Tuesday, April 27, 2010

Beaten-down contemporary art market sees brighter days

The art market badly fell with the onset of the financial crisis. However, fund managers, collectors, auctioneers and experts are confident that it’s on the cusp of solid recovery.

Castlestone Management, specializing in alternative assets for clients worldwide, is anticipating a 40 percent increase in prices over the next couple of years. Citing a 70 percent increase in equities since late 2008, the fund manager added that equities was a key indicator for analyzing the art markets trends.

The art fund house compared the equity market to gold that has gone up by 50 percent since late 2008. Like art, it’s un-leveraged, irreplaceable real asset investors turn to during hard economic times, it concluded. Analyzing the broader market, a Reuters news report notes:
“Less than two years after a long-lived art boom came to an end with lower prices and a decreased supply, bidders have returned to salesrooms, prices are mostly ticking up and records are being set once again. Strong results at the impressionist, modern & contemporary sales in London bear out the optimism. More recently, the HK sales set records and exceeded estimates, driven in part by Asian buyers. "
Such solid results obviously boost confidence in the art world, thus encouraging owners of quality works to re-enter the art market. The availability of rare or top-quality fresh-to-the-market pieces pushes up bidding. It, in turn drives up prices. Conversely, when sellers tend to hold back, often mid-range works flood the market. They draw little interest and less bidding. The result was the drop-off witnessed in 2008 and 2009.

Sotheby's rating has already been upgraded to ‘outperform’ from ‘neutral’, pointing to a clear rebound in demand for collectible art. In fact, Sotheby's managed to exceed analysts' expectations with a good 31 percent rise in fourth-quarter revenue. Optimism is well-founded with world-renowned, hugely valuable and prestigious collections ready to hit the block in NY in May.

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