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The art market 2020-2021: forecast from Bank of America
ARTinvestment.RU   30 июня 2020

One of the largest banks in the United States shared their vision of the future of art-рынка

In the last week of June, Bank of America, not only having a corporate art collection, but also providing services of art-банкинга for their clients, released own mini-исследование. In simple and accessible form of Bank analysts divided the current crisis in phase and made a prediction of the behavior of buyers and sellers in each of them. The main results of the work we offer AI readers with our review:

As is known, the indices of the art market lagging behind the indicators of the stock market and the global economy as a whole: the fall and rise on it come late in 6-12 months. Over the past 30 years the art-рынок has experienced three major shocks: the recession of 1990-1991, the collapse in the technology market (the so-called "dot com bubble". — AI.) 2001, combined with the terrorist attack of September 11 and the financial crisis of 2008-2009. The recovery of the art market after the last two crises had a V-образную form (rapid growth after the rapid decline. — AI.), while the effects of the recession of 1990 has been felt for over 10 years and the recovery was smooth, U-образным. Analysts at Bank of America expect art-рынок after COVID-19 will avoid the steep collapse and continue the development, consisting of three phases, named "output", "adjustment" and "recovery".

Output (currently — autumn 2020)

as quarantine restrictions weaken, begin movement to local economies and the world again restarts the global business-взаимодействие, Bank of America expects a proposal on the art market (the quantity and quality of work that sellers offer for sale. — AI.) will be limited until then, until it becomes more economic clarity. At this stage we should not expect big discounts from the sellers: they are interested in stabilizing the market by keeping average prices for artists. During the recent crisis, from 2008 to 2009, sales of objects of art fell by 40 %. This was due not to decline in price dynamics, and the fact that the sellers (primarily of the auction house. — AI.) refused to take on selling art at a discount, satisfied owners, and thereby deprive customers of the ability to make profitable acquisitions. This approach will continue during the summer of 2020, but to a desire to limit the offer will be added other factors: logistics companies are waiting for clarity with the international transportation of art, auction house, art-ярмарки and galleries are moving to online-каналы sales to ensure a minimum income. The few works which will go on public sale, most likely, will meet surprisingly strong demand, since the monetary incentive-кредитная policy in developed countries, and bored, quarantined, international collectors continue to buy. Summer auctions are likely to have a limited supply of previously agreed guarantees and stable demand: the amount it needs to maintain stable price level.

Adjustment (fall 2020 — spring 2021)

it is Expected that since the fall of the number of papers coming onto the market, dramatically will increase (including from-за activity of small and medium sellers that are not included in the number of controllers, and act erratically. — AI.) and in some segments will outpace demand, — on a short distance it will lead to lower prices. In need of cash flow of the gallery, concerned about the decline in the liquidity of private dealers and shippers, which will be psychologically forced to accept lower prices, will negatively affect the art market. Demand primarily depends on the mood collectors will ultimately determine medical restrictions, level of stock market liquidity and purchases. Analysts expect the pricing during this period will be slightly calibrated: the cost of rare works and masterpieces will remain stable, but the price dynamics of the works of the middle level and the primary market for contemporary art is likely to be negative. In short, Phase 2 — is time to find a quality job and making profitable deals.

Recovery (spring 2021 and further)

Deflationary (that is, decreasing the average level of prices. — AI.) the period in the art market should be completed with the strengthening of private capital, the normalization of the cycle of corporate profits and the recovery of the overall economic sentiment. With the beginning of a new period of Economics of the world countries face inflation as a financial response to the pandemic. This process should once again lead the capital on the art-рынок, as the proposals from the perspective of art by nature limited, and because inflation is not affected by — in particular, the Federal reserve Fund cannot reprint of Picasso as US dollars. The primary market for young contemporary artists lag behind in growth from the better known and investment-привлекательных authors. Museums have for some time to tighten their belts and only dream about the collections. Galleries average for the full recovery will take years, some might be closed. Well-developed top-галереи on this background will be stronger, and the number of art-ярмарок reduced. Bank of America predicts the development of virtual marketplaces, online-аукционов and digital channels of communication and dialogue with customers, but at the end of Phase-3 art-рынок expects "digital redistribution": the part of collectors will return to social and "tactile" shopping in physical spaces, while others remain followers online-сделок and communications.

Bank of America identified three main trends of the current crisis on the art-рынке.

1. The system of art-рынка quickly adapts

the Infrastructure of the art market is in a sharp reduction in the number of players. Galleries, auction houses and museums have reduced or laid off employees today to decide how to work in a new environment. It is expected as a new wave of consolidation efforts (enterprises of small players in the group or merge with the top-функционерами market. — AI.), and closing business — especially for galleries whose income lost up to 80 % (and those in the world today most. — AI.). According to the American Alliance of museums (AAM), over 30% of museums in the United States will not have the resources to open. Bank of America expects the most rapid and powerful in the history of art-рынка the innovation cycle interms of changing business-моделей, acquisition and adaptation of modern technologies. In the future, this means more accessible, transparent, and the impersonal and a bit dull, the virtual art world.

