The Art Market

The Financial Times takes a quick look at the state of the art market.  With many important upcoming sales and so much uncertainty in the global financial markets, it is hard to predict what will happen at the fall sales.  Many believe the art market has cooled from the earlier part of the year.  The FT post states that art sales track the financial markets on the way up, but due to liquidity issues, such as waiting for the proper sale, takes longer to fall.  Although, in this current global financial position, many are looking at collecting art as a "store of value" and as a tangible asset to be included in a well balanced portfolio.

The FT article notes the Art Market Report and its overall index which shows the peak in 2008, drop in 2009 and rebound in 2011.  Only time will tell what happens this fall.

The FT reports

All eyes are on the art market in the coming weeks as observers try to assess the potential impact of the economic situation on art sales. Can art repeat its gravity-defying performance since the 2008-09 crisis, when its rapid recovery startled even seasoned observers? Figures from Art Market Report (AMR) show that its Art 100 index (a basket of everything from Fragonard to Warhol) and its modern and contemporary art indices peaked in 2008, dropped sharply in 2009 – and rebounded in 2011 to 2007 levels. Francis Outred, head of contemporary art at Christie’s London, says that the sales during Frieze next month, which he is currently preparing, are of a higher value than the equivalents of last year. “This indicates a continuation of the recovery since the 2009 crisis,” he says.

The key element in this supply-driven market is confidence, says art economist Clare McAndrew. “If markets are shaky overall, then owners may hold off selling, so this impacts on results.” She also points out that the art market is not one market, but a series of sub-markets that may perform very differently: contemporary art has been the most linked to stock markets, but more traditional sectors have seen less correlation. Rachel Campbell, assistant professor of finance at Maastricht University, says that when markets rise, the art market rises as quickly, but in a downturn falls more slowly because art is less liquid and owners have to wait for a suitable sale to dispose of their works. So what is likely to happen today? “With uncertainty over inflation, art is seen as a tangible asset, like gold, and this is a big driver of the market,” says Campbell. McAndrew concurs: “People see art as a safe place to put their money,” she says.