It seems as though the stability that has been achieved since the last art market crash in 2008, may soon cease. According to an article about the art market, by London writer Mark Collett-White, many market leaders believe that the recovery from the 2009 slump may be short-lived, while other analysts claim that it is likely that the influx of money from Chinese investors will enhance the risk of a rapid increase in money in the art market followed by a swift market plummet.
According to analysts, the increase in China’s class of super wealthy people, could lead to “speculative money [that] will push art prices beyond their-long term, intrinsic art historic value” leading to another crash of the art market. The rapid addition of money to the emerging markets and established Western markets will likely cause the art market to “experience mini-booms and busts more frequently than in the past as spectators move in and out of different markets trying to cash in on the latest trend”. This fad of investing in what is “hot” and quickly abandoning it once it is out of season could lead to quite a bust in the market. The start of this new era in which art is viewed as a financial asset instead of a collectable item has started in 2011. One of those individuals who is optimistic about the future of the market is Jussi Pyikkanen, the president of Christie’s Europe, who proclaims his confidence in the strength of the market and that it will be able to not only sustain itself but also has potential room for growth.
From 2008 to 2009, the number of clients who registered for a sale at the world’s largest auction house rose by 23 percent. This large increase in the number of buyers is what gives Pyikkanen the confidence in the art market future. Other analysts say “as long as prices remain high, experts argue, top quality works will continue to come on the market, creating a cycle that is vital to the market’s future expansion”. Interestingly, both Sotheby’s and Christie’s both had an increase in sales, with Christie’s posting record annual sales of $5 billion in 2010, up 53% since 2009. Sotheby’s boasted an auction total of $4.3 billion in 2010, an increase from the auction total of $2.3 billion in 2009.
Only time will be able to assess if the art market will be able to maintain its strength and achieve more growth since 2008. Opinions of critics vary, with some attesting to the fact that the market will be able to continue its current success, while others claim that the rapid emergence of new investors will eventually lead to a rapid bust in the market. Thinking optimistically, I believe the art market will be able to sustain its current strength and that there will be greater investments and a stronger market.
Reference:
http://www.reuters.com/article/2011/02/03/us-market-preview-idUSTRE7124B720110203