2. Change of strategies of auction houses

In the past year, three auction house — Hindman, Bonhams and Sotheby's — have changed their owners. The battle for market share has led to a revision of the auction commissions, and social distancing in 2020 accelerated the transition auction houses to new proposals (for example, unification art objects of different eras within a single trade. — AI.) and digital sales channels. It is expected that the model is a "hybrid auction" (when the auctioneer is running in the hall, as the bidders are watching them online. — AI.) will be widely used in the foreseeable future. Followed by the increase in the number of multi-day auctions with the open form of offers of prices, lightning-fast sales and lots sold by auctions in private transactions. Will increase the role of business-альянсов at public auction (a collaboration of the Guardian and Christie's in China) and private sector (draft Sotheby's Gallery Network). From now on the customers of large auctions have the opportunity to bet not only on objects of art and luxury, but on collectible items from the sphere of fashion and design, and in the future — even exhibited in the form of lots of financial and other art-услуги.

3. Take-off and market correction technology

Social distancing accelerated the transition of the art world to digital sales channels and communications. The first high-profile project 2020 we saw in March, when Art Basel Hong Kong launched a completely virtual fair (we do, however, believe that it all started with applications Acute Art with the works of KAWS. — AI.). It is expected that all remaining afloat art-ярмарок will be a virtual gallery sales. The survey conducted by Bank of America are among the galleries and private dealers, has shown that a virtual sales provide an average of 25 % sales, which in recent years has occurred on the physical fairs (and they, in turn, accounted for 50 % of all gallery sales during the year. — AI.). The new format provides greater price transparency, and means that collectors will be easier to make informed effective decisions about purchases. Recent online-аукционы and fair digital art turned out to be surprisingly effective: up to 40 % of the auction bids received from other bidders and recorded a high level of sales. May we never see such format as the day the auction (sale of art in the lower and middle price categories, which are finally located on the Internet. — AI.). In the result, it is expected that the art market will move to a hybrid world of digital technology, personal data and live participation as soon as possible.

table 1. The behavior of the art market in the three main crisis phases 2000-2021 years.

Category arts / Period

the Release from quarantine
Summer 2020 — autumn 2020

Adjustment
Autumn 2020 — spring 2021

Recovery
Spring 2021 and further

Masterpieces

(the primary and secondary market of unique works)

strong demand met with reluctance to sell / make work to sell, which led tolow trading volumes but stable prices

lower interest rates and high liquidity art "blue chips" will keep prices stable by increasing the volume of trades

Market masterpieces will remain untouched

Recognized artists

(the history of auction sales and / or major gallery)

Surprisingly high demand for online-аукционах, preserving stable prices thanks to the constant audience

the Excess supply of-за a fall in purchasing power will cause a drop in prices by 10-30 %, because buyers expect discounts

Balance between supply and demand will lead to lower average prices for 10-15 %

The primary market (contemporary art without a history of auction sales)

Very low liquidity, a shift towards other forms of art and sales techniques (digital art, fractional ownership)

the Excess supply of-за the fall in purchasing power and the elimination / consolidation of the gallery will lead to a drop in prices 20-50 %

Most of the galleries and their artists have to start again with lower prices, some careers and businesses will never recover

Report Bank of America notes the experience of the financial crisis of 2008-2009, which can help with forecasts and decisions in the current situation. Sales of art and Antiques fell from $62 billion in 2008 to $39.5 billion in 2009, but by 2010 returned to pre-crisis levels. A return to previous levels was caused by stimulus measures fiscal and monetary policy (particularly, tax and credit incentives offered by States and other instruments of economic stabilization. — AI.), similar to what we see in 2020. Bank of America expects that the global economy and art-рынок in the period 2020-2021 years will go down the same path. The volume the art market in the current year is projected in the report at $34 billion.

the report contains, and four of the Council collectors, but they have one problem — to advertise the Bank's services related to the art. They are focused on US law and the use of the readers of the CIS countries is minimal. Tips include: keep the arts in crisis to yourself, at least use it as a security Deposit (hereinafter — through Bank of America. — AI.)@the semicolon in case of withdrawal of the asset for auction, use good art-консалтингом to explore the risks and determine the most appropriate auction house and country, subject to logistics; use temporary changes in tax rates of their countries to plan for inheritance today; do not forget about charity, which in some of the world's legislation will help to reduce taxation, including regularly watch for new laws that provide certain benefits during a pandemic.

Review AI: first of all, the report is based on the assumption that the global quarantine will come to naught by the fall of 2020, and will never happen again. However, with all the conventions of forecasts in relation to the time was the first time anyone-то authoritative structured current hybrid (pandemic pluseconomic recession) crisis, and also described the behavior of the three major groups of art in terms of supply and demand. Unlike the authors of most other materials on the topic of the crisis, Bank of America tries to flirt with the market players, and says it bluntly: these will go and you — remain. Slipping distrust of modern technology is explained simply: in-первых, among the Bank's clients related to art, dominated by collectors and dealers, for which only the usual personal, not virtual interaction with him, in-вторых, Yes, massive dominance of virtual spaces and artists will go, will remain strong. Forecast of the volume the art market in 2020 involves a return to the physical fairs and auctions in the fall. It's nice that the figure proposed by AI in one of the previous materials ($38 billion to cancel Art Basel in Basel), in General, agree with the rating of Bank of America ($34 billion, after the cancellation). For completeness of perception of the material also recommend you to return to our article about art-рынке in crisis — the first, the second and third parts.

And perhaps most importantly: a study of Bank of America answered the most important question raised by Noah Horowitz in webinar Art Basel: what form will have the current crisis, V or U? Then the question remained unanswered, and today we finally know: it will be a U. Oh, is now alive!



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