Art loans can offer liquidity to your collection

ART LENDING INDUSTRY: ARTTACTIC PODCAST REVIEW

On October 13th, ArtTactic published there latest edition of the ongoing podcast series dedicated to art market topics. The new podcast titled “Art Lending Industry“ is an interview with Andrew Rose, the president of Art Finance Partners based in New York City. Highlights from the interview include detailed information about the array of available loans through Art Finance Partners, Rose’s opinions about how the recession has affected art lending, and a status update on the current state of the art market.

Art Finance Partners is a specialty finance company that provides innovative credit and advisory solutions to owners of "unconventional" assets, such as fine and decorative art, antiques and collectibles.

Types of Loans

“Bridge Loan to Sale”- Advance in funds against and art asset that will be sold. Used to get cash before sale transaction happens. The duration is typically 12-18 months with renewal provision.

“Acquisition Financing”- Upfront loan given to buy artwork, paid back overtime. Similar to real estate loan/mortgage.

“Working capital line”- Used by dealer or collector to finance inventory or collecting needs. The duration is 12 months with the option to renew.

The advantages to employing art loans to your personal art investment strategy are two fold. They offer liquidity between auction cycles (bridge loan to sale), and allow you to defer payment which frees up capital increasing yearly collection budgets (acquisition financing).

How the recession has affected art lending

When asked how the recession has affected art lending, Rose’s response was upbeat.

“Every business is facing the same liquidity crisis at the moment.” He continued to state, “we are seeing a fair amount of demand. Surprisingly in this market we haven’t seen the for-selling that one may have expected in this recession.”

How are artworks valued and has the current recession depreciated these values

Art Finance Partners utilizes basic valuation strategies when determining the value of the artworks lent upon. Their strategy consists of referencing established auction prices for comparable artworks through online databases like ArtNet or AskArt. In the case of a rare artwork, they consult their database of private sales, or get the opinion of an appraiser or art dealer.

Art Valuation Facts:

Loan to value ratio: 40-50%

General value of artworks down 20-30%; ultra contemporary artworks down 50%

Andrew Rose ends the interview stressing that good quality artworks sell well. Although trends and tastes change, Rose reiterates: “there will always be demand for very good quality international artwork on the international market.”

Related posts:

• Mei Moses art index founder plans Chinese version, optimistic about Chinese art- March 2009
• Three recession strategies for selling art in Shanghai – Shanghai Daily- April 2009
• New auction houses with new strategies open in Singapore art market- October 2009

Subscribe to Art Radar Asia for more market and auction house news

SF/KCE

Which 5 Indian artists would you dare to buy now?

CONTEMPORARY INDIAN ART

Which artists from the Indian subcontinent are most likely to have a market in 10 years time?  Think about it for a moment and then compare your results with those below:

Subodh Gupta

 

Atul Dodiya, Fallen Leaves A Stroll

 

 

Top 5 Ranking:

1. Subodh Gupta

2. Atul Dodiya

3. Rashid Rana (Pakistan)

4. N.S. Harsha

5. Jitish Kallat

(Each of the artist names above is linked to their wikipedia entry. Just google the artist name + images for a large selection of images and sources).

This list has just been published for the first time by ArtTactic using its Survival Rating Methodology. We have enormous respect for the well-researched reports produced by Anders Petterson. Here is more information from their website:

This Survey launches the Survival Rating methodology for the Indian art market, which was pioneered for the US & European art markets in December 2008. The measurement captures the long-term (10 years) belief whether the artists’ markets will be of High, Medium, Low importance. The Barometer is particularly useful in the current environment, where the market is trying to decipher which artists’ markets will survive the current downturn.

