Contemporary art market Asia now bigger than US for first time says Artprice

ASIAN ART MARKET

Visitors enter a Sotheby's auction room in Hong Kong for a sale of modern and contemporary art on October 6, 2008.

For the first time ever, the total auction revenue from contemporary art in Asia is greater than the total of the United States artprice reports. The statistics are collected from a 12-month period spanning from July 2008 to June 2009. Asia generated US $193 million versus the United States’ US $183 million. China is the highest gainer out of this trend, having generated US $141 million from contemporary art during the same period.  According to the report, this means China is continuing to “hold on to its third place global geographical art auction revenue ranking.”

The establishment of foreign auction houses such as Christie’s, Sotheby’s and Bonhams in Hong Kong, in combination with the financial strength of Hong Kong and Shanghai are to be accredited for China’s position. For those who are looking to begin collecting Asian art, this does not mean that the price of contemporary Chinese art is back up to its sky-high prices of a couple of years ago. Artprice’s report tell us that in the first half of 2008 the average price of contemporary works sold in China was $65,500, however, in the first half of 2009, this average dropped to $26,800.

Related posts:

• Liquidity propels prices, Chinese Political Pop is back- Sotheby’s Contemporary Asian Art Auction 2009 Hong Kong- October 2009
• Trends and opportunities in the contemporary photography market- October 2009
• Newslink round up Art Basel 2009- Indian, Japanese artists dominate coverage of Asians- June 2009

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Art in storage, at fairs and sales – is it getting harder to insure?

ART FAIR INSURANCE

Last week, The Art Newspaper posted an interesting report that claimed that art is getting harder to insure. According to their source, Richard Northcott, executive director of the art, jewellery and private client division at Heath Lambert Group (London), firms that protect specialist fine art insurers are becoming cautious of insuring a large amount of art kept in one place at the same time, such as in storage warehouses and exhibitions. The article explains why:

“For a long time nobody in the insurance world was monitoring the cumulative value of art shown at fairs or kept in storage,” explains Northcott. “But in the last two or three years the industry has become a lot more sophisticated and a lot more aware of the issue.”

This is partly owing to 9/11 and Hurricane Katrina in 2005, which made insurers aware that a single catastrophe could wipe out an entire art fair or storage facility, and partly owing to recent developments in software that have made it much easier for re-insurers and specialist fine art insurers to track the location of the thousands of policies they have underwritten at any one time.

At Art 40 Basel in June, “there were already murmurs of a problem,” Northcott says.

“There is a limit to the insurance market’s capacity for the cumulative value of policies for a single event like an art fair,” says Northcott. This stands at around $2bn; the insurance value of art at Frieze this year is much lower as the downturn in the contemporary market has led to declining prices, and the many younger galleries exhibiting for the first time are offering less expensive, emerging artists. But he believes that as the art market recovers, “all major art fairs will come under scrutiny by the industry”.

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• More art, better art, riskier art at ArtHK 09 – May 09
• Who are the top artists at art fairs? Mar 09

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New auction houses with new strategies open in Singapore art market

ASIAN ART MARKET TRENDS

Usually, to be a part of the bubbling Asian art market scene, buyers need to associate themselves with industry leaders Christie’s and Sotheby’s for lack of other options. In South East Asia, however, there’s a new way for collectors to discover their contemporary art. According to a recent article by the New York Times, a host of new and smaller auction houses—such as Borobudur, 33 Auction, and Larasati in Singapore—have successfully emerged to “fill in the gaps” of the market, which means they are opening their doors to a broader range of the market, from high-end collectors to first time buyers. So far, sales suggest this may be the right strategy to entice new buyers:

“Last week, sales by two auction houses in Singapore, Borobudur and 33 Auction, brought in a combined $10 million, with the larger sale, by Borobudur, easily beating its pre-sale estimate. Later this month another Singapore auctioneer, Larasati, will offer 160 lots of Asian modern and contemporary art with an estimated value of 2 million Singapore dollars, or $1.4 million.”

