Actually, a correction in prices has started long time ago, but the huge amounts spent on the art of oriental buyers, supporting the illusion that everything is in order. Now the economy in the world shaking, and the art market is not immune from losses

art market is considered этаким «Persistent toy soldier» - a market that thrives when everyone else suffer. Until recently it seemed that invest in art certainly more profitable than equities or real estate. But the situation changed. Already we can not deny the fact that the crisis really affected the art market.

art of falling prices, increasing the number of unsold lots

In September of this year, the art market fell - for the first time since 1990. The market works of art long remained inviolable. Even after events such as terrorist acts of 11 September 2001, people continued to buy art. But the test of global financial crisis proved the market is not on the teeth. Shortly before the prestigious New York auction Sotheby's and Christie's powerful online resource Artprice.com analyzed data from 2 900 auction houses worldwide. And that turned out.

To the question « What impact will the global economic recession at the auction sale of works of art? » Artprice.com specialists provide the answer: « should expect a strong correction in prices and increase the number of lots, not find a buyer ».

To the question « Are there any segments of the market, which would avoid the crisis? » reply - « No ».

In comparison with January of this year, average prices for works of art sold at public auction, declined to 14.5 percent. End 2007 - beginning of 2008 can be considered the peak of art market.

According to Artprice.com, from the crisis has affected all segments of the market: from its very top, where speculation, to the segment of affordable (cheaper than 10 thousand euro), art. The most speculative segment utyagivayut for a more «calm» of the art market. Effect of crisis felt by the type and giants Sotheby's and Christie's, and very small provincial auction houses.

It seems that the market sverhdorogih works of art can stand up, because it is now globalized, as never before: up to this summer, prices increased due primarily to the activity of buyers from China, India, Russia and the Middle East. But in late August has been a marked decline in prices in this segment. The percentage of unsold works rose from 25 percent in late 2007 to 54 per cent in October 2008. At the same time, prices for products more expensive 100 thousand euro in the last 12 months have not changed. Between the appearance of works in the auction house and its access to the public in a trade hall goes quite a long time, so the organizers of the auctions fail to «adapt» estimeyty and reserve prices for the grim economic realities. Hence - is the number of unsold works. But sverhdorogie work is only 4.1 per cent of the market, and cheaper prices for segments of the decline is much faster. Since October 2007 they fell by 18 per cent.

prices have fallen not only in recognized centers of art-market - New York, Paris and London, but also in regions where the market is actively being developed: in Hong Kong, Singapore, Dubai. Recently Christie's auction held in Dubai works of contemporary art and jewelry , which yielded only 16 9 million instead of the expected 32-43 million. In early October, Sotheby's made a few auctions in Hong Kong , in which about 29 percent of lots did not find buyers. At last year's Hong Kong auction this figure was 10 percent.

Earlier this year Artprice warned that the market may soon slow, and it will be marked primarily by an increase in the number of unsold works. It was expected that in 2009, prices will drop everything works, even the most expensive. The last time this happened in 1990-1992, when for two years, prices fell by 44 per cent. In the current situation, imagine a correction of this magnitude are easily able to, because speculation in recent years has reached unprecedented heights: from January 2005 to January 2008 on the price of art in the United States grew by 67 percent. In other countries, they increased by an average of 48.9 percent. Art market has grown faster than the stock market: over the same period, French CAC40 rose by 46.9 percent, the U.S. Dow Jones - at 24.5 percent.

stock market usually responds immediately to all processes in the world. It should only receive some news from the U.S. Federal Reserve and European Central Bank, in a few seconds, it affects the price of the shares. Art Market operates entirely in a different rhythm. As the real estate market, it requires a certain period of time in order to «digest» the world's events, and usually it starts to respond to any of the processes in the economy only a few months later.

Nevertheless, in early October, the index of consumer confidence among participants in the art market fell by 13 percent, which coincided with a strong correction in prices in equity markets. In summer, less than a quarter of respondents Artprice market participants said that a premonition of decline in the art market, and in October, expressed pessimistic views more than half of respondents.

auction houses suffer from the crisis, but doing everything possible to stand up

In October of this year, it became clear that the crisis on the art market can not be avoided. This was especially noticeable in the behavior of most «fast-growing» markets - the Chinese art, Australian Aboriginal art and contemporary art, as well as markets, supported by a limited group of buyers, in particular the Islamic art market, independent of purses collectors from Qatar and Abu Dhabi.

«if auction Demiena Hirst took place two weeks later, something happened to the bloody bath », - said director of Albion Gallery Michael Hughes-Williams (Michael Hue-Williams).

