The indicator of confidence in the market for contemporary art Tactic. Part 1
ARTinvestment.RU   21 мая 2020

One of the leading international analysts released a report on the first half of art-рынка in the period pandemiya

After analysis of the market of the artist under the pseudonym KAWS, which dismantled the AI here and here, the British company ArtTactic has released the long-awaited report Contemporary Art Market Confidence Report. The report title can be translated as "the Indicator of confidence in the market for contemporary art" — by analogy with the global report, "consumer confidence Indicator", which in 1967 has been published American analytical company The Conference Board.

ArtTactic began to explore the confidence level of professionals to the art market in 2005 and to date has released 32 full semi-annual report. The methodology of the indicator are survey data 125 elected functionaries and insiders: collectors, auction houses, galleries and private dealers, art-консультантов, analysts and other professionals of the art market. It is worth noting the invariance of the questions asked since 2005 focus group for calculation of the indicators report, as well as the stability of respondents: about two thirds of the respondents participate in the survey for the last 15 years (which, given the stability of their businesses, says an adequate assessment of the current situation and a reasonable future prediction of the market).

the Main points of the report Contemporary Art Market Confidence Report is as follows.

Indicators of confidence in the market

the crisis caused by the pandemic Covid-19, reduced the credibility of the contemporary art market to the lowest level since the start of the survey in 2005. A recent study ArtTactic Art Market Confidence, conducted last week, reflects the darkness that struck the art market since the beginning of March this year: the value of the confidence indicator was 6.4, which is 85 % less than the previous survey in September 2019, which at that time already indicated the weakening confidence in the global art-рынке. (Cumulative sales at international auctions Christie's, Sotheby's and Phillips in 2019 in the amount decreased by 20 %. — AI.).

Received in may 200 year confidence index (6,4) —, the lowest rate since the start of the survey in may 2005, lower than the same indicator (11) during the financial crisis in November 2008. According to ArtTacic, this is a clear indication how serious can be the consequences for the market of contemporary art in short-term (6 months) and medium term (12 months) term. Since the beginning of March 2020 the global art-рынок experienced something similar cardiac arrest: fairs, biennials, festivals, auctions, exhibitions in galleries and museums have been cancelled or postponed to a later date this year. And although some of the trading platforms managed to translate online-режим, the volume of Internet-продаж significantly inferior to that of physical auctions Christie's, Sotheby's and Phillips in the first five months of the calendar year. For comparison: in 2019, the revenue from three major auction houses reached $4.2 billion in the period from 1 January to 19 may. In 2020, the physical sales Christie's, Sotheby's and Phillips totaled $354 million, and the volume of online-продаж, since March 14, was $174 million — approximately 87 % of total sales for the five months (considering the situation as a whole data Sotheby's that from the beginning, the growth of online-продаж auction house was 370 %, are perceived not so positive). Failureart-рынка to function properly during the crisis associated with the pandemic, showed its vulnerability and dependence on international events (international fairs) and seasonality (spring and autumn auction of art of the highest price category). However, it is uncertain when the art market will be back to work full time, and how it will differ from habitual to us before.

the Boom in art-рынке began to fade in 2019

In contrast to Clare McAndrew, Art Basel, who found in the results 2019 signs of growth (largely because from the art-ярмарок and the non-public market looked optimistic), ArtTactic says it bluntly: the current crisis comes at a particularly unstable time, and art-рынок at the end of last year clearly showed signs of fatigue. In 2019 auction sale on the global art market has fallen by 20 %: the market of postwar and contemporary art have overcome this negative trend and managed to achieve a slight increase auction sales by 4.6 % (mainly due to trading in Hong Kong, where the evening sales of contemporary art rose by 66.6 %), while the same indicators trading in new-Йорке and London fell by 7.4 % and 27.4 %, respectively. In the period from February 2019 to September 2019, the ArtTactic confidence indicator fell by 29 %: experts art-рынка expressed concern about the rising price speculation and opportunistic behavior of large players, and also political turbulence, associated with the "Brexton", 5-й anti money laundering Directive of the EU and a trade war between the US and China. However, no one could have predicted the pandemic that to date has deprived the three major European auction house — Sotheby's, Christie's and Phillips — auction sales in the amount of approximately $3.7 billion (the aggregate data are averages estimate the declared items until mid-may 2020, taking into account the average number of unsold lots).

