US back on top as the world’s biggest art market
The US is once again home to the world’s biggest art market, with China, thought by many to be unstoppable in cementing its position at the pinnacle, incapable of holding on to its crown.
According to the TEFAF Art Market Report 2013, which is considered to be the industry authority on the subject, the Chinese art and antiquities market shrank by almost a quarter last year, a slack that was picked up by the US.
However, as is reflective of the buying power of China, its slowdown contributed to the seven per cent contraction in the worldwide art market value to €43 billion (approximately £37.2 billion).
Consequently, although there remains a lot of activity and interest in the market, the depressive nature of the global economy is nevertheless having an influential impact.
In response to the ongoing malaise, which really showed no signs of improving significantly in 2012, buyers are minimising risk by focusing their attention on the biggest artists, with a heavy leaning towards post-war and contemporary art, a sector that has been enjoying an impressive period of sales as of late.
In 2012 it had an astonishing 43 per cent share of the art market, recording a five per cent rise to €4.5 billion (£3.9 billion). Modern art followed in second place, with a 30 per cent slice of the market, but unlike post-war and contemporary art, reported a significant drop of 17 per cent to €3.2 (£2.8 billion).
Dr Clare McAndrew, a cultural economist and author of the report, said that while the art market has shown incredible resilience in the wake of the global financial crisis, its “fate as a whole is increasingly tied to wider economic events”.
“Poor and variable economic growth along with political uncertainties encouraged investors to retreat to the safest and most low-risk areas of many asset markets over the past year, such as bonds and blue-chip stocks,” she explained in an article for the Art Newspaper.
“In the art market, this was exemplified by cautious buying and selling in many areas leading to a strong polarisation of the market, with the best performance seen at the top end of the best quality works and the most well-known artists.”
A key factor in the decline, as mentioned above, is the slowdown of the Chinese art market, which in 2011 had seemed supremely powerful. This was the year it took over the top spot, with a commanding 30 per cent of sales occurring here. However, this has proved to be fleeting.
The main reasons for this, the report informs, is due to a decline in demand – including continuing liquidity constraints – and sellers holding onto high quality top end works of art.
If it wasn’t for the US experiencing an upswing, the downturn could have been more harmful. There was a five per cent increase in sales figures emanating from the North American country, taking sales figures to €14.2 billion (£12.3 billion).
The US now has an authoritative 33 per cent share of the market. China follows with 25 per cent (a five per cent fall), while the UK remains solid in third place with 23 per cent (a significant one per cent rise).
“Notwithstanding its decline, the Chinese market remains the most important of the emerging markets, both in terms of the size of its domestic sales and the international significance of its buyers,” elaborated Dr McAndrew in her article for the online news provider.
“The dynamics of its wealth continue to show great potential for future growth in art sales, with a rapidly rising number of wealthy consumers and a growing middle-class. This, combined with a rich cultural heritage of art and antiques, has produced a huge domestic market and ended the duopoly held by London and New York for over 50 years.”
In Europe meanwhile, the markets as a whole performed poorly last year, with the volatility in the eurozone ensuring that there always remains a bit of hesitancy in buying and selling, as well as chipping away at the confidence of the industry as a whole.
The report did point out to another interesting factor in the below average performance of the continent, explaining that most of the sales in Europe had been for middle to lower price art.
If more high value works of art are brought to auction in 2013for example, particularly in countries like the UK, France and Germany, a tangible and positive difference can be achieved.
This study also cast interesting light on the bourgeoning art market of Brazil, which is, along with Russia, India, China and South Africa, one of the fastest rising economic powers in the world.
It noted that sales in the Brazilian art market accounted for a modest but important one per cent of the global total, which will increase as the country’s wealthy elite expands with economic prosperity. However, much more needs to be done to make the market friendlier, including easing restrictive tax and import regulations.
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