A.C. Andre Tananma, "Run Away" 2008. Part of Larasati's Asian Modern and Contemporary Art Auction, Singapore, 25 October 2009.

Many of the new auctions houses have developed as off springs from established galleries, such as 33 Auction (Singapore), Maestro Auction House (Jakarta, Singapore) and Kingsley Art Auction (Beijing), as a way of broadening their offerings to current clients, while also becoming accessible to new ones:

“Like everything else, the art market is not immune from the global recession and consequently sales at most galleries have been down for the past 12 months,” said Valentine Willie of Valentine Willie Fine Art, which has galleries in Singapore and Kuala Lumpur, and has in the past helped Borobudur curate its auctions. “Auctions may seem a good way of clearing gallery stock and they offer the possibility for collectors of bargain hunting, especially after the boom of two years ago.”New and smaller auction houses would naturally try to fill in the gaps with more adventurous offerings and lower entry price points because, “the industry leaders, Christie’s and Sotheby’s have a somewhat limited and conservative offering of Southeast Asian art,” Mr. Willie added.”

Some auction houses are targeting the middle class crowd in particular, a demographic rarely cornered by larger and more established auction houses like Christie’s or Sotheby’s. To entice the middle class market, Singapore’s Ziani Fine Art Auction House tactic was to award cash prizes, serve wine, and even offer whiskey tastings at their September 20 debut auction:

“‘When you launch a new business you need to attract new people,” said Frank Veyder, a banker and partner in Ziani, before the auction. “We are very conscious there is a risk that people might think it’s just a fly-by-night, gimmicky house, but we’re holding this auction in a five-star location and we’re offering quality art.

“The pieces are not of the level you would see at Christie’s or Sotheby’s, but we’re not trying to play in that space,” Mr. Veyder added. “Our marketing is targeting to a wider, middle-class crowd.”‘

Though it can be said that the competition between auction houses is good for business, there are some auctioneers that are concerned that the market may have a hard time absorbing everything on offer.  Daniel Komala, chief executive of Larasati Auctioneers, explains:

“‘The art market has bottomed out; in fact, it’s fair to say that it has picked up some speed of late,” Mr. Komala said. “Having said that, the real capacity to absorb, over all, especially in Singapore, is only going to increase by 20-30 percent maximum from its rock bottom level. So, it’s wishful thinking to expect that the market will double up in capacity compared to how it performed six months ago.”

Read more New York Times

Related posts:

• Liquidity propels prices, Chinese political pop is back – Sotheby’s Contemporary Asian Art Auction 2009 - Oct 2009
• ARTSingapore – new photography fair, high value sales and gallerists pick top fairs in Asia today – Oct 2009
• Green New affordable art fair in Beijing smashes the traditional format – Sep 2009
• Learn where Singapore art is heading – President’s Young Talents competition – Sep 2009
• Which are the top 10 contemporary international art fairs? – Jan 2009

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Wu Guanzhong retrospective Singapore Art Museum – New York Times review

CHINESE ART SINGAPORE

Some of the best arts writing on the web is produced by the New York Times. Coverage of art in Asia is rare unfortunately which makes this review of the celebrated and influential 90 year-old Wu Guanzhong’s retrospective at Singapore Art Museum a must-read piece.

In this article Sonia Kolesnikov-Jessop deftly explains how his oeuvre evolved in response to his experiences as a student in Paris and his later travails on his return to China where Communist authorities who exalted the Soviet Socialist Realist Style, branded him a ‘bourgeois formalist’ and ultimately destroyed much of his earlier work at the start of the Cultural Revolution.

 

Wu Guanzhong, Pandas

“My father believes that this series of exhibitions are indeed the most important exhibitions of his entire life because they show the full spectrum of his artistic career, from the 1950s to last year. These are also what he considers his absolute best works, which he had kept because he had always planned to give them to museums, for all to see,” said his son, Wu Keyu, 62, who represented his father at the opening of the Singapore exhibition because, he said, the elder Mr. Wu was too frail to travel from Beijing, where he lives.

