Global Art Market Avoids Crash –

Global Art Market Avoids Crash –

crashAfter all the predictions of doom and gloom that were made in relation to future of the art market during 2008 you may have begun to wonder why the correction that is taking place isn’t as bad as many people predicted. The reason that so many people predicted a major collapse of the art market is because the last time the art market took a dive in the early nineties, the dive was quite severe. What people need to realise is that the current art market is significantly different to what it was in the nineties and the circumstances under which the current correction is taking place are also considerably different.

There are actually several reasons that the correction has not been as severe as people predicted or as severe as the correction of the nineties. The first reason is that there are many more art buyers than there were during the early nineties. As a result, there are still plenty of people buying art even though there has been a reduction in the number of people that were buying art during the art market boom. In fact, it is estimated that there is at least 20 times more people buying art now as there was during the early 90’s. Those people that have retreated from the art market are the speculators that took advantage of the ability to make quick profits by flipping works of art and were partly responsible for the inflated prices so will not be missed.

Secondly, the art market boom was not driven by a small group of people. Many of the wealthy Japanese businessmen who were driving the art market were using art as a way of avoiding tax and also as a form of currency for criminal activity. Once the dodgy dealings of these Japanese businessmen were uncovered and the people involved made accountable, the art market had lost a considerable number of the people who had been responsible for the art market boom. The Japanese also used art as collateral for business deals many of which went bad when the financial crisis took hold. When the business deals went bad the art had to be sold to pay off debts and cover the losses from the business deals that went bad. The art that was associated with the criminal activity and the bad business deals became tarnished goods that undoubtedly reduced the desirability and the value of those works for a considerable length of time. When all was said and done the art market had once wealthy Japanese buyers had made a mass exodus from the market partly because of their financial problems and partly because of the shame that they had bought upon themselves. The Japanese had made up such a large number of the major art market players that their sudden absence sent the market into a downward spiral.

Thirdly, the art market is a much more global affair which has made the art market far more stable and able to withstand economic and financial downturns in the most significant markets for art such as America, Britain and France. There are now so many countries with strong or developing art markets that the number of countries whose art market is not effected by the financial crisis to the same extent as the top few countries is sufficient enough to prevent a total collapse of the art market and maintain the momentum of the global art market.

There are people that have said that these factors will not prevent an art market crash but it would appear that they have. Nothing was ever going to prevent a correction from taking place but I consider a crash and a correction to be two very different things and would challenge anyone who says otherwise.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

5 Responses

  1. Here are just a few of the art market records set in 2008:

    $ 2.5 Million – Record for Art by an Indian Artist (Souza’s Birth)

    $ 8.0 Million – Record for Total Sales at Melbourne Art Fair

    $10.0 Million – Record for Total Sales at Tokyo Art Fair

    $14.6 million – Record for Art by Robert Rauschenberg (Overdrive)

    $23.5 Million – Record for Art by Yves Klein (MG9)

    $26.0 Million – Record for Sculpture by Jeff Koons

    For more updates, please attend our program January 22 at the Los Angeles Omni Hotel.

  2. Hey Nicholas,

    What data do you have to suggest that a significant correction has not transpired? Based on auction results, such a shift has transpired. I’d love to see data that suggests otherwise.

  3. I didn’t say that a significant correction has not transpired but that the correction is not as severe as people predicted. It is also important to remember that the auction industry is not the be all and end all of the art market and should not be used as the sole basis of any analysis. An analysis of the art market such as the one I have conducted above requires far more than mere data can provide. All sorts of information, input from other art market professionals as well as looking at figures is required to get a complete picture of the status of the art market. Art auction data makes up a small part of the information needed to properly analysis the art market.

  4. Certainly the art market includes more than just the auction market. However, from my knowledge, many galleries are doing poorly. Some refuse to lower prices and consequently are simply holding their inventory trying to hold on until the bad times pass, while other galleries are reducing prices.

  5. It is inevitable that some galleries will do poorly during the financial crisis but that doesn’t necessarily mean that the whole art market has tanked. The cause of many of the galleries not doing so well does is not necessarily a direct result of the art market correction. Many galleries are doing poorly because they are not able, or do not know how, to adapt to the current market. From what I have observed and been told, the art market has experienced a correction but more importantly it has also experienced a major alteration. Not only have prices decreased in many areas but the way transactions are conducted, the reasons people are buying art, the types of people buying art and other trends that were in effect prior to the correction have changed. If a gallery could reverse their poor performance by altering the way the do business or changing other things but choose not to then I don’t think that their poor performance is an accurate indicator of the health of the art market. Basically what I am saying is that the health of the art market cannot be accurately determined by looking at the number of galleries that are not doing well. The reasons behind the galleries poor performance are just as relevant, if not more relevant, than the results of the poor performance.

    Nicholas Forrest

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