the Level of risk —, the highest since November 2008

ArtTactic risk Indicator (parameter showing the dependence of the pricing of art from external objective factors) over the past six months rose 15 % — to the value of 8.1 out of 10, which is the second highest figure in the history since 2005. The highest value of — 8.3 from 10 —, it was observed in November 2008 during the financial crisis caused by the collapse of the mortgage market. The current value is much above the average of the last six years (6.5 out of 10) and clearly reflects the concern of the experts of the art-рынка the impact of Covid-19 on the market for contemporary art. While the risk indicator is close to historic highs, the speculative indicator (parameter showing the degree of artificial influence on the pricing of art-рынка) from September 2019 fell by 6.3 % and is currently at 6.8 out of 10, slightly above 10-летнего average value of 6.6 out of 10. Since most traditional sellers cut off from the market or restricted in online sales, as well as in connection with substantial uncertainty, speculators may seek options for fast transactions, exerting further pressure on the cost of the art objects with the aim of reducing.

Prospects for market recovery: the U or V

the Forecast for the next 6 months showsthe experts art-рынка humbled: the current crisis will not have V-образную shape (sharp increase in the market after the recession, bypassing the stage of depression), but rather U-образную ("classic" version with the recession, depression and gradual recovery of all market indices). Thus, according to 48% of the respondents, the contemporary art market in the segment of established artists will decline in the next 6 months, while 47 % of respondents believe that the contemporary art market will remain stable during this period. Only 6% of the functionaries of the market believe that the market for six months will be able to recover.

12-месячный the forecast shows more optimism:

• 20 % respondents believe that the art market will begin to recover in the next year;
• 42 % of the experts believe that the art market will continue to fall;
• 38 % of respondents expressed the view that in the next 12 months it will remain stable compared to may 2020.

the Prospects for the young generation of contemporary artists who are "on the rise" (in other words, experiencing a period of rapid growth of popularity and price indices), over the next 6 months, according to respondents, similar to the perspectives of established artists:

• 54 % experts believe that a pandemic will have a negative impact on the market of young artists in the next 6 months;
• 45 % of the experts believe that the market will remain stable;
• 1 % experts in the next 6 months to see a market of young artists growth opportunities.

the Beginning of the return of the global art market to previous levels is expected within the next 12 months, however, the views of relatively young artists in the annual term of the respondents report less optimistic:

• only 15 % of the experts expect the market of young artists recover after the crisis during the year;
• 48 % of respondents believe that the market basically not affected;
• 37 % of respondents believe the effects of the pandemic will continue to have a negative impact on the development of young artists over the next 12 months.

table. The confidence indicator for the contemporary art market, 2005-2020 (100 — absolute trust and confidence in the future growth prospects 0 — total lack of confidence)

Review AI: the following table we have not limited data ArtTactic, and put them on the sales of the art market since 2005. The average discrepancy between the predictions of art-сообщества and real figures in subsequent seasons was 21 % — in one direction or another. The quality of the predictions improves significantly, since 2010: over the last decade, the discrepancy amounted to only 10.9 %. In other words, after speculation with contemporary art in 2006-2007, the 2008 crisis and subsequent recovery art-рынка, and with the advent of the thorough report from Deloitte, ArtTactic, TEFAF, ArtPrice and Art Basel & UBS functionaries of the market have become much more adequately assess the situation. It is interesting that in the case of negative forecasts and increased concerns in times of crisis (when the confidence indicator had a value less than 50) the art market has dipped a lot less than he was worried: the average totals were 22% better than predicted gloomy-minded visionaries. In other words, if you try even now to predict the market volume in 2020 on the basis of one of the ArtTactic confidence indicator, it will be approximately $38 billion — where-то between the indicators of crisis for art in 2009 ($39.5 billion) and 2005 ($36 billion), when the primary role of contemporary art at the art-рынке we didn't.

In the second part of the material in explanation of the ArtTactic report, we will tell about the investment prospects of contemporary art, according to market players, as well as on the sales trends of the last half-year among the recognized and emerging artists. And there let us sum it up.

Denys Belkevych, AI