Tuesday, May 21, 2013

New Era' For Art Markets As Collectors Drop Half A Billion At Christie's Contemporary Sale


'New Era' For Art Markets As Collectors Drop Half A Billion At Christie's Contemporary Sale

It seems that it’s not just the stock market that is firing on all cylinders, breaking record after record.  Last week, Christie’s marquee post-War and contemporary art sale fetched a record $495 million, with more than nine works selling for over $10 million.  Amid a stagnating global economy and high unemployment, the ultra-rich are raising the stakes on so-called alternative investments like art and real estate, prompting a prominent Christie’s executive to speak of “a new era in the market.”



It was truly a record-breaking night, and week, for Christie’s.  Its evening sale totaled nearly half a billion dollars, the highest value ever for any art auction.  16 artists made world auction records, and more than 20 buyers forked over $5 million or more for individual pieces.  What makes the sale all that more impressive is the context: stubbornly high unemployment in the U.S., recession in Europe, and a slowdown in China, which had been the global powerhouse in economic growth over the past several years.

The trend is clear.  The wealthy are increasingly putting their capital into luxury investments seen as alternatives.  


QUESTION:  Is it good to invest in contemporary art?
Here are five good reasons to do it: read the full essay


The post-War and contemporary art markets are definitely red hot.  As I’ve previously reported, the total value of contemporary art sales grew from $850 million in 2002 to about $6 billion last year.  This trend accompanied a steady decline in prices for modern, impressionist, and old masters over the same time period, according to artnet.

Art, along with real estate and other alternative investments, present a risky opportunity.  While prices have risen exponentially, several pieces by top artists including Franz Kline and Jeff Koons failed to find buyers.  At the same time, thin liquidity means prominent collectors with deep pockets, including the Mugrabis, Nahmads, and megadealers like Larry Gagosian, all present in last week’s auction, can steer the market.

Another trend to watch is the rise of China as a global powerhouse.  Chinese buyers, as I explained here, are concentrated on domestic artists, meaning they don’t have a massive effect on Western favorites such as abstract impressionism and pop art.  Yet in 2011, China’s total sales assimilated those of the post-War and contemporary market mentioned above.

It remains to be seen whether this “new era” for the art world can be sustained, from a price perspective.  But what is clear is that appetite for top pieces and highly-esteemed artists remains strong, despite the economic headwinds.

(abstracts from Forbes, Agustino Fontevecchiafull article here)

QUESTION:  Is it good to invest in contemporary art?
Here are five good reasons to do it: read the full essay


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