HELVOIRT.- The art market has become a global marketplace with new collectors in emerging economies who may contribute towards protecting it from the current international economic situation. This fundamental shift in the geography of art buying is revealed in a new report commissioned by The European Fine Art Foundation which organises The European Fine Art Fair (TEFAF) to be held in the Dutch city of Maastricht in the MECC (Maastricht Exhibition and Congress Centre) from 13-22 March 2009.
The report, Globalisation and the Art Market, Emerging Economies and the Art Trade in 2008, has been prepared by Dr Clare McAndrew, a cultural economist specialising in the fine and decorative art market and founder of Arts Economics. It is the latest in a series of important annual studies commissioned by TEFAF.
The report takes a detailed look at the growing importance of China, Russia, India and the Middle East in the art market in recent years. It also examines the past and possible future effects of the current world economic climate on international art buying.
Among the report’s key findings are: Dealers have increasingly been encountering two types of buyers: traditional collectors and wealthy new global clients with motives that include investment, prestige, fashion and nationalism. While the new buyers pushed up prices in some parts of the market, notably contemporary art, their effect on other sectors appears to have been more limited. Some of these new buyers come from emerging economies such as China, Russia, India and the Middle East. China has emerged as the third largest national art market after the US and the UK with 8% of the global share and with Hong Kong as its dominant centre. Total sales of Indian art in 2007 were €243 million of which 30% occurred within India and 70% were in other centres such as London, New York and Dubai. Dubai is emerging as the leading art market centre in the Middle East with 2007 sales of about €150 million.
In recent months contemporary art sales have suffered but other sectors of the art market such as Old Master paintings have posted strong results. The drop in contemporary art prices may be a sign of decline or could just be an overdue market correction. Although the economic downturn will impact even those buyers with the most diverse portfolios the effects on the art market as a whole are as yet unclear. While lower discretionary incomes may drive down art buying, there may be a “substitution effect” with people using art as an alternative investment. The appearance of new collectors from the emerging economies may at least partly help protect the art market from the international economic situation.
The report states: “The emergence of China as a global player in the art market highlights one of the biggest transformations in the art market over the last five years, namely the emergence of a number of new and thriving art markets and art centres around the world including China, India, Russia and the Middle East.
“Many of the dealers around the world who were interviewed as part of this research commented on the noticeable shift in the dominant buyers within their sectors: in the past they dealt with a smaller group of more traditional collectors with a high degree of connoisseurship, whereas they now also interact with a new generation of ‘global shoppers’ with a lot of money, not as much specialist knowledge and with different motivations for buying art including investment, prestige, fashion and nationalism………It is worth noting that other parts of the trade report that they have been virtually unaffected by these new buyers.
“With some contraction in global wealth therefore, it could be argued that lower incomes or less discretionary income (the income that remains after essentials are paid for) will lead to lower consumption of luxury goods.
“On the other hand, in the current environment, there is also an important ‘substitution effect’ present for investors, which may enable the art market to resist some of the effects of the global financial downturn……investors may substitute away from poorly performing stock markets and invest more in art or simply invest in art to maintain a more balanced portfolio of assets.
“While sales of contemporary art appear to have felt the effects of the economic downturn, those in other sectors of the art market have shown continued strength. Old Master paintings, for example, demonstrated particular buoyancy in the major auction houses in December……Record sales have occurred in different decorative art sectors. On December 10th at Christie’s London jewelry sale, a world record price was achieved for a diamond (and for any jewel) sold at auction.
“Whatever happens, one established fact is that the art trade is now taking place in a much more global marketplace in terms of both buyers and sellers…..The more traditional competition between markets such as London and New York is now being replaced by global competition.
“It seems likely that the appearance of new collectors from the emerging economies will protect the art market to some extent from the downward pressure it would have been subject to had it been only dependant on European and US economies. Their influence has therefore made the art market less vulnerable to recession than it would otherwise have been. If this is the case, it also seems likely that new centres such as Hong Kong and Dubai will remain and grow in importance as competitors to London and New York as centres for the art trade.”
Copies of the report at €20 each excluding postage can be ordered through the TEFAF website www.tefaf.com under Shop.