Art Market Trends
Volatility of contemporary art prices |
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| China moves up to the number 3 position in the global art market In geographical terms, France traditionally takes third place in the global art revenue ranking behind the United States and the UK. However, in 2007 it was relegated to fourth position by China where annual revenue, boosted by the major international auction companies, reached a higher level than in France. In 2007, the Chinese market generated no less than 75 sales above the million-dollar line with a top price of HKD 66 million (USD 8.5 million) for a work by Cai Guoqiang - an absolute record for a work of Chinese Contemporary art - followed by two Modern artists, XU Beihong (HKD 64 million) and ChHen Chengbo (HKD 45 million). Henceforward, sustained by rapidly growing domestic demand and rising star artists commanding rocketing prices, China is capable of competing with New York and London on sales of Fine Art, frequently generating revenue figures reaching into 8 figures. And last year, the most prestigious sales were not the exclusive privilege of Sotheby’s and Christie’s... The Chinese art boom is also reflected in the number of auction houses and the volumes negotiated. China’s arrival as a major player in the art world has proved even more spectacular on the particularly buoyant and highly competitive Contemporary art segment. In 2007, 36 Chinese artists featured in the Artprice index for the top 100 Contemporary artists by sales revenues, with in second place, ahead of Jeff Koons, the extraordinary Zhang Xiaogang. © 2008 artprice.com |
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| Christie’s & Sotheby’s: who rules the global art market? Every year, in New York and London, the prestigious Impressionist and Modern Art evening sales or Contemporary Art sales at Sotheby’s and Christie’s are the high points of the global auction season. They are always a great spectacle, boasting catalogues stuffed with the market’s most exceptional pieces. Between them, these two auction houses now virtually monopolise sales of a million dollars and over. In 2006, of the 810 million-plus lots sold, 81 went under the hammer at these two leading venues. In the current growth phase, competition between Sotheby’s and Christie’s is having a dynamising impact on the wider market. Of the 9,200 fi ne art auctions recorded by Artprice in 2006, the big two hosted 842. This is 80 more than in 2004. But, despite having just 9.15% of total auction numbers, Sotheby’s and Christie’s handled 76% of the global fi ne art market’s turnover. The average price of lots sold at the two market leaders, who arrange the most prestigious sales, was $ 91,805. This compares to an average at all other auctions houses of just $ 7,156. © 2007 artprice.com |
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| The market’s structure is evolving as the contemporary art and photography segments are becoming more popular than other market sectors. Thus, the contribution of living artists to Fine Art auction sales jumped from 7.9% in 2000 to 17.6% in 2005. Prices in this segment (in dollar terms) climbed 12.5% in 2005 compared with 8.2% for Modern Art, -2.4% for 19th century paintings and 8.7% for Old Masters works. Furthermore, on 12 May 2005, Christie’s set a new record for a contemporary art auction by generating $ 31.7 million over and beyond its 2004 record of $ 102 million. And it only took 65 lots to attain this result! The auction owes its success to the strong interest among buyers in the major post-war works on offer. The most expensive lot was Edward Hopper’s painting, Chair Car, (1965) which fetched $ 12.5 million. Close on its tracks was Willem de Kooning’s Sail Cloth which sold for $ 11.7 and thirdly a 1964 work by Mark Rothko which went for $ 9 million. The photography segment is now extremely popular among collectors. In 2000 this sector only accounted for 3.4% of sales in volume terms, and $ 50 million (1.7% of the market) in value terms. The segment has become very important with an annual turnover of more than $ 93 million. In October 2005, photography works in New York had never been so lucrative. In seven auctions, Christie’s, Sotheby’s and Phillips together made $ 28.9 million in turnover. They also set an increasing number of records, the highest for the portfolios of Edward S. Curtis (1868-1952): The North American Indian fetched an impressive $ 1.2 million, thereby doubling its high estimations. © 2006 artprice.com |
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| Investment in the art market requires a knowledge of the markets for individual artists, but also of the associated investment risk. As with the stock markets, this is not insignificant. However, the art market is considerably less volatile. For example, from 1 January 1997 to 1 June 2004, the average quarterly fluctuation in the Artprice Global Index was two to three times smaller than the same statistic for the Dow Jones IA and the S&P 500. The art market is far less sensitive to economic crises and geopolitical events than other assets. Art prices held up well in the wake of the 11 September terrorist attacks and the Iraq war: our index contracted only 1.2% in the third quarter of 2001, and, in the first six months of 2003, it rose 7%. As with stock markets, the art market contracts in times of uncertainty. The annual volume of art works sold at auction dropped 36% between 2000 and 2003. While stock markets tend to price in the slightest concerns investors may have, there is no automatic correlated reaction on the art market. In effect, rather than compromise on price, buyers and sellers of works of art become far more selective. At auctions, this translates into a higher bought-in rate: between 2000 and 2003 the bought-in rate rose by 9%. The quality of the works bought and sold guarantees the return on investment, while the lower sales volume fuels prices. |
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