Tuesday, June 25, 2013

Global liquidity and art prices

Specialists and experts in the domain of international art rightfully observe what’s driving the market globally is that certain people have a lot of liquidity and are looking for places to put it.

Renowned art columnist Agustino Fontevecchia mentions of ‘New era' for global art markets, referring to the recent Contemporary Sale of Christie's that witnessed extremely aggressive bidding from potential buyers. The much-awaited event witnessed good demand for several masterpieces. ‘Number 19’ by Jackson Pollock fetched over $58 million (including fees) achieving a world auction record for the artist. Along with three auctions of contemporary art, comprising Leonardo Di Caprio’s ‘Eleventh Hour’ sale, the spring week sales figure of Sotheby’s climbed to an impressive $638.6 million.

Among ostensible investment avenues of ‘passion’, fine art is the one that has appreciated by almost 200 percent in the past decade or so, suggests the Luxury Investment Index of Knight Frank. The same is calculated on basis of the weighted performance of different indices for total nine classes of collectables, comprising fine art, classic cars, coins, Chinese ceramics, furniture, jewelry, watches, stamps, and fine wine. Investors are clearly taking a much closer look at all these real assets going beyond their emotional and aesthetic values.

Fontevecchia cautions to state: “Art, along with real estate and other alternative investments, present a risky opportunity. While prices have risen exponentially, several pieces by top artists including Franz Kline and Jeff Koons failed to find buyers. At the same time, thin liquidity means prominent collectors with deep pockets, including the Mugrabis, Nahmads and megadealers like Larry Gagosian auction, can steer the market.”

To sum it up, venturing into the segment of fine art & collectables will demand immense caution as well as specialized advice from experienced experts in the field. You might love a piece at the first sight but the broader marketplace might not! The better idea would be looking at it both as a choice of passion and as an investment. What should come first and what will come later, is anybody's conjecture…

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