Art Market In 2014: Late Predictions For The Year Ahead

It is again the time of year to make predictions, and predictably, everyone is making them, no less so in the artworld: what will 2014 bring?  Will the numbers keep going up? Will the primary market open wider? What about China and the Internet and all those other trends trend-watchers watch?

It’s tempting, of course, to ask experts if they foresee surprises, and it’s a question people often ask, though I never quite get why: if someone can foresee them, they’ll hardly be a surprise. But many, including me, anticipate some changes, both in how art is being bought and sold in 2014, and where.

Personally, I suspect we’ll start seeing changes in what is sold, as well, as more and more private dealers begin moving away from secondary market sales to promote and sell artists directly. The headache of brokering secondary market works has, I’ve heard from several private dealer friends, just become overwhelming, and the returns don’t make it worthwhile: $20,000 on a $2 million sale here, $3000 on a $50,000 sale there, all of which involve viewings, condition reports, multiple negotiations, and the potential risk, especially for works by late artists, that the piece will prove to be a fake. (Not a few have learned a lesson from the Knoedler scandal.) By contrast, one can present a collector with work by a lesser-known and more affordable artist, and take 40-50 percent.

But it’s not just about the money. Many private dealers came out of the gallery world and miss the contact they once had with artists, and the fulfillment of supporting and promoting work that they believe in. Directly representing younger talent to a stable of established clients allows them to continue doing just that, without the expense (and time commitment) of a gallery. Everyone wins.

Even so, the secondary market, we all know, is where the big money is, more and more of it circulating between the two big auction houses. But as they continue their global command of the market, they are also now particularly  keeping an eye on developing markets, especially in China and the Middle East.  2013 saw the opening of Sothebys’ Beijing, and the aborted plans for a Sotheby’s/TEFAF partnership in Hong Kong. Sotheby’s also witnessed great success in its Doha sale as did Christie’s in Dubai . Will they reap their rewards for this this year?

Maybe; but auction houses hold a different place than dealers do in these regions, according to those I’ve spoken to.  Sotheby’s huge investment in Beijing suggests confidence in future growth and opportunity there – but are they right?

Clayton Press of Linn-Press Art Advisory Services isn’t optimistic,  though he does observe, in Sotheby’s favor, that “The majority of activity will still occur at auction, which (as we understand it) the Chinese believe is more transparent than galleries.”

Nonetheless, both Press and Fabian Bocart, President of the Brussels-based Tutela Capital, which provides art market data for investment purposes, are wary.  “People focus on Chinese art market and what they miss is that Chinese art market  equals Chinese monetary policy,” Bocart says. “If the market went so well this last decade, it’s not because Chinese collectors suddenly became fond of art, it’s because they’ve become rich thanks to easy money. “

Consequently, he says, “If one has a Chinese art collection and made millions out of it until now, one can go and thank Mr. Zhou Xiaochuan, the governor of the People’s Bank of China.”  Still, he adds (as only an economist could), “I think that if growth is kept under control in China and that monetary aggregates keep expanding at a sustained pace, we should see a continuing growth in prices of Chinese contemporary of around five to ten percent – but with a very large deviation per artist.  On the other hand, if the Chinese central bank decides to cool down inflation over the year, I would avoid a large basket of contemporary.”

Either way, the Chinese collectors, Press feels, are likely to remain “insular,” as he puts it,  “focusing on preserving Chinese patrimony first.”  Consequently, the number of what he calls  “genuine world class collectors of global contemporary art” will, he expects,  “remain small.”

These pictures, unfortunately, are made no prettier by recent cautions about the Chinese economy overall.