Artists Confidence Indicators and Survival Ratings included in the report:

F.N.Souza, M.F.Husain, Ram Kumar, S.H.Raza, Akbar Padamsee, Himmat Shah, Jogen Chowdhury,Arpita Singh, Krishen Khanna, Rameshwar Broota, KG Subramanyan, Vasudeo S. Gaitonde, Zarina Hashmi, Tyeb Mehta, Anju Dodiya, Atul Dodiya, Shibu Natesan, Sudarshan Shetty, Ravinder Reddy, Nataraj Sharma, Surendran Nair, Subodh Gupta, Bharti Kher, Jitish Kallat, Thukral & Tagra, Rashid Rana, N.S. Harsha, T.V. Santhosh, Justin Ponmany, Riyas Komu.

Jitish Kallat

To buy, click the Indian Art Market Confidence Survey report May 2009

Related posts:

• Which artists from Asia are in the Pompidou collection? – Dec 2008 – includes list of Indian artists
• Mixed reviews for Serpentine’s Indian Highway show in London – Dec 2008 – 25 contemporary Indian artists in survey show billed “a snapshot of a vibrant generation of artists”
• India has most speculative art market in world - Philip Hoffman Fine Art Fund – Sep 2008

Subscribe to Art Radar Asia for news about Indian art

 

Outlook for Chinese art market – interview Larry Warsh – Arttactic podcast

CHINESE ART MARKET

Larry Warsh of AWAsia in New York, a private organisation which provides Chinese contemporary art sourcing and curatorial services to global institutions such as MOMA and the Getty Museum, talks about his take on the outlook for the Chinese art market on Arttactic’s newly-launched free podcast service.

Warsh’s expertise lies in Chinese painting and photography by the first generation of historically important Chinese artists who came to prominence between 1989 and 1999.

Topics discussed include:

• the evolution of US interest in Chinese art – Americans ‘came late to the party’, Christopher Phillips’ show at ICP ‘Past Present Future’ 2004-5 was the start

 

• why the Cynical Realists appealed to the West

 

• the trend for major US institutions (MOMA, Getty) to buy and show global art, Chinese art and the upcoming show at MOMA by Song Dong summer 2009

 

• recommended books about Chinese art

 

• weaknesses of Chinese art scene (as yet undeveloped education, infrastructure and curatorial skills)

 

• opportunities in the market – Chinese photography

 

The promotion of Chinese art is Warsh’s self-confessed mission so it is not surprising that the bulk of the interview claims great investment opportunities for selected Chinese artists. He suggests that scarcity of supply (he says there are only 30-40 historically important contemporary artists) and the future potential of the Chinese buyer base (favourable demographics, population size and a growing interest in contemporary art) means that prices are bound to rise.

Asked why the top auction houses seem to be featuring less Chinese art in their recent sales, Warsh explains that he sees this as evidence of the scarcity of supply of quality Chinese art rather than lack of demand.

We are not quite convinced by this argument. If supply is scarce but the demand still exists, then the pieces that have been coming to the market recently would have made heady prices but instead they have fallen along with other art categories and asset classes. In Hong Kong’s Spring sales 2009 works by Zhang Huan failed to sell at Sotheby’s and at Christe’s a Cai Guo Qiang edition ‘Kaleidoscope Time Tunnel’ and a Yue Min Jun lot were passed in.

No matter, we like controversial opinions. Arttactic promises more podcasts with ‘key’ figures so we look forward to hearing a variety of views. To listen to this one go to ArtTactic Podcasts and search for Larry Warsh May 22 2009.

Unfortunately we cannot give you a direct page link – we hope that ArtTactic will iron out this wrinkle in its promising new service.

Related posts:

• Newslink round up Hong Kong art fair Art HK o9 - May 2009
• Sneak a peak at the collection and private residence of dealer Pearl Lam – video interview – Mar 2009
• Mei Moses index founder plans Chinese version, optimistic about Chinese art – Mar 2009
• What are the latest trends in Chinese art? Who are the top two emerging artists? – video interview Melissa Chiu - Feb 2009
• Domestic demand in freefall at Chinese art auctions – China Daily – Nov 2008
• Book: Chinese Contemporary Art 7 Things You Should Know – Oct 2008

Subscribe to Art Radar Asia for views about the Chinese art market

Chinese art market outlook 2009 – Arttactic, AWAsia

CHINESE ART MARKET

Why there are opportunities in Chinese 90s-made art and Chinese photography and how Western museums are impacting this market are some of the topics in the interview between Anders Petterson, Founder and Managing Director of ArtTactic and Larry Warsh, Founder of AW Asia.

