Imagine going to a grocery store, negoting down the price of a litre of milk, not paying for it for a year or so, then returning it after a glass, saying it was past the sellby date. Or going to a fashion designer and being told you were not suitable enough to be seen wearing the dress? In the art world of the past 20 years or so, these were typical scenarios every art professional is familiar with. The nuances and pecularities of the art world are numerours and legendary. But the landscape is quickly shifting.
For instance, even selling art vs the car auction market is entirely different. This is best illustraed by a recent sale of a shelby daytona coupe by mecum in the us. It was slated to be the most expensive us car ever sold publicly but failed to meet the $10m expectation with a high bid of $6.8m. The auction house responded by simply rolling the car into the very next sale where it sold for $7.5m which was indeed a record for a us car.
In art, that wouldn’t happen. When an art work publicy fails to sell at auction it is considered burnt and needs to be off the market for what in the past would be years. The gap between these two scenerios is closing under present market hardships, but the arts are a minefield for those not fully informed and initiated in it’s unusal ways.
Which is why good advice is of paramount importantance more now than ever. If you are not sure of the unwritten rules of how the ever shifting art game is being played you can be exposed to some pretty unscrupulous dealings or simply spend too much. Not that one is any worse than the other.
From private negotiation tactics to what you are entitled to when dealing with auction houses, advice is more important than ever. There are issues such as conservation of works, logistics—like packing/shipping, insurance, and more than ever the customs ramifications of moving art around from country to country. If you are not careful, in zero tolerance countries like switzerland, you can end up deep in litigation if works are not properly and fully valued.
The art and collectible markets have slowed but are far from morbid. Rather things are still more active today than in boom years past. Though value and volume of sales at auction are down dramatically from the recent past, it is still volumes ahead of the last recession in the early 90s. And though there is less being offered publicly, private treaty sales are now exceeding public auctions—this only goes to show clients are not willing to risk poor auction performance at lower estimates when they can attain higher prices with less downside risk privately. There is an article in bloomberg.Com today on the subject.
In any event, the balance of power has shifted from the auction houses and dealers to the collector in a manner not seen for years, even decades. Today, there is more room for negotiation for top tier works than i can ever remember.
Gloabalization has finally reached the levels where there is a measurable impact on the art market. There are fine art charts and graphs of artists and market segments, and art funds announced practailly every day. Whether that’s a good thing or not is another story. Bloomberg is in fact today’s new art magazine. Even weath management companies are specifically getting involved in the arts due to the inherent and growing demand of their client base; i know as i am speaking to one about a position as advisor.
And its not just art. In the design market, which is the market for furniture produced in limited numbered editions: the seminal work that all others are measureed against is a chaise lounge by the 45 year old australian marc newson who exhibits his limited editon industrial designs at the gagosian gallery. By leaps and bounds he is the world’s most commercially successful designer. The metal riveted lockheed lounge chair in an edition of 10 + 4 proofs, so 14, traded at $1.5m at the very height of the art boom in 2007 and only a few months ago in april of 09 (well into the height of recession) another piece from the edition went for over $1.6m. From 2000 to 2006 the same work went from $100k to $1m! This is an area of the market that will grow and should not be overlooked. But buyer beware, one table went from $300k and a year later failed to find a buyer at $200k. Hail the return to connoisseurship.
In the end, the internatinal art market is now a fully fledged recognized asset class, and even beyond that it’s a barometer of wealth and liquidity in the global markets. Every balanced portfolio should have some, with the added benefit that it can look good too.
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