Compare the results of auctions of modern design: 25 September took place bids Phillips de Pury, in which buyers have 78 per cent of lots and the bidding exceeded estimeyt. After 23 days, 18 October, was an auction Sotheby's, which has sold 50 percent of lots and the overall results to the lower limit estimeyta not dotyanuli. During those 23 days there have been many: European governments were forced to rescue the sinking banks Dexia, Fortis and Hypo Real Estate; the British government nationalized mortgage bank Bradford & Bingley; the fourth largest U.S. bank Wachovia was bought by Citibank; a 700-billion plan to rescue the U.S. financial system was initially rejected by the House of Representatives of Congress, then it also approved. Auction houses brave, pasting in the press release phrases type «given the current economic situation» (Christie's) and the «preparation for the auction started at a time when the economic situation is very different from today» (Sotheby's). But they will not sit idly by, waiting until the buyers will begin to pay for tens of millions of pictures, and try every possible way to minimize risks.

In 2005, Sotheby's agreed with the Bank of America about the possibility of the auction house credit of $ 300 million, and the recently it has taken from this amount, 250 million . Before you borrow, the Sotheby's said the company already has 290 million in cash. Now the auction house is not experiencing the best of times: a year ago, in October 2007, Sotheby's shares were valued at 55 dollars apiece (respectively, the entire company - at 3.7 billion), but now the price of shares dropped to 8 (!) U.S. , the value of the auction house - up to 550 million.

In order to reduce losses, Sotheby's reduces warranty. Failures in the auction in London and Hong Kong this month cost Sotheby's in 15 million dollars, paid for warranty . Therefore, the auction house now provides half of safeguards than last year.

Unlike Sotheby's, Christie's is a private company, so information on their financial affairs, it is not obliged to disclose. Nevertheless, if to watch over the activities of the auction house, you can make some conclusions about what steps he takes to the salvation of the crisis. For example, the total value of guaranteed works, exhibited at the November auction works of Impressionist, Modern and contemporary artists, is estimated at 225 million dollars, whereas last year it amounted to 441 million.

Christie's also agreed to change the policy of providing loans to buyers. Now you get an absolute majority of the work is in the hands of the buyers only after they vylozhat for them with all the necessary amount - for late payment can only hope those who buy very expensive work.

As for the Phillips de Pury, the auction house it is hoped to the new owner - Russian retailer luxurious Mercury Group . The tender pieces of contemporary art on 18 October had formed a disaster: the auction has just 5 million pounds instead of the expected 18,7-26,2 million. Soon, Phillips will hold another auction of contemporary art, this time in New York. There, out of harm's way, to guarantee a single job.

What will?

general signs that the art market soon «protrezveet», appeared last year. In November 2007, an indicator of confidence among participants in the art market ArtTactic.com unexpectedly fell by 40 percent. The main reason for this was the mortgage crisis in the United States, which made for many a harbinger of future problems. According to founder ArtTactic.com Anders Peterson (Anders Peterson), the crisis on the art market began at a time, rather than this October. Just then his almost nobody noticed: the whole year of art market was frenzied activity opyanen buyers from China, India, Russia and the Middle East.

ArtTactic.com also publishes auction indicator, which calculates the number of lots sold above estimeyta. In June 2007, this indicator has spread slowly downward, and by May of 2008 fell by 48 percent. This has led many to draw attention to the fact that later became the main problem of the art market: auction houses reluctance «adapt» estimeyty to the harsh economic realities. Indeed, at the «top» art market prices are rising as the yeast. But this fall, all problems at once exposed, because of the collapse of financial markets from the auction halls disappeared buyers from Russia and Eastern countries, which have the primary hopes.

What now will happen to the market? Without a doubt, the prices of works by many artists fall. At recent auctions of contemporary art works Mintszyunya Yue (Yue Minjun), Rashid Rana (Rashid Rana), Vayoletta Banks (Banks Violette), Anisha Kapoor (Anish Kapoor), Demiena Hurst (Damien Hirst) and Takashi Murakami (Takashi Murakami) has brought the sum of at 30-60 per cent lower than those to which all are accustomed to. Does this mean that soon the glory of these artists will go into nothingness? Most likely, no. Many collectors just waiting for the price of their creations down: when they finally become available. Remember the collapse of the art market, which happened in the early 1990's. Then hit the prices of works by many trendy artists, including David Sall (David Salle), Julian Shnabel (Julian Schabel), Eric Fishl (Eric Fischl), Francesco Clemente (Francesco Clemente), Kia Sandro (Sandro Chia) and then the stars . Of course, many of them to restore the price level needed to fifteen years. But the markets did survive. But history has repeated feature.

The crisis could also affect the balance of forces between the auction houses and galleries. A few months ago, after Hurst announced a desire to make a solo bid, which would put a new product, start a conversation that the gallery will soon be absorbed in the market auction. But now, due to weakening of the auction houses again to increase confidence in the primary market.

After all, the correction will help the art market to get rid of the «elephantiasis». Because of the crisis, people do not cease to be interested in the arts and artists will not disappear, even, perhaps, new currents. The crisis will help people remember that art history is written not only in the auction halls.

Material prepared Yulia Maksimova

Sources: artprice.com , theartnewspaper.com , artinvestment.ru