Zhang Huan, Family Tree, photographs

Buying opportunities – 90s art and photography

AP: Where do you see buying opportunities in the Chinese contemporary art market in the short and long-term?

LW: In the short term-the next 12 to 18 months-there will be good opportunities to buy works by top-tier artists in both painting and photography. By top-tier, I mean the 40 or so who have gained art-historical recognition, have been internationally exhibited, and are being acquired by museums in the West as well as Asia. Historical works by these individuals -the first generation of Chinese contemporary artists, from 1989 through early 2000s-are relatively scarce and will continue to gain value. The global downturn has yielded some attractive pricing, particularly in comparison to top contemporary artists in the West, creating smart buying opportunities. In fact, art funds focusing on Chinese contemporary art have been formed to take advantage of this moment. Museums are also acquiring for their collections.

Chinese contemporary photography is a buying opportunity. It’s still undervalued relative to painting, which was the focus for collectors for many years. Quality works will become increasingly scarce, particularly as China develops as a consumer society with its own collector base. The Chinese audience with disposable income is growing, and a consistent percentage of those people will become art advocates and collectors.

The Chinese economy may be slowing down, but it is not in a recession. China will remain among the world’s most attractive investment destinations, and art will continue to parallel this direction. The result is that Chinese contemporary art will weather this economic downturn and will come out as an even stronger player.

Threats to Chinese contemporary art market

AP: What do you see as the main threats to the future development of the Chinese contemporary art market?

LW: Quality. As in the West, in China there are tens of thousands of artists producing all types of work. The quality varies widely. It is important to pick the artists who will have historical staying power, with solid records in terms of art-historical recognition, museum exhibitions, and curatorial interaction. In every country, the finest work by the top artists is expensive and sought-after, and it holds its value. In this, China is no exception. There are many levels of artists and art, and it’s essential to know the difference between the art business and art history. Also, over the past few years some dealers took a very aggressive approach to pricing, which shot up dramatically. A shake-out was almost inevitable, especially when the quality was not there.

I think there is not enough education regarding who the important artists are. In China, this is now starting to change. There are now more collector groups, and more lectures and seminars on Chinese contemporary art. It’s not enough, but it’s starting. There’s activity promoting education and the development of a collector base.

Western attitudes to Chinese contemporary art in future?

AP: Was Chinese contemporary art just a fad in the West? Why not? What developments are we likely to see in the West with regards to the Chinese contemporary art market?

LW: It’s not a fad, not at all. Pundits talk about it in those terms because of the speed with which Chinese contemporary art has grown and the impact it’s had on the art world. That’s consistent with the Chinese economy overall, which has seen rapid growth in many other sectors as well. We forget that the reopening of capitalism in China was a once-in-a-lifetime event, truly a phenomenon-a country waking up with such might in the course of 30 years.

There are also many notable curators, academics, writers, and collectors in the West who are studying, following, researching, and buying Chinese contemporary art, and were doing this years before it became a notable player in the marketplace. One trend that I see continuing is the integration of Chinese contemporary art into Western museum exhibitions and collections. Just in New York alone, the Guggenheim, the Metropolitan Museum of Art, and MoMA have acquired Chinese contemporary works. Other U.S. and European museums are completing acquisitions as well. And while this is entirely anecdotal, among collectors I’m in contact with, interest in Chinese contemporary art remains very high, and there is a shift happening now of new collectors who are buying, as opposed to speculators.

Chinese art has also been outperforming Western and European art in the contemporary non-Chinese sales. As recently as November 2008, at the Christie’s day sale in New York-which overall did poorly-14 of 16 contemporary Chinese works sold, many doing better than their Western counterparts. There was spirited bidding from absentee and phone bids, as well as activity in the room.