As a teacher and essayist as well as artist, Wu Guanzhong’s influence has been pivotal on the development of art in China and he  is particularly renowned for

 ”bridging together the Chinese art emphasis placed on the quality of lines and the Western art emphasis on color and the representation of the visual field,” said Kwok Kian Chow, the director of the Singapore Art Museum and the show’s co-curator.

 Related links:

• A Chinese Artist’s merging of East and West - New York Times – May 12 2009
• Images and review Beyond Sg - a handful of images from the show
• Wu Guanzhong – China Culture via China.org.cn 2006 - more details of his life and works
• Baiyaxuan Wu Guangzhong – 2008 – discusses his controversial remarks about China art circles and the influence of Van Gogh on his life
• Eastern Art Report interview with Wu Guanzhong - Wu in his own words

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How Chinese auction house Poly sold spectacular 83% lots in December 2008 art sale

ART AUCTIONS CHINA

This weekend marked the end of the auction season on the  Chinese mainland and, while spectacular success was had in antiques and antiquity sale categories, contemporary Chinese art shared little of the success…save for Poly Auctions, says Katie Grube in Redbox Review.

In November and December sales

• Only fifty-four percent of the works offered in Guardian’s “Chinese Oil Painting and Sculpture II” found buyers.
• Council’s contemporary sales similarly sold only 57%.

Poly provided the only bright spot in the contemporary art category by focussing on emerging artists and slashing estimates at the last minute.

Poly opened their four days of auctions with an emerging artist sale, oddly translated as “New and Vigorous Artists,” and would go on to sell over RMB 134 million during the course of their December 5th contemporary sales. The contemporary evening saw the dramatic pre-sale reduction of 14 lots’ estimates, or nearly 1/4 of the sale. Some estimates were reduced by as much as one-third; Wang Guangyi’s “Great Criticism – Motorola” (lot 588) carried a pre-sale estimate of RMB 1,200,000 – 1,800,000, but saleroom notice pointed to a reduction to RMB 800,000 – 1,200,o00. The work earned a hammer price of RMB 800,000. Lowered estimates seemed to encourage buyers and most works sold at or just above the low estimate with 83% of works sold by lot.

Redbox Review

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Corporate art collecting in decline since the eighties – Wall Street Journal

CORPORATE COLLECTORS TREND

Corporations in distress sell art collections

Another bankrupt corporation, another corporate art collection on the block. Actually, no one quite knows what Lehman Brothers, the financial services firm that filed for bankruptcy protection on Sept. 15, will do with its 3,500-piece art collection, but with works by such bankable artists as Jasper Johns and Andreas Gurky, it is likely to be on sale at a major auction house near you.

Companies in trouble sell whatever can raise them money, and art collections are but one more asset. Arthur Andersen, the accounting firm brought down by the Enron scandal, for instance, turned two floors of its Chicago offices into a gallery showroom in 2002, selling more than 2,000 artworks over a five-day period. In 2006, the New York futures broker Refco Inc., which filed for bankruptcy protection the previous year while under investigation for hiding $430 million in debt, sold 321 photographs for $9.7 million at Christie’s auction house over a three-day period.

“The major sales of corporate art collections that I’ve been involved with have been distressed situations,” said Joshua Holdeman, senior vice president at Christie’s, who in 2003 had also helped both Enron and Seagram sell artworks from their collections when he worked at Phillips, de Pury & Luxembourg. At other times, corporate consignors of art at the auction houses are not identified out of fear that the sale “may be seen as a sign of distress,” he said. “In the grand scale, of course, no one’s art collection will get it out of trouble.”

Mergers and acquisitions, office moves are other causes

Corporations get rid of their art collections for other reasons than doom and gloom, of course. Mergers and acquisitions bring in new leadership that simply doesn’t want the old stuff around. Or yesterday’s art doesn’t work in today’s new building.

Take Unilever. In 1982, the company had bought a 92-work collection of black-and-white museum-quality photographs for its then-new headquarters on Chicago’s Wells Street. Assembled quickly by an art consultant, the collection included such renowned photographers as Diane Arbus, Henri Cartier-Bresson, Robert Frank, André Kertesz, Irving Penn and Alfred Stieglitz.

