Is the Chinese Art Market Boom Doomed? – artmarketblog.com
As well all know, and as I have written about many times before, the art market experienced a serious collapse in the early 1990′s when the Japanese wealth wagon that was driving the art market boom came to a grinding halt. News last week from artprice.com that China overtook the USA during 2010 claiming the title of world’s biggest auction market for fine art should have evoked a sense of deja vu in many people. It certainly did for me. What concerned me even more was a comment made by Grant Ford, Sotheby’s Head of Irish Pictures, who said regarding a recent sale:
“Today’s sale achieved the highest total by far for any Irish art auction worldwide in two years. We saw a fabulous price for the O’Conor and a resurgence of interest in Yeats. Of note is the fact that we witnessed an influx of new buyers and bidders from Ireland, the UK and the US, as well as China. Testament to the appeal of this market is the reappearance of certain buyers from Sotheby’s Irish sales during the 1990s. A busy saleroom saw competition between room and telephone bidders, with the top lot keenly sought after.”
The concerning part of this comment is the suggestion that buyers who were active during the 90′s are returning to the market. The question on most people’s minds would be: why now? Well, the answer is that prices have risen enough to instill confidence back into the minds of buyers. Although it might seem more logical to be more active when prices are low, most people lose confidence in the art market when prices are low and regain that confidence when prices begin to rise again – as they have been. Even though the above comment is in relation to a relatively small market, any inference that buyers from the 1990′s are returning to the market should be of concern.
Yet another sign that the art market is heading towards a 90′s style bubble is the resurgence of interest in the work of artists such as Hirst, Koons, Murakami, Prince and others who are known as boom time favourites. As soon as good taste and intelligent buying become less important than social status and reputation, you can bet your bottom dollar that the names mentioned above will start to appear in the headlines more regularly.
What frightens me more than anything I have mentioned so far is the rate at which the Chinese art market has grown. From fourth place in global auction sales to first place in a matter of four years is nothing short of amazing. As a result of this rapid rise many people are asking the question: is the Chinese art market boom sustainable? If the current evidence I have of the cracks that are already beginning to appear in what seems to be the stellar economic growth that China is experiencing, the answer is a big NO.
An investigation into China’s economic growth recently aired in Australia on a current affairs television program called Dateline. This investigation uncovered some startling evidence that suggests that China either overestimated the rate at which their economy would grow, or is artificially stimulating the economy to encourage growth. What China is allegedly doing is building commercial properties and entire suburbs of residential dwellings at an alarming rate in anticipation of the future growth that will enable more Chinese people to purchase their own home. The problem is that there is still no demand for the millions (yes, millions) of properties that are being built – and likely never will be. One analyst estimates that there currently around 64 million empty apartments in China. You see, what the Chinese government is achieving by building all these properties is a growing GDP. Regardless of whether the buildings are occupied, the actual process of building generates jobs and uses resources that make the economy appear to be in a much better position that it is in. According to the dateline story titled “China’s Ghost Cities” there is even a massive shopping mall called South China Mall that remains virtually empty. The transcript of the story reads:
“The majority of this vast shopping centre remains as empty as it did when it opened six years ago. Back then, developers boasted that it would become the world’s biggest shopping mall, with plans for 1500 shops that would attract 70,000 shoppers a day – the mall was heralded by the New York Times as proof of China’s astonishing new consumer culture. But today, the not so great Mall of China, as it is known, is a glaring indication that this consumer culture has been grossly overestimated.”
I’ll leave you to make up your own mind about what this means for the future of the Chinese art market boom and the general direction that the art market is heading. I know what I think.
To see the dateline story about China’s economic growth go here:
To read the transcript go here:
**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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