Owners of the American firm Artvest, providing consulting services in the area of investment in art, share their views on the current market situation

Five years ago, thanks to a good combination of several important factors participating art market got a new impetus to the purchase of works for investment purposes. Prices have jumped on the art so that the investment began to think even those who never those not interested. Excess global liquidity and attractiveness of alternative investments have led to the emergence of two new types of customers - "a collector-investor" and "speculator collector. However, the global financial crisis put an end to the euphoria.

Now the market is already getting better: the improvement of his condition showed loud auction transaction with sverhdorogimi works, which marked the end of 2009. Nonetheless, many are asking: Was the art boom is only "a byproduct" of a large investment bubble? .. If there is no correlation between the prices of works of art and value of the shares, according to some experts, why did the price and speed auction collapsed after the financial market? And most importantly: Can we say that the market has already reached its bottom and beginning to stabilize?

trying to do this by some estimates, is always considered the art market in the global economy . To understand where it moves, it is necessary to monitor the behavior of other assets, especially financial. Of course, should avoid simplistic conclusions, such as: "the art market lags behind the financial market to a certain number of months". But we must always remember that the "engines" of the market are the accumulation of wealth and liquidity (high speed and ease with which you can close the deal). A problem with these driving forces can deliver a crushing blow to the price and volume of transactions - and showed that the auction season 2008-2009,.

At the peak of an art boom, nobody believed that it could all a sudden "bang", although the stories have been similar examples - in particular, the inglorious end "Impressionist bubble, inflated by Japanese buyers in the late 1980's. But two decades later, all the repeated mantra: "Now everything is different." Collectors said that prices can not fall much because the consuming base compared to the previous boom has increased substantially: first, the number of super-rich people has increased, and secondly, they came with a collectors' emerging markets (Russia, the Middle East, Latin America and Asia), and thirdly, in the growing American elite circles it became fashionable to collect contemporary art.

Proponents of this theory were only partly right: the fact that the market experienced a massive influx of new buyers does not mean that he would not be the same massive outflows. The market could easily collapse if the collectors, collectors, investors and "speculators collectors" suddenly change their view about the value of purchased their works - especially since the art market is opaque, nereguliruem and has no objective, standardized methods of asset valuation.

vulnerability of the market becomes even more evident if we compare a two-week auction marathon (impressionists /Modernist postwar /modern), held every autumn in New York: in 2007, their overall result was 1, 6 billion, and in 2008 - 729 million. The quality of the exhibited works at the auction was comparable. The only thing that distinguished one from another marathon - this is the level of consumer demand, reduction of which has caused the severe correction in prices and reducing the percentage of lots sold. Falling prices and curtailing the practice of safeguards led to the owners of first-rate works began to refuse to sell their treasures at a public auction, and it only worsened the situation. In autumn 2009 the first major auction brought only 596 million dollars, which is 40 percent less than that since art boom.

Now, those who spoke of "broad-based purchasing", argue that market participants are "hiding" and waiting for the world economy will recover - and when that happens, they always come back. But where such confidence in their return? .. These statements should be treated with great caution, since before the crisis, too, thought that buyers anywhere not disappear, but it turned out quite differently. Of course, despite the fact that many have lost or minimized in the crisis of their fortunes, the funds may be invested in works of art, is still very high - but here we must remember that the submission of the wealth compared to the year 2007 changed much, and the return of the subspecies as "speculators" in the near future is foreseen. Some prominent economists, including Paul Krugman (Paul Krugman), argue that now is a monumental restructuring of many segments of the global economy - media, retail, automotive and financial sectors. Will there be transformed and the art market?

It should also be noted that now is the global reduction of risky market positions. According to the forecasts of many economists, it will continue this year and next. While it is not clear what effect this will have on the cost of works of art. If, for example, in the U.S. housing prices will remain at the level of 70-80 per cent of the peak period, it could retard the growth of the art market.

Do not forget about that the crisis has hit the value of the assets of the leading collectors, foundations and cultural institutions. If even such powerful institutions as the New York Metropolitan Museum and Harvard University, obliged to go to the draconian budget cuts because of the staggering reduction of endowment and investment income, what it says on the purchasing power of the most prominent players art industry? And as the debt crisis affect Dubai collector ambitions for Middle East millionaires?

Art Market in 2010

Limited liquidity on the art market, a general reduction of risk positions, the disorder in the financial markets - the consequences of this were felt throughout 2009. But the global economic turmoil has strengthened collectors from China, India and the Middle East in the opinion that it is necessary to keep the real assets - art, real estate, gold, and so on. "Emerging Markets", I must say, recovering faster than the U.S., Europe and Japan. So no surprise that the classic Chinese art has suffered in the crisis less than the west.

Due to individual rich individuals, worried about inflation prospects or new shocks in the financial markets, gold prices climbed to a record heights. The same considerations surely prompt some to incorporate into their portfolios of works of art (as an inflation hedge). This can lead to significant price increases in the most "respectable" segment of the art market, serving more conservative tastes - we mean, of course, works of old masters, as well as classical impressionism and modernism.

Works of art will always be a very valuable asset. For it must be kept and connoisseurs, lovers and investors. In 2010, at the art market continues reconstitution: auctions will be more modest than in the boom times, collectors will still prefer private deals opening; the best works will enjoy great success and bring an impressive amount, while the work of the second and third number or will not be sold or will go at a reduced price. Although if the global economy be without any major shocks, one can expect that this year's art market will feel better than in the past.

authors of the article -- Michael Plummer (Michael Plummer) and Jeff Reybin (Jeff Rabin), the founders of the company Artvest Partners LLC, providing investment advice in the art. Based in New York.

article prepared by Julia Maksimova, AI

Source: theartnewspaper.com , artinvestment. ru

Comment Editor : Hope for the worst, then the poor will not upset, but only the best will appreciate. Is no accident bad news always sells better than the reports of someone's success. A negative outlook and statement of cause is usually more confidence. Receive a win.

By and large, what is new, we have learned from the withdrawal of U.S. consultants? As for the crisis, all was better than at the time? Or that during the crisis, the owners of the masterpieces will be extremely reluctant to sell them at auction? Or that the old master is always the price?

I think, know the authors of the fantastically successful outcome of February's Impressionist and modernist before the publication of articles, their prognosis would have been adjusted to more positive vector. In the hopeless depression, the records are not updated.

What we can not accept is the fact that the market after the crisis of change. Many people, burnt child milk will blow on the water. Former occasional buyers or pick up their self-education, or refuse to participate in this market. I personally expect that the art market will become more technologically advanced and user-friendly for novice collectors and investors. There will come a time when works of art will no longer be sold "whisper" when the price to beg, and the object to look for investments with the dogs, almost on cronyism. Perhaps the lessons of the crisis to push and took off sellers chips conservatism.

Vladimir Bogdanov, AI