Meantime in Dubai, dealers and some Europeans who have invested heavily there in the past all tell me they’re losing confidence. One London-based dealer put it tersely: “It’s not happening.”  Others cite a loss of faith in business, struggling to be paid for works they’ve sold and, in some cases, even delivered.  True, art from the region continues to do well at auction in the UAE;  but the market for Western art has expanded little in the past few years, despite the relative success of the Doha sale. As  Clayton Press observed in an e-mail,

A few more collectors will undoubtedly emerge from the Gulf States and Middle East.  It is inevitable with the growth of wealth, and with the fashionability of art as a potential alternative investment and as upwardly socio-cultural mechanism.  But, when you look at luxe markets, you have to remember that a small number of people in all of these markets control a disproportionate amount of wealth.  Also, few collectors have longevity.  For many collectors, collecting is not a life-long passion.  Even prominent collectors often collect in spurts.  And then there are the cultural considerations.  The art collected in many places is “decorative,” “benign.”  So artists like Jeff Koons and Damien Hirst are generally well-suited to the “communal” tastes of the ultra wealthy.  Thank you, Elle Decor.

That this leaves us pretty much where we’ve been for decades  — with the US and Europe as the centers of art-making and art-collection – is not especially surprising, though it is perhaps a disappointment. I, for one, have held higher hopes for the Middle East, and find it distressing that art from the region seems to have largely stagnated. Edge of Arabia, a collective of Saudi artists I particularly admire, has the advantage of association with London based galleries; but I have yet to see any of the artists in the group find serious recognition within a global art context; either being exhibited at galleries that are not uniquely focused on Middle Eastern art or purchased at auction by major Western collectors. And that’s a shame, because some of them certainly should be. (I won’t go into the Abdulnasser Gharem vs Damien Hirst thing here).   On the other hand, with some few exceptions, most of the once-promising Iranian artists seem to be stuck re-hashing the same formulas, based, to be sure, on a political purpose as urgent now as it was when these artists first emerged on the Western scene; but one can’t help but wish they’d start exploring, pressing out a bit more, before their art begins to look more like political propaganda (even if it is in support of ideas I share with them deeply).

So what will be different in 2014?

Most noticeable of all will be the role of the Internet (and, according to Clayton Press, of social media.)  Every month seems to witness the start of yet another online art sales portal as a new generation seeks to displace the established models like Artnet, Art.sy, Paddle8, and others. (Who ever thought we’d be calling Paddle8 “old hat”?)  One major challenge, he predicts, will be “whether online retailers can remain exclusively focused on art, or whether they either diversify and develop other luxury product lines (such as design, jewelry, and fashion) using a 1stDibs model; and/or expand their geographic reach and market penetration beyond North America and Europe.  For many online retailers,” he notes, “diversification and globalization could be critical to business survival.” (I’ll be covering this subject in a forthcoming post.)

The overall picture, then, seems to be an upbeat one, with a booming market continuing to thrive, in part through growing interest in the primary market  (a development which may happily even suggest that the investment-only buyers of a few years ago are actually starting to enjoy art for its own sake. Or am I being overly optimistic?).   It will also be clearer than ever that the global market continues to hold anchor in the two big art centers – New York and London– and perhaps it’s time to recognize that fact once and for all.

Similarly, it seems that the artists who make the strongest works are the ones who have access to global art and art trends, wherever they happen to reside, and whose work forms a harmonious marriage between the global scene and their own — “think local, act global,” if you will.

As for those still focused largely on investment, Bocart assures that “generally speaking, we are now back to late 2008, early 2009 levels in contemporary art, and considering that equities have already reached new highs in 2013, we can only expect the contemporary art market to follow and keep on rallying.” He notes, however, that this is true really only of mid-priced works, from $25,000-500,000, observing that there’s been such stagnation in the area of art valued between $500,000-25 million that it might be best to sell – if you can. “The rate of return of upper market contemporary artworks is now dangerously close to zero percent,” he warns, “but again, nothing that can be compared to 2008.”

The upshot? With apologies to Carole King, http://www.sing365.com/music/lyric.nsf/Smackwater-Jack-lyrics-Carole-King/22E4047EB79821D748256DA6000F9BA2 it’s looking like on the whole, it ought to be a very good year for the art collector.

Views expressed on this blog, which is hosted on BlouinArtinfo.com but produced independently of it, do not necessarily reflect the views of BlouinArtinfo.com.