By 2003, however, the company was ready to move again to a somewhat smaller building on North Michigan Avenue, and so it was time for the art to go. “The old space was classical and elegant, with muted colors, and the black-and-white photographs worked,” said Jessica Jolly, facilities manager at Unilever. “The new building had a different design idea, and people wanted bright colors.” In fact, they didn’t want art at all but large-scale photographs of the company’s products splashed about on the walls. “We show images of Suave shampoo, Ragu bottles, tea packages — images employees can connect to.”

Deaccessioning by gift to public alternative to sale

To Unilever’s credit, the company held a public sale of the 92 photographs, raising $400,000 that was donated in full to the Marwen Foundation, which provides free art classes to Chicago’s disadvantaged youngsters in grades six through 12.

More recently, Altria, which had changed its name from Philip Morris Cos. in 2003, disposed of half of its 700-piece art collection when it relocated its headquarters to Richmond, Va., from New York City’s Park Avenue last March. “Our Richmond headquarters now features a lot of Virginia artists,” a spokesman said. The move ended the company’s 25-year-long relationship as a branch of the Whitney Museum of American Art, but its parting gift to the city was almost 200 works from its collection (featuring pieces by Jennifer Bartlett, Romare Bearden, Philip Guston, Betty Saar and Andy Warhol) to 10 institutions, including the Whitney, the Studio Museum of Harlem, the Brooklyn Museum of Art and El Museo del Barrio.

Heyday of corporate collecting over

Once proud buyers of A-list art, corporations are taking a second look at collections. Amid the corporate downfalls and takeovers, we are seeing signs that the heyday of corporate art collecting is over, replaced increasingly by budget-priced decoration.

Volatility a cause

“The 1980s was the high point in corporate art collecting, but the crash at the end of the ’80s started the process of killing it off,” said David Galenson, an economics professor at the University of Chicago and the author of the 2006 book “Old Masters and Young Geniuses: The Two Life Cycles of Artistic Creativity.” “Company executives found out that the art market could be a very volatile thing that they didn’t want to be part of.”

Astronomical prices another factor

Other factors contributed as well. The prices for top-flight art have risen to astronomical levels, draining corporate resources, and the type of art that is expected to appreciate in value “costs money to maintain, in terms of storage and climate control and state-of-the-art facilities in which to display it,” said Mary Lanier, former director of the Chase Manhattan Bank art collection and now a private corporate art adviser. Shareholders and board directors have less and less tolerance for major art expenditures, according to Princeton University economist Orley Ashenfelter, who noted that “firms, especially when the economy starts to sour, recognize their need to stick to their core business.” The result has been a 20-year-long disposal of one corporate art collection after another.

See

• original article also refers to JP Morgan in Wall Street Journal
• latest posts with references to corporate collectors, all collectors

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Pop goes bubble for Chinese Indian artists – Businessweek

SOTHEBYS HONG KONG AUTUMN AUCTIONS

While much of Hong Kong hunkered down just hours before the arrival of a typhoon on Oct. 4, the start of Sotheby’s three-day auction of modern and contemporary Asian art was buffeted by the financial storm on Wall Street. Of the 47 works that went under the hammer, more than 40% were unsold. What’s more, earnings for Sotheby’s (BID), including the auctioneer’s commission known as the “buyer’s premium,” were a paltry $15 million, accounting for just 41% of the auction house’s estimated takings for the night. Among the biggest upsets was the unsold work by India’s hot-selling artist Subodh Gupta, Untitled, which had an estimated price of $1.55 million to $2.05 million. Another big surprise: Chinese cynical realist painter Liu Wei’s triptych, The Revolutionary Family Series, failed to find a bidder willing to meet the $1.55 million suggested minimum.

