by A. Richard Langley and Tanya Singh
As you all may have already heard, something “mind-blowing” (as quoted by The New York Times) happened on the evening of May 18, 2017. A single work by African-American street artist Jean-Michel Basquiat broke multiple records, not just for the artist but for the country as well. At the record-breaking cost of $110.5 million, Untitled became the sixth most expensive work ever sold at auction; the most expensive work for an American artist; and the first work created post 1980 to make over $100 million.
The sale of Basquiat’s 1982 painting of a black skull prior to the auction was estimated at $60 million by Sotheby’s, a price that was already a high for the artist. So, why did Japanese billionaire Yusaku Maezawa, end up paying almost double that amount? Whether it was a calculated decision on the part of the buyer or not, according to the art market statistics the painting is worth every penny and perhaps even more in the future. Jean-Michel Basquiat’s auction high has been consistently increasing over the years – almost over tenfold in the last 15 years. According to the Artprice Database, last year, Basquiat became the highest-grossing American artist at auction, generating $171.5 million from 80 works. It is really no wonder that Sotheby’s was already prepared for a significant hike.
We do not know for sure if Mr. Maezawa studied the market prior to his extravagant bid or not, but we know that anyone who had, would have probably done exactly what he did. With an ever fluctuating market and evolving trends, it has become extremely crucial for art collectors to have a good understanding of the economic side of the art world. Not sure where to start? Here are the basics!
Related Article: Art Prices – What Collectors Need To Know
Reviewing The Market For 2016
As an art collector, you should periodically review the economic dynamics of the global art market. Understanding the market can help you make informed decisions on what, when, and where to collect.
Let us start with reviewing the statistics of the past year, because after all, in the market, the past is what sets the stage for the future. Below are some of the key highlights as shown in the TEFAF Art Market Report 2017.
- Total world art sales in 2016 were $45 billion dollars, up 1.7% from 2015.
- The U.S., despite market volatility, continues having the largest market share (29.5%), followed by the U.K. (24%) and China (18%).
- The strong U.S. dollar had a negative effect on international sales outside the U.S.
- U.S. public auction sales of postwar and contemporary art (particularly works by Andy Warhol, Cy Twombly, and Pablo Picasso) dropped 35%.
- Art fairs, both local and global, and online are key ways to acquire new clients – especially collectors of emerging artists.
Factors That Affect The Market
The above information clearly demonstrates a shift in markets, from traditional auctions to more progressive avenues, as well as a change in global tastes, for instance, the steadily growing demand in China. As an art collector in today’s volatile market, it is crucial for you to stay on top of the global art statistics. Not only does it help you make more informed decisions but also keeps you updated about the latest trends in the market. In fact, if you really pay attention to such information, you can actually even predict future trends and invest your money in the right places.
Many would argue against treating art as an investment, and we definitely agree. Purchasing art is an enriching and emotional experience that must not be tarnished by the indifference of financial investments. However, there is absolutely no harm in keeping up with the market trends and being able to evaluate the real value of the art you are interested in.
Now that we have you convinced, let’s discuss the factors that affect the art market. These are the things you need to understand and keep track of in order to buy and sell smart.
Sales Shifts And Trends
As with any commodity, the art market also follows certain trends and fads. For example, in the recent years, there has been an increased demand for art fairs and online galleries, creating a shift in sales from auctions to other private avenues. A revived interest in the arts of the Asian countries has also swept the market. Keeping up to date with these trends will help you identify the potential markets and understand the value of artworks.
Let us explain how the sales trends directly affect the market in a region by taking the example of the U.S. in the recent years. According to the TEFAF Report, the recent decrease in the U.S. auction market results from two major trends: increase in dealer revenue; and increase in privately brokered sales, resulting in less reported sales at auction.
- Increase in Dealer Revenue
The TEFAF Report says that the reluctance of high-end collectors to openly buy and sell works has spiked dealer sales (62.5% of global art sales). These changes occurred due to the cultural and societal changes experienced in the economy; the increased preference for the support, transparency, and discretion that dealers and galleries provide; and the easy accessibility of information online.
- Increase in Privately Brokered Sales
Auction houses have turned to privately brokered sales as a new revenue stream. Private sales—those not conducted at public auction—have been strong worldwide. The TEFAF Report estimates that the share of dealers in the U.S. is at least a 66% market share.
Therefore, we see how the art market in the U.S. has considerably changed with the shift in the sales. Understanding and following market trends alone, which can be easily accessed online, can be very helpful during your art endeavours.
New Client Channels
Another important factor that significantly affects the art market is the establishment of new client channels. No matter its economic state, the global art market always needs the passion and energy of new clients—emerging and established—who can help grow sales and create demand in new areas.
Art fairs, online platforms, and social media are prime points to attract new clients. While these venues and platforms show high-end works, they mainly feature lower-end pieces (less than $5,000).
The number and influence of art fairs is booming worldwide—and you, the collector, benefit. Connecting with the community (artists, galleries, dealers, auction houses, and exhibitors) firsthand can build your relationships and buying sources, and help define your tastes in artists, subjects, mediums, and movements.
After years of reluctance, the global art market is fully on board with selling online. Even better news if you’re a collector of lower-end works: The TEFAF Report references The Hiscox Online Art Trade Report 2017, which notes that over 75% of fine artworks sold in 2015 were less than $5,000 in value, and over 25% were less than $500.
Buying and selling art online allows you to quickly search for and buy—with no external pressure—affordable treasures within your budget. Artists and sellers receive wide exposure and can attract new clients.
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Managing The Purchase Process
You should manage the purchase process with the same passion you would use to research and choose a piece—no matter its size or value.
Select a Sales Channel
First, research the following events and venues in your area where you can view and purchase art. Select the one that has the kind of artworks (artists, subjects, mediums, and movements) that you enjoy.
- Public auctions
- Artist studios
- Fairs (local and international)
- Private sales (through specialists at auctions houses, and dealers)
While all levels of buyers use these channels, collectors of high-end works tend to buy at public auctions and private sales. Collectors of emerging artists typically buy at artist studios, galleries, fairs, and online.
Navigate a Sales Channel
After selecting a sales channel, use the following tips to help you navigate the channel and purchase the piece.
- Be confident. Have the knowledge and experience to interact—in person or online—with the parties selling the work.
- Keep fiscal focus. Know the market rate for the work, negotiate for the best price—and stick to your budget.
- Stay current. Follow market specifics on the piece you’re buying, and always be researching to find your next piece.
Understanding The Future – Online Growth
The tide seems to be turning in 2017. Despite a slowing global market, online art market sales are up. As stated in the Hiscox Report, global online sales reached an estimated $3.75 billion in 2016, up 15% from 2015. The number of existing online art buyers—you could be one—who have bought more than one piece in the last year has increased to 65% in 2017, up from 63% in 2016.
However, while purchasing art online has made everything so much easier for collectors, it has also increased the importance of awareness of the market.
Understanding the complex economics of the global art market is challenging, but not impossible. Make sure to consult the right, respected resources to help you stay current on pricing and sales. Don’t become overwhelmed by the numbers—glean data only on subjects, mediums, and movements you enjoy. With targeted data that you understand, you can be a more informed and confident collector.
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