Since 1950, on average, art has outperformed other asset classes at 8.4 pc per annum compounded. Damien Leslie, senior lending portfolio manager, Sotheby’s London
I came away from March’s stellar (as always) TEFAF Maastricht not just with three new works for the Juanita Collection but with a ton of new ideas about old things (hint -hint) that I will present later this year after a little more research.
This note is long overdue and I would like to take advantage of these volatile times to discuss the role of art as an asset class (not just as an investment but of stored of value) and the opportunities in the USD 1-5m market since collectively, EKCART ASIA trades at that level and there MAY BE potential among the individual works we own as I will explain below. This sector of the market is the one most covered by the media but is also widely misunderstood.
ArtTactic and Sotheby’s Insight Report — the first of its kind —-Peak Performance: The Art Market Beyond USD 1 million 2018-2022 says that works at this price point comprise 74pc of the value of the total declared art market but make up only 4pc of the lots. This is USD 33B out of USD42B over the five year survey of the three major auction houses— Sotheby’s, Christie’s and Phillips. In these five years, the sector has grown 9.5pc from USD 7.44B in 2018 to USD 8.15B in 2022. (The total global market value of the art market in 2022 was USD65B).
What is the importance of the USD 1-5m art market to EKCART ASIA and the broader art market?
ArtTactic founder Anders Petterson said in a panel discussion with Sotheby’s, “The one million market represents the intersection of art and finance for thinking of art as an asset class.” The upper end of the art market has also shown great resilience in the face of financial downturns as Dr David Bellingham, an art historian and the programme director of the MA in art business at Sotheby’s Institute of Art, mentions in his report summary. I have used facts from Dr Bellingham’s report throughout this note.
The panel discussion in London brought up further advantages of this sector.
First — It has shown to have the highest resilience and liquidity over the five years of this survey.
Second – Especially among new collectors, there is not only demand for works of art across all categories but also the desire for public affirmation thus the competition at auction to “show off trophies.” (The USD 20-50m market has stronger private sales) .
Third- New collectors are coming straight into this price point without going thru the “traditional initiation of collecting” by starting with works on paper (WOP), drawings, prints or other less expensive categories —- going from emblematic to better to best. It is not unusual for a first time buyer to start a collection with multi/million dollar work/s.This may not be just about wealth but more-so confidence developed from readily available information from the internet, exhibitions, x-branding with fashion and media, more inclusive engagement with dealers and auction houses.
At this level, there is a thin line between collecting art as a vehicle of diversification of a financial portfolio and love for the pieces themselves.
There are three trends in the over one million market that EKCART ASIA could be in a position to take advantage of.
This market has become symptomatic of geographical shifts in global wealth, as well as changing demographics but there are three interesting trends in this market that I want to emphasize that may have great positive effects on EKCART ASIA.
With the transfer of wealth by baby boomers, there have been seminal single owner sales in the last few years — Macklowe – Ann Bass – Ann Getty – Paul Allen – Mo Ostin -David M Solinger – Wolf and even our dealer Michael Goedhuis with Bonham’s in mid May.
“Collections are going to be a big theme in the market because there is an increasing fascination on how collections are framed — to learn, to inspire, that make connections (collectors) never thought of, “ said Brooke Lampley, chairman and global head of sales at Sotheby’s.
But “single owner” need not be a person. It could be an actively managed and beautifully presented collection like JUANITA. Or our benchmarks, Estella (2008) and Origo (2016). Today’s market is more sophisticated and open minded that art is not seen as so precious and venerated that it should only be in museums or homes of the wealthy. Or sold only upon death.
The growth and popularity of the young contemporary market (artists born after 1977) has seen names like Lisa Brice, Fiona Yukhnovic, Nicolas Party, Shara Hughes, Caroline Walker sell for as low as 20,000 dollars in the primary market five years ago then sell at auction for close to or a little over a million dollars in the last few years. This is good news for our HAPPY HEDGE LGBT (Kelvin Yang at Galerie du Monde) and TKE ARTUNTAMED (Hettie Reatchlous) collections which hold works of racially, culturally and sexually diverse artists from all over the world in this age group.
There is a return to value as many collectors have noticed —-that at this price point, one can take a risk with a very young artist of the moment without a career track record or a rare old master or works already tried and tested in the “modern or classical” category. “ Many are starting to think and compare values between artists with proven longevity vs trendy Wet Paint (flipping new work usually by young artists) or Zombie Formalists (crapstraction- a great word!).
And finally, for my disappearing act, and to add flavour and thought to this note, I leave you with these recent “disappearing million dollar” sales (literally, go figure…) — coincidentally both by Sotheby’s—- an esoteric Yves Klein paper receipt “Zone of Immaterial Pictorial Sensibility” from 1959 sold this April and Banksy’s famous self destructing “Girl with Balloon” sold in 2018.
All the best in art and life,
Kitty Go
Founder EKCART ASIA