As the weather deteriorated on Sunday morning, so did events in the auction hall. Only 39 out of 110 paintings from the 20th Century Chinese Art Sale found buyers, while 71 had to be packed up and shipped back to their sellers. By the afternoon session, the usual buzz at Hong Kong’s contemporary Chinese art auctions was sorely absent. At one point during the sale, the auctioneer mistook a woman covering her mouth to stifle a yawn for her wishing to bid, prompting a valiant attempt to inject some levity into the proceedings as he asked if “anyone else is yawning in the room.”

Yawns gave way to disbelief a little later when two works by white-hot Chinese artist Zhang Xiaogang went unsold. That’s a huge reversal for the Beijing-based artist, whose paintings have routinely fetched millions of dollars, well in excess of auction estimates. (His painting Bloodline: Big Family No. 1 was one of the few top lots that sold on Saturday, though the $2.97 million price was below the expected maximum.) Yue Minjun and Zeng Fanzhi, two others among the hottest-selling Chinese contemporary artists, did manage to sell, although well within the estimates.

Wall Street Fallout
You connect the dots: Wall Street goes into meltdown, and Sotheby’s auction bombs in Hong Kong. Kevin Ching, Sotheby’s CEO for Asia, tries to be optimistic about whether the two are connected. “I hope there is no immediate direct correlation between the financial market and the art market,” he says, pointing to the widely successful auction of enfant terrible Damien Hirst’s works in London within days of the collapse of Lehman Brothers. The problem with some of the Hong Kong auction, he adds, stems from overly ambitious owners trying for unreasonably high prices. “When we have [sellers] who want aggressive estimates over and above what [the] market can accept, they would have to occasionally accept the consequences, and I think that’s what happened here [Saturday] night,” Ching explains.

Still, others in Asia’s art business are certain the fallout from Wall Street is already hurting Chinese and Indian markets. In both countries, newly wealthy investment bankers and hedge fund managers helped inflate bubbles in works by local artists. For instance, in the last four years a booming Indian economy and buoyant stock market encouraged many private banks to offer fee-based services to assist clients in building portfolios of artworks sourced from galleries, auctions, and even direct sales. Fund managers say that investment bankers with their hefty bonuses helped inflate art prices by 30% to 60% above their real value, according to a gallery owner in Mumbai.

Bright Spots
Now with Wall Street in turmoil, most of the bankers who were regulars at art shows and auctions have moved out, says avid art collector Harsh Goenka, chairman of India’s diversified RPG Enterprises, which has interests in tires, power, and retail. He claims that in the last few years, around 60% to 70% of art sold in auctions and shows in India went to the new breed of investor rather than art connoisseurs. “They looked at art as a brand and made money by trading in it,” says Goenka. In the past few months, he says, painters and art dealers have been calling him up to offer their unsold works at a 30% to 40% discount.

The picture isn’t all grim, though. The mood was positively ebullient at Sotheby’s Hong Kong on Oct. 6 as buyers crammed the room for the auction of Southeast Asian contemporary paintings. Sotheby’s employees manned the phones to handle enthusiastic overseas bidding. For instance, Indonesian painter I Nyoman Masriadi had already set a personal record on the first day of the Sotheby’s auction when his huge canvas featuring Batman and Superman sitting on adjacent toilets sold for $620,000. He then surpassed that with a painting of boxers that seems part Botero, part Léger; it fetched a high $833,000. A bit later, during furious bidding for yet another Masriadi, the auctioneer exclaimed “This is really, really fun.” The room broke into applause when the work finally sold for a very respectable $307,000.

The reason for this sea change in sentiment? The prices were far more affordable than the works from China and India on sale during the weekend, and collectors seem to have finally cottoned onto the notion that Indonesian, Vietnamese, and Filipino artists represent opportunities for collectors to own great art. One work by up-and-coming Filipino painter Geraldine Javier sold for $32,000, more than three times the high estimate. An intimate portrait of a woman and child by Vietnamese painter Mai Trung Thu also sold for triple the estimate, fetching $23,000.