Shift from West to East

AP: As a result of the increasing economic powers of the East, are we going to see a shift away from the power of Western art model to an Eastern (Asian) model? What implications could this have for the Chinese art market?

LW: Chinese culture is 5,000 years old, and national pride runs deep. China will not collect our Western heroes and icons-not widely, at least. They will create, and have always created, their own. That’s where their collecting interests lie.

In art, the Chinese will adapt many of the Western business models, but they will also evolve their own dynamic approach to working with museums, galleries, and the international art market in general. We should not think that our way is the only way.

The strength of the Chinese economy has been underestimated in the West. With a population of 1.3 billion, China has an enormous pool of consumers. The Chinese middle class is now roughly equivalent to the entire U.S. population (and growing), and their collector base barely has been tapped. They may be spending more cautiously, but they still have money.

Major development – Government support

AP: What will be the most important event(s) for the Chinese contemporary art market in 2009?

LW: The Chinese government has recognized the importance of contemporary Chinese art, and has earmarked money to promote and solidify the field via the Beijing Culture and Development Fund. They are also supporting museum exhibitions in China and abroad. This is a major development.

Inflation-resistant investment with demand in many countries

Also, I think that in the near term, China will undergo more severe inflation than it’s seen recently, making high-quality work a good haven for protecting the yuan. This will also benefit non-Chinese collectors holding this type of asset. With its broad acceptance on the international art market-London, New York, Paris, Hong Kong, China-and its performance in Western and Asian auction houses, high-quality work will be salable around the globe, yielding the respective currency of choice. With the coming inflation, I predict that art will outperform other non-art investments, as it has done in the past. I project that within 24 to 36 months, prices will return to levels close to where they were, with some prices higher. Great work will achieve breakout prices sooner.

Asia is the future, and everyone in the West should be aware of this fact. Between China and India, the entire planet will be looking toward Asia as it leads the globe in new areas of development. The Chinese art market has tremendous opportunities yet to be realized. Chinese contemporary art is not going away.
ABOUT THE CONTRIBUTORS

Anders Petterson is the founder and managing director of ArtTactic.

Larry Warsh is the founder of AW Asia, a private organization in New York City that promotes Chinese contemporary art through institutional loans and acquisitions, curatorial projects, publishing, and educational programs. Previously the founder and publisher of Museums Magazines, he has been an active collector of Western and Chinese contemporary art for more than 25 years.

This article was originally published in the February edition of Rawfacts, ArtTactic’s monthly art market newsletter. The original text is republished here by courtesy of ArtTactic.

Related posts:

• Getty Museum acquires Chinese contemporary photographs by Wang Qingsong, Hai Bo April 2009
• Mei Moses index founder plans Chinese version, optimistic about Chinese art March 2009
• Emerging Chinese conceptual artist Li Hui defies recession at Christies Dec 2008
• Largest art museum in world to be built in South China Oct 2008
• Survey of Chinese contemporary art at San Francisco museum Sep 2008

Subscribe to Art Radar Asia for the latest market news

Turkish art another fad? The lowdown on this new market

TURKISH ART MARKET INTERVIEW

In the week of Sotheby’s inaugural sale of Turkish art, Art Radar gets the lowdown on the Turkish art market from Anders Petterson, Managing Director of research company ArtTactic.

Sotheby’s holds its inaugural sale of Turkish contemporary art  this month – why is Turkish contemporary art receiving attention now?

The local art scene in Turkey has experienced a boom in new art institutions since 2004, from galleries, artist-run spaces, privately funded museums and art centres, to art fairs and auctions. At the same time the value of the domestic Turkish art auction market has quadrupled in the eight years after 2000. The international auction houses have been keeping a close eye on these developments and are beginning to test the market now.

But what about the recession? Does it make sense for Sotheby’s to launch a new category now?

