Is the current art market boom just the beginning of a whole new era for international trading?
Art market boom
We all know that wealth needs outlets for investment and consumption, and as always the international art market forms an integral part of this, yet the amount of money that is currently hitting the auction houses is truly staggering. In two successive weeks of feverish auctioning, previous records were shattered as figures reached beyond the $1 billion level for the first time. It seems the rich are rapidly growing richer and more numerous—and their appetite for especially Modern and Contemporary art is growing apace.
New York is the centre of this activity, although the source of buyers is increasingly widespread, fuelling the kind of sales that the auction houses recorded this November (2006). On November 8th alone, Christie’s set a new record of $491.7 million during their auction of Impressionist and Modern art, more than trebling their previous record of $157.4 million. With a record of $125.1 million, Sotheby’s seems to be falling behind, and in spite of finding itself in the midst of the greatest boom the art market has ever experienced, this loss in market share has actually led to a loss and falling market share.
Christie’s appear to be enjoying the fruits of the boom far more successfully, yet the huge figures they turn over do not automatically equate to huge profits. In an increasingly competitive market, where the rarest pieces are sold in nine-figure private deals, the pressure is on the established auction houses to maintain their long-held position. This entails high costs in marketing, promotion, presentation, guarantees and above all the putting together of international teams of market specialists around whom the trade revolves.
Stiff competition in an evolving art market
It is clear that the art market is not only growing spectacularly but also evolving. For auction houses limited to fixed margins the scale of operations will become a factor of vital importance, requiring them to become increasingly global in both their reach and organisation. New York is likely to continue to play a leading role in the art trade for many years to come, but it will have to absorb new markets to do so.
The international art market is currently experiencing the greatest boom it has ever seen, with auction houses recording sales that sometimes amount to several hundred million dollars in a single night. In November 2006 alone, sales pushed past the magical $1 billion mark for the first time ever. This trend is driven by the ever-increasing wealth and growing numbers of the super-rich, not only in the developed countries of Europe, North America and Japan, but also in developing regions such as Russia, China, India, the Middle East and South America. Much of the sales are accounted for by Modern and Contemporary Art, yet in spite of the huge volumes turned over by the auction houses, they face stiff competition from huge private deals and soaring costs in marketing and securing the services of key players in the industry, who can ensure a steady flow of both art and buyers in the top of the segment.
By Michel Cruz