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• Business Week article
• more posts on art recession, market watch
• more news on Indonesian, Filipino, Vietnamese, Chinese, Indian art

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Chinese, Indian leading artists fail to sell at Sotheby’s Asian Art evening sale October 2008

Kang Hyung-Koo

 

 

 

REPORT FROM THE AUCTION ROOM

Big name Chinese and Indian artists and several premium lot artworks failed to sell at Sotheby’s October 2008 evening sale of contemporary and modern Asian art but the sale pointed to a new trend of enthusiastic collecting interest in South East Asian art.

Sotheby’s presented its first evening sale of Asian art in Hong Kong 4 October 2008 following Christie’s lead in the Spring auctions. Although Sotheby’s was more aggressive in the number of lots offered (Sotheby’s 47, Christie’s 32), Sotheby’s sale was generally a more diverse cautious offering compared with Christie’s. Sotheby’s presented:

• artworks covering more time periods (Sotheby’s contemporary and modern, Christie’s contemporary only)
• artworks from more geographical markets ( Both: Chinese, Indian, Korean, Japanese, Sotheby’s added Filipino and Indonesian)
• a greater price range at Sothebys with given estimates ranging from US$13,000 to more than US$3.85 million (Christie’s lowest given estimate was US$64,100 and ranged up to US$3.2m).

The results however could not have been more different. While Christie’s sale was a resounding success Sotheby’s sold only 28 of the 47 lots on offer.

The auction room was packed with all of the 200 or so seats taken and though more seats were brought in 30-40 people had to remain standing at the back. There were two rows of Sothebys staff (30-40 people) taking telephone bids. The auction room hummed with anticipation and got off to a roaring start with the first two lots. Filipino artist Ronald Ventura’s ‘Pinamumugaran’ attracted furious bidding and achieved a price of US$230,000 ex premium compared with estimates in the range US$13,000 to US$23,000. The next lot Indonesian artist Handiwirman Saputra’s ‘Mental Series No 8′ estimated at US$25,000- US$40,000 was also successful and eventually sold for US$140,000 ex premium.

Enthusiasm quickly waned during the next two lots of Indian art: lot 3 by  Thukral and Tagra just exceeded the estimate and lot 4 by Jagannath Panda missed its estimate.

The first big upset was lot 5 Subodh Gupta’s ‘Untitled’ estimated at US$1.5 – 2million. Known as the leading Indian contemporary artist Gupta was the first Indian contemporary artist to be included in international auction sales. Sotheby’s had high hopes for this lot but it failed to meet the reserve and went unsold. This set the tone for the next 7 lots; although the works were by  big name Indian and Chinese contemporary artists only 2 (Zhang Xiaogang and Feng Zhengjie) sold just scraping the bottom end of the estimates.

I Nyoman Masriadi

The remainder of the sale was slow and bidding was sticky apart from a couple of bright spots. Indonesian artist I Nyoman Masriadi’s ‘Sorry Hero, Saya Lupa’ estimated at US$48 – 75,000 attracted wide bidding from the room and phones and was finally sold for over US$500,000. Other artists who attracted several bidders and sold above estimates included Korean artists Lee Bul and Kang Hyung-Koo and Indonesian artists Agus Suwage and Affandi.

Contemporary Chinese artists who failed to sell any works in the sale included Liu Wei, Wang Guangyi, Tang Zhigang, Zeng Fanzhi, Yan Pei-ming, Feng Lijun. Chinese Moderns were not spared and lots by Liao Jichun, Chang Yu, Zhu Dequn were not sold. Other Asian artists who were not successful included Indians Subodh Gupta, Justin Ponmany, Japanese artist Takashi Murakami and founder of new media art Nam June Paik.

Some commentators suggest that this sale has been less successful because it coincides with a structural turning point in buyers’ tastes which are speculative and fad-led by nature and that interest in Chinese contemporary art has been replaced with a new enthusiasm for Korean and South East Asian art.

