How to navigate the Global Art Market

The Art market is more dynamic than ever, supported by a growing international demand, as demonstrated notably by the increasing frequentation and frequency of art fairs all over the world. This is further seen in the record highs achieved recently for modern and contemporary art works at major auction houses in New-York, London, and globally. Exhibitions of well-known artists like Monet, Picasso, Hopper, Warhol, Basquiat have broken visitor records at major museums throughout the world.

In fact, the art market has shown a strong resilience to the financial crisis and is now reaching historical peaks, 2012 was a record year in value with over USD 12.3 billion artworks sold at public auctions (Fine Art segment). The Spring auction season (May 2013) just closed in NYC, achieving record sales, with more than USD 1.5 billion worth of artworks sold in just two weeks, including numerous artists’ records and historically low bought-in rates. Christie’s even achieved the highest total in auction history on May 15, 2013.

Even if around half of the auction art market in value consists of prestige sales over USD 1 million, which is the steadiest, highest-yield, and most profitable segment in investment terms, the densest segment consists of much more reasonably priced artworks. It is estimated that 80% of the offer at public auctions is made of works under the USD 5,000 hammer price threshold, with a very dense and active market constituted by over 250,000 works sold in 2012 at auctions…
The art market is fuelled by a growing number of buyers, on all segments of the market. Auction houses are now recording bidding from over 35 countries at their major sales, with increased activity from Latin America and Asia and the highest level of new buyers’ registrations. At the same time, the Art market is more complex than ever. Together with the growth of the auction market, there has been a significant increase in the private market, in the number of artists exhibited both at galleries and art fairs. As a consequence, it is difficult to know what to acquire and under what conditions…

All the more that Art has now become a true alternative investment. While it remains an aesthetic and intellectual investment; it is one that can also result in strong positive returns in the medium to long term. However, investment in Art does carry risks, many of which are identifiable and can be mitigated as part of a well-conceived investment portfolio. There are ways to rationalize an investment in art and to successfully grow an artistic portfolio, but it requires time, investigation, and strong knowledge of Art history.

By Sebastien Laboureau, International Art Consultant, Founder of MoonStar Fine Arts Advisors

Juin 2013

www.moonstar.fr

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