Artprice Annual report on trends in the market of contemporary art

[LCR]

As you know, now in Paris is FIAS - International Fair of Contemporary Art. Yesterday, at the entrance handing out the annual report on the status Artprice mezhdunarodzhnogo art market. Here is the translation department, which I think might be interested in the local professionals.

contemporary art market 2008/2009
Recent trends

In the previous market Gide Contemporary Art, published in October 2008, drew attention to the change in cartography market: China's third largest market after the United States and Great Britain, far ahead of France. In the Guide also highlighted the incredible dynamism of the markets of emerging countries, ie China, India and the Middle East.

In the 2007/2008 contemporary art market seemed to be insensitive to the economic pessimism caused by the financial crisis. However, in October 2008 that the euphoria came to an end.

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Art Market in the face krisiza: description of the situation

The contemporary art market (we refer to him artists born after 1945), staggered after seven years of steady price increases. Indeed, recall that the emergence of new buyers from Asia, Russia and the Middle East, as well as increasing the number of speculators and investment funds, attracted vozmozhnoostyu get a quick profit, immediately led to the hypertrophy of the segment of contemporary art. One record replaces another, between January 2002 and January 2008, prices for contemporary art has increased by 85%and the number of lots that appear in the directories of trades has increased dramatically, particularly in the market the most expensive works of art. Proportion of produce sold on the market of contemporary art at a price of more than 100000 euro, increased between 2005 and 2008. from 8%to 19,3%!
The number of contemporary works of art sold for more than a million, has increased over the period by 620%: between July 2005 and June 2006 to such works was 18 and they belonged to the seven authors. Two years later, 25 artists have exceeded this threshold in 120 times! This year, between July 2008 and June 2009, 72 works of 19 contemporary artists were sold at auction at a price exceeding one million euros.

The most speculative and volatile sector of the art market first suffered from the degradation of the global economy and the decline of European and American stock exchanges.

Following the achievement in January 2008 g.vershiny speculative bubble followed by a vertical drop in the price: -27.1%for 2008 and -4.4%in the first semester of 2009, this sharp correction in a few months, eliminated the two years of speculation and lowered prices to the level in 2006 should be noted that this correction - the most significant of all known, it was caused by a strong reduction in demand in the sector's most expensive works of art.

Figure 1: Evolution of prices for works of modern art 1998 - June 2009 (base: 100 euros in January 1998)


This decline in demand is a direct consequence of losing money on the stock markets and a climate of distrust in the economy. In early October 2008 index of AMCI (Art Market Confidence Index=previzionny barometer Artprice, allows real-time measure the confidence of the market actors), like the world stock market indices, suddenly collapsed at -13%.

Between October 2008 and March 2009 had recently acquired by major state of Russia, India and Turkey is literally melting away (according to the first quarter of 2009 on a global scale during this period have disappeared over 300 billionaires), banks have stopped issuing loans to collectors, designed to purchase proizvedeney art, giant UBS (Union des Banques Suisses = one of the largest Swiss bank) abolished the Division of consulting in the field of buying and selling works of art, private donations to the arts in the United States had been depleted, causing massive job losses in the most prestigious museums (Art Institute Detroit Museum of Contemporary Art in Los Angeles fired 20%of its staff). In the U.S., a wave of layoffs, which affected all parts of the world of art - from museums to investment funds. Do not avoid it, of course, and the big picture. Already in 2008 removed many of the world's largest demonstrations of art: Art Cologne Mallorca, Art Frankfurt, DC Düsseldorf Contemporary. In 2009, the bloodshed continued: Scope London, Scope Hamptons, Photo London, Basel Red Dot Art Fair, Grossvenor House Art & Antic Fair, the Paris Biennale des Antiquaires. Artparis Abu Dhabi - the first international demonstration of the art in the Arab Emirates - took place only twice, in 2007 and 2008. But in November 2009, held the first edition of the other fairs - Abu Dhabi Art.

This climate crisis is not spared and auction houses. In the second semester of 2008, the number of unsold lots increased dramatically, from 33%in the first semester of 2007 to 47%. With regard to the sector of Modern Art, the first victims of the crisis was the latest developed countries - Hong Kong, Singapore, Dubai. In Hong Kong in October 2007, Sotheby's unsold lots were less than 10%, and in October 2008 - 29%. This, of course, affected the financial results. Appeared fear that potential customers to "freeze" their purchases will no longer come to the auction that will not fail to lead to a collapse of emerging markets ... shortly before the November sessions of the auction houses have an urgent need to convince sellers to revise their reserve prices downwards.

Chart 2: Revenue from the sale of contemporary art: the growth of the semester

Despite all these efforts, and although the sales results by Gerhard Richter and Jean-Michel Basquiat at Christie's auction of 11 and 12 November 2008 (more than 10 million euros) and Yves Klein at Sotheby's (14,8 million euros) were more than satisfactory , compared with an expected turnover of auction houses in the sector of modern art was catastrophic. Sotheby's and Christie's, suggesting these two days of sessions to achieve sales of 430 million dollars, had to be satisfied with 204 million dollars. The same session in November 2007 led to sales of 399 million dollars, 20%above the bottom of a preliminary assessment of the proposed works.