Fads aside, the correlation between prices of works and demand is certainly striking demonstrating a new price sensitivity by buyers of Asian art. September’s financial meltdown is no doubt the leading cause of the many failures in this sale but other factors may also be involved. The number of auctions and fairs has exploded in the last two years providing excess supply of art just when demand is reducing. This Sotheby’s auction competes with the concurrent Hong Kong International Art and Antiques Fair in which art is shown by over 80 galleries in 5000 sq metres of space on the floor above Sotheby’s sale at the Hong Kong Convention and Exhibition Centre. The Sotheby’s sale also overlaps with Korea’s leading auction house Seoul Auction’s first auction in Hong Kong which is offering high quality Korean Japanese Chinese and Western modern and contemporary works.

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•  art recession, globalisation, auction watch
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Largest art museum in the world to be built in south China – Shanghai Eye

NEW ART MUSEUM CHINA

Shenzhen officials announced they are building “the world’s largest art museum” reports Shanghai Eye. Spokesperson for the project, Wang Xiao Ming, said work will begin in March 2009, with a budget directly from the government of up to 2 billion yuan, (several hundred million pounds), for construction costs of 80,000 m2 of space. Around 38,000 m2 will be dedicated to contemporary art, the remainder being split between urban planning, design and other related areas.

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• Chinese contemporary art news

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Mei Moses art index founder talks about financial crisis and art – Artnet

FINANCIAL CRISIS IMPACT ART

Michael Moses, a finance professor at New York University’s Stern School of Business, may well be the art-world’s most famous academic expert on art prices. With his colleague Jianping Mei, Moses co-developed the Mei Moses Index, a fine-art price index that widely made news for showing that artworks sold at auction over the past 50 years had a compound annual growth rate better than that of bonds and close to that of the Standard & Poor 500 index. With U.S. financial markets facing the biggest crisis since the Great Depression, Artnet Magazine Germany contacted Moses for a telephone interview on the role that art investments might play in the ongoing fiscal-market drama.

Artnet Magazine: The finance world has not experienced such turbulence for decades. Will there be repercussions for the art market?

Michael Moses: Historically speaking, the art market has tended to lag downturns in the financial market by 6-18 months. But the art market is also dependent upon worldwide wealth creation. So a downturn in a single market may not affect the art market, but a downturn in world markets will most likely affect the art market. But it’s driven more by global accumulated wealth than by short incremental changes.

AM: Could art become a substitute investment? In times like these, do investors move their funds not only to gold, but if necessary also to artworks?

MM: When individuals sell equities, they need to put the proceeds somewhere, whether it’s gold, cash or art. Historically, art has been basically an asset class, and money flows to it during good times and bad times. The question is how much is flowing. And when people are disposing of other assets, there may be an opportunity for some of those assets to flow into the art market.

AM: Can the loss of capital on the financial markets lead to “emergency selling” in private art collections?

MM: Yes. We’ve seen it before when the dotcom bubble burst. There were executives who had to sell works that they had just recently bought during the glory days, and that’s true with any asset. [Editor's note: It has just been reported that Richard Fuld, chairman of the now-bankrupt Lehman Brothers banking firm, has consigned $20 million in art to Christie's auction house.]

AM: Is the gallery market invisibly linked to the finance market? Will New York lose influence as a marketplace?

MM: Again, this is a question of ups and downs. It would stand to reason that, due to changes in Wall Street and changes in some American companies, the people who were long in all of these markets will stand to lose money. The people who were short in all of these markets will tend to make money. On balance, most likely in the short run, there probably will be more losers than winners. But in the long run, there’s nothing that I see that shows that things won’t rebound over time — they always have in the past. But I don’t have a crystal ball.

AM: The market has many different sectors, like contemporary art, or classic modernism, or 20th-century design. Will this financial crisis effect sub-sectors of the art market differently?

MM: Currently I think that we’re finding that new money seems to go after new art, and this tendency might be one of the reasons that post-war art has done so well over the last five years, so potentially, this category might be more susceptible to downturns in new wealth creation. But we have to remember that wealth creation is a worldwide phenomenon now more than it has been in the past, so it may be that the world market picks up now where the American or European markets may slow down.

• Read full interview on artnet
• Read more reports about the impact of the financial crisis on art

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