Artprice just released its art market report for 2016. I have yet to read the report, but parts look rather interesting. In the block quote is the table of contents of the report followed by the chapter titled Financialisation of the art market.
Follow the source link below the second block quote to read the full report
The Art Market in 2016
Nota bene
Editorial by thierry Ehrmann, Founder and CEO of Artprice.com
The emergence of a “new world order” on the Art Market raises serious questions about East-West relations, but also about the role of museums and the ubiquity of technology.
Editorial by Wan Jie, President and Founder of Artron Art Group
Despite a fragile economic context, the Art Market stabilized in 2016. China and the West are getting closer, while the democratisation of art is prompting more people to collect art.
Financialisation of the art market
Financial pressure has sharpened competition between Art Market players leading to better price stability and enhanced liquidity.
General consolidation of the art market
China has become the world’s leading art market while Western sales have seen a significant drop in spectacular auction results. However, transaction volumes have never been so high.
European art… a pillar of the Western art market
The top results have rewarded the best in European Art generating records for Old Masters, Impressionists and Modern artists, and intense demand for the German English and Italian superstars, among others.
Top price American art
The American market is largely focused on its national artists, starting with the blue chip Pop Artists, but increasingly interested in its Abstract and Contemporary artists.
Characteristics of the Chinese Art Market in 2016
Modern Chinese painter Zhang Daqian is the world’s top auction performer. He epitomises the power of the Chinese market, which alone accounts for 38% of global turnover.
Art from around the world
15% of the Top 500 artists are from outside Europe, the USA and China. The Japanese are still very present, as are artists from certain Latin American and South-West Asian countries.
Top 100 auction records
80 works fetched over $10 million in 2016 including Claude Monet’s La Meule (1891) that generated the year’s best result at $81.5 million.
Ranking of the Top 500 artists by auction turnover
In 2016 the ranking saw a lot of movement. It is now essentially composed of 41% European artists, 30% Chinese artists, 15% Americans artists and 15% other nationalities.
Financialisation of the art market
Source: ArtpriceThroughout 2016, auction operators have demonstrated their capacity to stimulate demand despite a climate of uncertainty. China has managed to stabilise its auction turnover, while the West saw its highest level of transactions ever recorded (398,000 lots sold). In both the East and the West, a focus on consolidating the core of the market took priority over the race towards new auction records.
This market configuration owed much to an intensification of competition between the market’s different players that has, in turn, led to a more stable and solid market environment. In 2014, Sotheby’s yielded to pressure from its shareholders, including hedge-fund manager Daniel Loeb. After 34 years of loyal service (including 14 as CEO), William Ruprecht handed the reins to businessman Tad Smith. At Christie’s, a series of CEOs from major industrial groups have attempted to make the organisation ever more efficient: Steven Murphy in 2010, Patricia Barbizet in 2014, Guillaume Cerutti in 2016. An acceleration of personnel changes in key positions also reflected the tougher competitive environment, initially at the auction houses, and then later throughout the Art market as a whole. In December, Brett Govry defected as head of Postwar and Contemporary art at Christie’s to join the Galérie Dominique Lévy.
Today, the Art Market’s dependence on the financial sector is palpable at nearly every level. Recall that major banks (UBS, Deutsche Bank, JP Morgan, etc.) have become powerful partners in major artistic events (art fairs, biennials, exhibitions, awards, etc.) that substantially influence the success and prices of artists. Meanwhile a number of major multinational corporations are actively enhancing their public images by partnering with artistic causes, or by building their own exhibition centres, like the Louis Vuitton Foundation in Paris.
The upper echelons of the Art world are nowadays intimately connected with industrial and financial power whose requirements have given the market a new level of efficiency. The result is that every item in the major players’ cost & income statements is being carefully scrutinised. During his first year at the head of Sotheby’s, the new CEO Tad Smith imposed a vigorous voluntary departure plan. The firm has also adjusted its buyer’s premiums twice over the last two years and we are seeing a multiplication of the incentives used to convince buyers and sellers of artworks: guarantees, online auctions, etc.
The Art Market’s adjustments over the last twelve months clearly reflect an increased level of efficiency. The market is now capable of adapting supply to demand far more quickly than ever before. The result is a sharp increase in the number of transactions and a significant rise in the liquidity of artworks, an aspect that was long considered the weak point of this type of investment. More than ever before, the art market guarantees that it can buy and sell at the right place and the right time, and, in an era of negative bank rates, art represents a particularly competitive and attractive alternative investment.
At the heart of this new balance, public museums retain a central position, though a greatly modified one. On top of mounting financial pressure, they now face competition from private exhibition spaces. Increasingly unable to acquire masterpieces directly, public institutions rely on gifts, donations and sponsorship and are also expected to play a more active role in supporting creativity. Nevertheless, museums still represent a “black hole” that is impossible to ignore if we want to understand the exponential growth of art prices and the most influential forces in the art market.
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