The 2010 Art Market Review – artmarkeblog.com

The 2010 Art Market Review – artmarkeblog.com

2010 has been one of the most confusing, unpredictable and unexplainable years for me as an art market analyst. So many of the trends, events and fads that emerged during 2010 did not appear to be caused by the sort of conditions, have the same effects, or follow the same path of logic that one would expect they would given the way things have panned out in past years. This leaves me with no doubt that the art market is evolving at such a rapid pace that there is little point trying to justify or explain the events of today using logic that is based on the progression and events of previous years. In fact, more of the art market events that took place during 2010 appeared to defy logic than ever before. I do, however, strongly believe that one of the reasons that it has become even more difficult to determine what is going on with the art market is that the art market (auction houses in particular) has become adept at making the situation appear much better than it really is. Whether it be by skewing figures or manipulating the way results are perceived – galleries, fairs and auction houses have become the plastic surgeons of the art world.

What has also made 2010 such a hard year to analyse was the contraction, and slow regeneration, of the market for the work of trendy emerging artists and recent works by top contemporary artists – both of which are usually the most global, visible and publicised sectors of the market. As the market moves towards the work of artists with a proven track record, collectors and investors have shifted their focus from the usually dominant and globally relevant contemporary art market to the work of artists from a wide of variety of styles, mediums and movements that cannot appear to have very little in common. This has resulted in a situation where there is not one dominant global trend that art market analysts such as myself can focus on, but a number of smaller and disjointed trends that make reading the market particularly difficult.

A few months ago I wrote a series of posts on what I believed was a move towards a more sentimental art market, which appears to be exactly the direction that the market has headed. General disillusionment with the contemporary art market has sent many collectors and investors take a more sentimental approach to fine art that is characterised by a focus on the safety of more established artists and the familiarity of artists that they can relate to. When art collectors or investors seek safety and familiarity they are most likely to gravitate towards works by artists from the era and culture that they have the greatest connection to. This would explain the large number of seemingly unrelated trends that emerged during 2010 many of which involved previously unfashionable styles and movements that are distinctly associated with a particular era or culture.

There is no doubt that the art market has recovered far quicker than many people thought possible. Again, the unexpectedly rapid recovery has thrown a spanner in the works when it comes to analysing the art market and trying to make sense of what is going on. Some journalists and analysts have gone as far as to admit that they cannot explain how a market that seemed to be at breaking point could make such a rapid recovery. To give you an idea of how quickly the art market has recovered, in March of this year (2010) Walter Robinson, editor of Artnet Magazine, said that “Art Market Watch has been on something of a hiatus during the last few months. What with the recession, reporting on auction results just isn’t as compelling as it was during the boom years”. Six weeks later a painting by Picasso become the most expensive work of art ever sold at auction when it fetched a staggering $106.5 million. A week after that an Andy Warhol self portrait sold at Sotheby’s for $32.6 million (more than twice the estimate) setting a new record for a Warhol self portrait at auction. Compelling enough?

When it comes to rationalising art market events there is much to be gained from knowing who has money to spend and how much they have to spend. The top end of the market is fuelled by super wealthy collectors whose level of wealth would not have been affected enough by the financial crisis to deter them from buying art. Therefore at the high end of the art market things have been pretty solid as is evident from the number of record auction prices set in 2010. The lower end of the market is fuelled by collectors who focus on edgy and trendy contemporary art by emerging and newly established artists, and who will usually have a high level of interest in the cultural and artistic side of fine art. Collectors at the lower end of the market are a very determined group who are always going to be around even if they appear a little less active at times. Things at the lower end have improved but have done so at a less than rapid pace which makes it difficult to judge where this sector of the market is heading. Without a doubt the sector of the art market that has suffered for the longest period of time due to the effects of the global financial crisis and the art market downturn is the middle market. The middle market includes lesser works by big name artists, and the more expensive (less justifiable) works by the trendy contemporary artists, which makes the middle market a sort of currently un-necessary compromise for the super rich, and a stretch too far for the modestly well off. Middle market works are, however, perfect for the financial advisor and hedge fund manager types who are more interested in art as a status symbol than the quality or art historical importance of the works they are buying. With the pay packets of hedge fund managers and financial advisors taking a massive hit due to the financial crisis, there is little interest in the middle market works. The super rich are still rich enough to not have to compromise and settle for middle market works and the modestly well off continue to fuel the lower end of the market.
My next post will be the top ten art market 2010 so stay tuned……..