Yes this is a valid issue. Arguably this is not an ideal time to launch a new category, perhaps the decision was made in better times. On the other hand there is a base of collectors and strong institutional support. Unlike other emerging art markets this is an art scene with an established infrastructure which has been overlooked by international collectors. Furthermore Christie’s tested the market in October 2008 when it included Turkish modern and contemporary artists in the Dubai contemporary art sale. Eleven of the fifteen lots sold which was a robust result.

Istanbul holds its Biennal in 2009 and will become the European Capital of Culture in 2010 which could give the arts scene further impetus over the next year or so.

Are there any other auction houses selling or planning to sell contemporary Turkish art?

There are several local auction houses and it is rumoured that Phillips de Pury and Bonhams plan to follow in the footsteps of Sothebys.

Is there a secondary market? Which are the leading galleries focusing on contemporary Turkish art?

The gallery scene has expanded considerably over the last two years. New galleries have opened showing  cutting edge art alongside the more conservative galleries which date back to the 80s and 90s. If you are interested in delving further, our report on the Turkish art market profiles approximately a dozen galleries with information about when they opened, who runs them and what kind of art they focus on.

Are the contemporary artists in the Sotheby’s auction new to the auction scene or do they have an auction history?

Out of the artists born after 1950, 44% have never sold at auction and most of the rest have sold a few works in domestic auctions in Turkey. The exceptions are Mustafa Horasan, Kezban Arca Batibeki, Bedri Baykam and Kemal Onsoy who sell frequently at auction.

It sounds like this auction will be an intereting test for the future of theTurkish art market. If it is successful will it be yet another international art market fad?

While this is possible of course, I hope not. In its favour is its strong infrastructure of galleries, curators, museums and not for profits. Read our report for information on the most important of these in each category. Prices of Turkish art are cheap relative to Indian, Iranian and Chinese art and that could help too.

Find out more about ArtTactic’s 20 page report on the Turkish Modern and Contemporary Art Market Feb 2009

Related posts:

•  Sotheby’s inaugural sale of Turkish art – video – 5 artists talk March 2009
• Top 4 Radar picks at the Cairo Biennale Dec 2008 – One of Radar’s picks is Turkish artist Gulsun Karamustafa

Subscribe to Art Radar for facts and information about emerging art markets

Identify recession survivors with new Survival Rating methodology from ArtTactic

ART RESEARCH ART MARKET

This month, ArtTactic launched its first version of the Art Market Survival Rating methodology, as part of its US & European Art Market Confidence Survey.

The new measurement captures the likelihood of whether an artist will be of High, Medium or Low importance in 10 years time. ArtTactic says that the rating is particularly useful in the current environment, as the art market attempts to clarify which artists are likely to survive the current downturn, and what importance they will play when the market rebounds.

ArtTactic

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Indian art market confidence falls in latest ArtTactic survey – Indian Art News

INDIAN ART MARKET CONFIDENCE

The financial markets around the world are gradually recovering from a cardiac arrest, the banking system is being rebooted with help of government intervention and nationalisation. Most Western economies are heading for a recession. Emerging markets such as India and China have not been spared either, and the short-term economic outlook is highly uncertain.

Sentiment shift began May 2008

Now, this is the context in which the art market must be analysed. ArtTactic’s India Confidence survey in May 2008 signaled a shift in the sentiment, as respondents turned negative on the economy – 6 months after, the negative mood has now hit the Indian art market.

Confidence falls 23% May to September 2008

The recent confidence survey conducted in September 2008, showed that the overall ArtTactic Indian Art Market Confidence Indicator fell a further 23% from the last reading in May, which has resulted in a combined fall in the Indian Art Market Confidence of 34% since October 2007.

The ArtTactic Indian Art Market Indicator has been hit by 38% drop in the confidence in the economy, which is a further deterioration from the 54% decrease experienced between October 2007 and May 2008. Hence the economic component of the indicator has fallen 71% since October last year. This has to be viewed in the light of The Bombay Stock exchange (SENSEX) having lost more than 50% of its value between October 2007 and October 2008. With inflation levels at close to 12% and weaker industrial production numbers for August 2008, the Indian economy is feeling the gravity of the global crisis – a sentiment that is now starting to find its way into the heated Indian art market.

