 2011 Art Market Armageddon – artmarketblog.com
Don’t get me wrong, I am very glad that the art market has rebounded so quickly, but I am also extremely concerned about the way the art market is progressing. As I have mentioned many times before, the long term stability and viability of the art market is dependent upon the existence of a certain level of connection and interaction with the cultural sector, as well as certain level of participation from connoisseurs and collectors (as opposed to trophy hunters). Time and time again we see the art market take a dive when the value of art becomes so disconnected from the cultural and art historical value of the artists and their work that the only justification for the prices being paid is related to social status and egotism. At some point in the progression of an art market boom the purchase of fine art turns into nothing more than a game of one-upmanship – a game where a group of the super wealthy compete with each other to see who is ultimately going to be the biggest fool. As much as the super rich like spending money, there is always going to be a point in time when even they think that the prices are too high and have to pull out leaving one lucky punter with the “biggest fool” award.
Although the internet has had a positive effect on the art market, there is also the potential for the internet to further distance the connection between the cultural/art historical value of a work of art and the price being paid for a work. Think of it this way: the less exposure and interaction one has with the work they are purchasing, the less opportunity there is to analyse, assess and criticise those works. This leads to a very concerning situation where mediocre works by well known artists are being sold for prices that are way too high – a situation that I am all too familiar with. An indicator of the increasing level of disconnection between the buyer and the object is the reported increase in online bidding by Christie’s. According to a recent Christie’s press release:
“In 2010 online bidding via Christie’s LIVETM continued to deliver a large number of winning bids and new registrants. Over a quarter (28%) of Christie’s clients now bid online, a 5% increase on 2009 and the total value of lots sold online rose 69% to $114.4 million including premium.”
Add to this the recent launch of the first major online only art fair, the VIP art fair, and the new record for a work of art sold at any online art auction set by Saffronart in December 2010 with Arpita Singh’s ‘Wish Dream’ which fetched an extraordinary $2.24 million, and one can begin to see the impact that the internet is having on the art market. 2010 was a big year for the online art market that saw investors and collectors make progress into unchartered territory where they had previously feared to tread. That final leap of faith that had previously prevented the purchase of big ticket items online has finally been taken, and has really opened the flood gates. But at what cost?
Even more of a concern is the recent launch by a Chinese organisation of an online exchange for trading shares in works of art. Although many have talked about starting such a venture, no-one has been able to come up with a successful model – up until now. The market, operated by the government-backed Tianjin Cultural Artwork Exchange, is considered a financial innovation by the Tianjin municipal government. According to a Chinese government website:
“As we are told, the greatest highlight of TCAE is “trading of artwork shares”, namely public market trading based on the shares of the property right owned after the subject matter is evenly divided into certain shares. The cultural artwork can be traded through the e-platform of the exchange after being divided into shares. Investors can extend investment channels through investment in artwork shares.”
Also getting on the fine art share stock exchange bandwagon is a French company called A&F Markets who launched their exchange in January of this year. According to a press release:
“As of today, our clients will be able to see the first selection of artworks on the market, the price and volume of the shares available, discover how the marketplace works and what it offers and finally open an Art Exchange account in order to be the first to buy shares,” confirmed Pierre Naquin, founder of A&F Markets.”
Continuing on the subject of art investment, another sign that the art market is regaining its boom time momentum is the emergence of a new art investment fund. Emirates NBD, the UAE’s largest bank, announced at the beginning of February that they would be starting a new art investment fund as a means of tapping into the $10 billion Middle East art market. Clients will also be offered art investment advice from London based The Fine Art Find Group who have partnered with Emirates NBD.
Another worrying trend that has emerged during the first round of 2011 major art auctions is a noticeable resurgence in the interest of the work of artists who are boom time trophy hunter favourites such as Francis Bacon, Bridget Riley, Damien Hirst, Chris Ofili and Lucien Freud and others. Although it appears that buyers are remaining relatively conservative when it comes to purchasing works by these less “secure” artists, it is likely that it will not be too long before those irrational and indiscriminate demons rear their ugly heads. I also start to get worried when Surrealism takes centre stage because of the way the market approaches surrealist art. You see, Surrealism has become a sort of novelty movement that people like because it is unusual and intriguing. Unfortunately, few people understand Surrealist art and even fewer people want to understand it. Although the Surrealist art movement is a very intellectual movement, the complexity of the philosophies behind it tend to put most people off trying to understand the meaning behind Surrealist works of art.
When demand for Surrealist works increases dramatically I tend to think that the market is once again seeking trophy works of art that provide that instant visual gratification as opposed to an approach to the purchase of works of art that focuses more on scholarly and connoisseurial factors. Both Christie’s and Sotheby’s held sales during February that included a strong contingent of Surrealist works with Christie’s going as far as to hold a separate “Art of the Surreal” sale alongside their February 9 Impressionist and Modern Art sale. Christie’s held their big sale the night before Sotheby’s and got the ball rolling with a new auction record set for a work by Pierre Bonnard and a new auction record for a work by Dali. Although Christie’s set the Surrealist bar very high, Sotheby’s replied with a new auction record for Dali with ‘Portrait de Paul Eluard’ thus beating the Dali record set by Christie’s the night before. The price paid for the ‘Portrait de Paul Eluard’ was also a new auction record for any Surrealist work of art which gives Sotheby’s Surrealism bragging rights over Christie’s.
I wish I could say that I have confidence in the direction that the art market is heading, but recent events just can’t be ignored. As long as buyers continue to buy discriminately, there shouldn’t be a problem. I somehow, however, doubt this will be the case.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications
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