**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

Art Market Blog in the News – artmarketblog.com

Art Market Blog in the News – artmarketblog.com

Hi Art Market Blog readers, I thought you might be interested in seeming some of the press that the Art Market Blog has received over the last few weeks. Enjoy !!

http://www.tmcnet.com/usubmit/-bay-area-sculptor-gains-recognition-combining-classical-art-/2009/03/25/4081341.htm

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/visual_arts/article5981759.ece

**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.

The Art Market is Not Immune – artmarketblog.com

The Art Market is Not Immune – artmarketblog.com

There are lots of things that bother me about the way that art investment and the art market are portrayed. One of the things that bothers me quite a bit is the frequency of which the art market is referred to as being immune to economic or financial turmoil. To say that the art market is immune to the economy or financial turmoil is not entirely untrue depending on how you interpret the statement or the situation in which the statement is made, however, it is definitely not the whole truth and is often a misleading statement. The art market is a very unique market that reacts to certain events and factors in a way that does not correlate with the way most other investment markets would react. Because of this, the potential for people to incorrectly identify or mistake certain market movements, events or characteristics as evidence that the art market is totally immune to these events is quite high. This is not to say that there are not situations where the art market does display immunity but it is not usually to anywhere near the extent that is many people believe. There also seems to be many people who presume that because one particular artist, artwork, movement or regional art market appears immune to an economic downturn or financial crisis that the whole art market is immune.

As much as I want to advocate art as an investment and the art market I don’t see how misrepresenting the art market and art investment can be a positive move which is why I want to set the record straight. It is virtually impossible for the whole art market to be immune to a financial crisis such as the one we are experiencing at the moment because the crisis is having an effect on so many people and so many of the other investment markets that it is going to have to filter through to the art market at some point. The art market is often referred to as an isolated market which basically means that it has limited connections with other investment markets or, in technical jargon, it has a low correlation with other assets. As a result, the art market is said to not feel the effects of negative movements in other markets to the same extent as markets that have a much stronger connection with the market experiencing the negative movements. Once again, it is virtually impossible for the global art market to not be effected by the fluctuations experienced by other markets as there is always going to be some sort of a connection. The art market does, however, often have a less severe reaction to the movements of other markets and can even have a totally opposite reaction or not react at all. Therefore, it is reasonable to say that the art market has a low correlation with other assets because a low correlation does not mean that that there is no connection between the art market and other markets just that the relationship is not as strong as relationships between other asset classes.

Although the global art market is often incorrectly referred to as being immune to economic and financial turmoil there are certain circumstances under which the art market can exhibit characteristics that would suggest that it is immune to negative economic and financial market movements. There are also situations where the art market could genuinely be referred to as being immune. Because the art market is relatively illiquid compared to other asset classes there is usually not enough time for the art market to react to short term fluctuations in markets such as the highly liquid stock market where trading can take a matter of seconds. The art market can also take much longer to react to more severe and wide ranging financial and economic downturns such as the one we are experiencing at the moment which can trick people into thinking that it won’t react at all.

It is also important to recognise the fact that the art markets of different countries often have a low correlation with each other which means that even though the art market of one country may have been affected by a certain economic or financial event that the art market of another country may exhibit a very minor reaction or may not react at all. For example, at the moment the art market in Dubai and neighbouring areas appears to be have been affected very little by the current financial crisis where plenty of money appears to still be available for the purchase of art. It is also possible for particular movements or types of art to react differently than other movements or types of art. Contemporary art has benefited the most from the recent art market boom and as such has also been the most affected by the current financial crisis. Because speculation is far less common when it comes to the market for old master paintings and the value of old master paintings is much more verifiable and justifiable the market tends to be far more stable and less volatile. Although the market for old masters is not immune to market downturns they are often used as a hedge because they react far less to economic downturns than other sectors of the art market and other asset classes. Once again certain painters or certain artists whose work falls under the category of “old master” may exhibit characteristics that suggest that they are immune to economic downturns but a few examples cannot be used as a representation of the whole market for old master paintings.

In summary, suggesting that the global art market is immune to financial crises and economic turmoil is generally incorrect and misleading. There are certain circumstances and situations where a particular country’s art market or a certain sector of the art market could be considered to be exhibiting immunity to certain investment market related events.  Just don’t be fooled into believing that an investment in art is a total and infallible  hedge against an economic downturn.

**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.