Speculation cited as cause

ArtTactic’s recent survey shows a significant fall of 36% in the Indian Contemporary Art Market Confidence Indicator, which reached its height in May 2008. The loss in confidence has been largely caused by speculation (73% of respondents saying this the biggest risk to the contemporary Indian art market), and rapidly rising prices of younger, still unproven contemporary artists, combined with a much weaker and uncertain economic climate.

Future?

So what does this mean for the future of the Indian art market? The changes are likely to take place on different levels. The most immediate; art prices and value of Indian art works will come under scrutiny, which is evident by recent results from auctions in London, New York and Hong Kong.

In the medium term there needs to be a re-assessment of the Indian art market, and questions around artistic, historic and cultural importance need to be debated, discussed and contextualised. The Indian art market desperately needs a non-market/ non-commercial reference frame for which it can questions its validity. The market needs more long-term players, particularly art collectors.

On the positive side, the Indian art market boom has laid the foundation for a healthier, second Indian art market cycle. The emergence of institutions such as the Devi Foundation are necessary, but one needs many more – as a single institution runs the risk of becoming an instrument for another speculative boom. The market needs a wide range of ‘voices’ that can maintain the checks and balances, and ensure that the value of art has a foundation outside the commercial market.

However, one should remain positive. Whilst the market will go up and down, artists and art will not cease to exist. Contrary, a difficult environment is likely to be more conducive for art production and creativity. It is in this new cycle, where the real, long term value of Indian art will be established.

• For graphs, links see Indian Art News
• latest posts on collectors, Indian art, art recession,

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India Embraces the Contemporary: Financial Times

INDIA The Indian art market is going through a major transformation, where the market’s focus has shifted from modern Indian art to contemporary Indian art.

According to a report this month by ArtTactic, an art market research service which provides analysis and advice for art collectors, art professionals, art institutions and art funds, its contemporary art market Confidence Indicator now stands 20 per cent higher than the indicator for the modern art market. However, recent auction results show that there is still strong demand for the right period works by a selected number of modern Indian artists such as FN Souza, MF Husain, VS Gaitonde, Ram Kumar and SH Raza.

Western museums and private collectors have started to take a strong interest in what is happening in India at the moment. This will continue in 2008, with exhibitions planned at the Serpentine Gallery, the Saatchi gallery, the Mori Art Museum, as well as the current exhibition “Passage to India” at Initial Access, the space recently opened by UK collector Frank Cohen.

According to the ArtTactic Indian Art Market Confidence Survey, the overall Indian art market confidence indicator fell 13 per cent from the last reading in October 2007.

The indicator has been hit by a 54 per cent drop in both the current and future confidence in the economy. With India’s inflation surging to a more than three-year high, with global financial markets in decline and with crude oil prices rising, the economic prospect looks less promising than six months ago. And as the economic component of the confidence indicator carries a 33 per cent weighting in the overall Indian Art Market Confidence Indicator, the significant loss in confidence weighs heavily on the overall results.

However, despite the fall in overall ArtTactic Indian art market confidence, both the confidence levels in the modern and contemporary market increased significantly: up 17 per cent and 6 per cent respectively.

After the slowdown that started at the beginning of 2007, where the modern Indian art market experienced a 38 per cent drop in annual auction volume compared with the record year of 2006, the modern Indian art market is now regaining some of the lost confidence.

The ArtTactic Indian Modern Art Market Confidence Indicator is up 27 per cent from the last reading in October 2007, and while the survey respondents are less positive about the near future of the Indian contemporary market, the “expectation indicator” for the modern art market stands 23 per cent higher than the “present indicator”, showing the modern art market could be about to regain some of the ground that it recently lost.

www.arttactic.com

The ArtTactic Indian Market Confidence Indicator was launched in May 2007. It is derived from polling 81 respondents, including curators, collectors, dealers, galleries and auction houses operating in the Indian art market.