Wednesday, June 26, 2013

China’s pre-eminence in global art market

“What’s changing is the subtle investment angle perhaps,” a recent essay by the FT, UK columnist, Mariana Lemann quotes Knight Frank’s Wealth Report editor, Andrew Shirley, as saying, “Previously, people would like to collect so as to possess beautiful things and have the best possible collection. Traditional investments, however, have lost much of their intrinsic value and that the earlier neglected investments of passion are becoming attractive.”

The global art market’s sheer size makes it appear large and liquid in nature. It totaled nearly $61 bn in 2011 - estimated Clare McAndrew of Arts Economics, but it can still get topsy-turvy. The touch of allure carries its own high risks. “Still there’ve been several new buyers who are coming into the art market,” New York-based art expert and advisor, Mary Hoeveler, points out: “What apparently comes with that, sadly, is some amount of speculation.

The Wall Street sure takes notice; people enter the market solely as investing.” Contemporary art tends to go in and out of public favor, cautions another expert. “When you're dealing with popular contemporary artists, keep in mind the fact that their career and popularity graph can change rapidly, and so also their work. Still, market appreciation is not the primary motivation of investors or it shouldn't be so, advisors state.

The Asian market, especially China, has emerged among the most upscale ones in the world, ahead of America and notches ahead of Europe. The performance of the Chinese market is bolstered by the ‘Chinese Dream’ that primarily relies on hugely successful businessmen, leaders of major groups and other investors who have flocked to the asset to diversify their investments.

Partly driven by speculation and specialized investment funds sans much control, there is an influx of capital to the art market. For now, the power of auction houses in China is derived from their privileged positions owing to government support and monopoly situations. While the local Hong Kong market is highly dynamic, its power is mainly being fueled by the vitality of the city’s growing non-auction Contemporary art sector.

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