In 2009, the auction houses were forced to change its strategy and reduce the assessment to adjust to the new financial climate and the more moderate demand.

The new strategy auction houses

In 2008 g.eyforiyu from the mad rise in prices for contemporary art has replaced the general state of nervousness on the background of memories of the previous crisis, the art market, in which between 1990 and 1992. prices fell by -44%(global index). New period of continuous growth in prices only began in 1995

Figure 3: Contemporary Art 2008/2009 - the proportion of lots sold, depending on the price range

Major auction houses have responded with lightning speed to prevent the risk of "freezing" of trades. To minimize the risk of loss, they reduced the number of lots reduced the reserve prices (in December 2008, Christie's International has announced no less than -10%reduction), and preliminary estimates sold, adapted to the fact that buyers have come to prefer the less expensive works of art, and put End attractive to sellers offers guaranteed prices, except for the really outstanding, the rarest works. In parallel, to minimize the costs they had restrukturatsiyu enterprises. However, these policy changes have not helped to avoid any reduction of staff or closing a branch Philips de Pury in Cologne or denying Christie's International in August 2009 from the project to create an investment fund specialized in the art.

Chart 4: Sales of contemporary art: the 10 largest auction houses, 2008/2009 (Place - Turnover of sales - Auction House)

In the new context of deep crisis of the system to provide guarantees to sellers has been extremely dangerous. Between November 2007 and November 2008, the Sotheby's and Christie's guarantee about half the price of products offered at the auction of postwar and contemporary art, which allows them to submit their directories in the most significant works of art. Recall that the guarantee is that the amount owed to the owner to sell a, is fixed in advance and paid him, whatever the result of trades. If the product remains unsold, the auction house agrees to buy it at a price agreed-upon in advance with the owner. The attractiveness of this system of guarantees for owners of works of art auction houses allowed to enrich their catalogs bidding absolute masterpiece, which in turn played a major role in achieving numerous records at the auction and, accordingly, a substantial increase in their revenues. For example, it guarantees a minimum selling price of David Rockefeller, Sotheby's acquired a Mark Rothko's White Center sold May 15, 2007 in New York for 65 million dollars.

New strategies, adapted to the new economic givens have been effective: in the first semester of 2009 the share of unsold lots decreased by -7%. Thus, the losses were partially reduced, but this share is still extremely high compared with previous years: between July 2008 and June 2009 there were 44,7%of unsold lots, whereas in the previous five years, their number is not exceeded 34%.

Figure 5: 10 highest bidding results 2008/2009 Contemporary Art (artists born after 1945 - on sale from 1 July 2008 to 30 June 2009. Painter - Selling price in Euro - Price with a hammer - Date of trades)

In addition, the auction house is not enough forks lowered the preliminary assessment, in particular, the sector's most expensive works of art. Result: in 2008/2009. 65%of modern art works were sold below the bottom of the provisional estimates (in previous years below the lower estimate takes no more than half of the lots). Consequently, during the crisis of modern art is becoming more accessible: the proportion of works sold below 5000 euros, increased by about 20%(dosignuv between July 2007 and June 2008 69%).

Due to the increasing number of unsold lots on one side and falling prices on the other auction houses, traffic between the first semester of 2008 and the first semester of 2009 have fallen significantly: zaregistrirovannyyoe reducing revenue for this period is approximately -66.8%. But sdeluet moderate catastrophism generated by these figures: we recall that before the crisis gripped the art market, auction houses margin reached incredible heights. Between July 2002 and June 2003, results of sales of contemporary art has reached 75.4 million euro, and later, between July 2007 and June 2008 - 900 million euros! Thus, the result of 570 million euros, registered for 2008/iyun period July 2009 to exceed 87%of the volume of transactions during 2005/2006.

Figure 6: 50 highest bidding results in 2008 (Nationality - Artist - The sale price)

[SergeiSK]

However, in the Top-50 a lot of Chinese ...

[Vladimir]

19-th room with an interesting nationality TRU, Evgeny Semenov. Much more interesting to the Chinese.

[Кирилл Сызранский]

Сообщение от Vladimir

19-th room with interesting nationality TRU

And what is that TRU is?

[AlexanderG]

Trinidad und Tobago?: D

[Кирилл Сызранский]

Сообщение от AlexanderG

Trinidad und Tobago?

They like the TT.

[AlexanderG]

Kirill, eto tipa shutka. Tr Und, prosto zazvuchalo.

[Кирилл Сызранский]

Сообщение от AlexanderG

Kirill, eto tipa shutka.

So I'm in Trinidad he first thought, too. : D
Yes, offense and Tobago from Trinidad for two whole letters, from the conjunction-even has one, but an entire half of the single ...

[ранжер]

I might add that prices are not the works of Russian authors (of all - and modern, and not very) on the French market from September 2008 to March 2009 fell by about 30%, and from September 2008 to September 2009 - 60%.

[AlexanderG]

Vot i ia prizyvaiu kollektsionirovat ', a ne investirovat'.