The 2016 Annual Report on the Contemporary Art Market by Artprice confirms the excellent results achieved in the sector from 2000 to the present day.
Collecting contemporary art means supporting artists with a market value yet to be defined and for which the offer keeps evolving. The most volatile values and the rocketing of prices explain the appeal of this market to collectors. However, a portfolio of contemporary works is not only financially interesting in the long term, as the prospects of return offset the uncertainties.
The sudden increase in prices can be due to two complementary factors: the continuous emergence of new artists and the rise of some great names to the league of icons. The risks of overturning the market and the rebalancing of prices do not constrain the number of collectors, which is constantly growing.
Observing the data for the past eighteen years, the Art market confirms to be a safe haven in an economic and financial crisis, with coherent and recurring performances. The contemporary art segment, in particular, registered a 1.370% turnover increase over the past sixteen years. This results in a tangible, linear 115% increase of the average value of a work of art, which corresponds to an annual growth of 4,9%. This value has gone up to 9%, for works o art purchased for more than 20.000 dollars.
Therefore, Contemporary Art generates 12% of yearly revenues – a considerable share that can be largely attributed to a group of signatures of excellence. Today, several contemporary artists are on the verge of reaching equal prices to their famous ancestors, to the point where today’s ten best contemporary artists are amongst the Top 100 artists most sold at auction, which includes all periods, together with Andy Warhol, Roy Lichtenstein, Gerhard Richter, Lucian Freud or Zao Wou-Ki. It is a turning point in history that has been taking place over the past twenty years and which was unthinkable in the 20th Century.
The reasons for such growth can be found in the ease of access of information about the art market, the dematerialisation of the artworks’ auction on the Internet (where 95% of the stakeholders are connected online) as well as the financialisation of the Market, with an increase in the number of art collectors from 500.000 in the post-War period to 70 millions in 2015, a decrease of their age, the market expansion all over Asia, in the Asia-Pacific, India, South Africa, Middle East and South America.
Finally, the market’s transformation includes the museum industry (with 700 new museums created every year), which in the 21st Century is a well-established economic reality on a global scale. More museums were established between 2000 and 2014 than in the whole 19th and 20th Centuries. This industry, hungry for works of art, is amongst the main factors that supported the massive growth of the Art Market. In 2016/2017, no less than 1.200 museums will see the light in five continents and contemporary art will surely be represented.
Despite a slight decrease in line with the general trend of the Art Market, the Contemporary Art segment registered the third best financial year in history.
Contemporary Art collectors have acted more cautiously over the past few months. While modern art sales were going crazy and recorded the second best auction result of all times in November 2015 (170,4 million dollars for Nu couché by Amedeo Modigliani (1917/18), the Contemporary Art sales registered the second low consecutive semester.
The high-end market above all has been subjected to a ruthless selection. One work of art was purchased for over 20 million dollars in the past 12 months, compared with the five the previous year. In particular, Untitled (1982) by Jean-Michel Basquiat was sold for 57,3 million dollars to the Japanese Yusaku Maezawa (Christie’s New York, 10th May 2016), creating a new auction record for the New York painter. The transaction was extremely profitable for the previous owner who had bought the canvas for 4.5 million dollars in June 2004. The capital gain in twelve years of ownership has therefore reached 1.200%, that is an annual yield of 24%.
This strategy has calmed down the demand and risked to weaken the value of top names. Christie’s, Sotheby’s and Phillips, for instance, have observed a higher reservation in the sales of Jeff Koons and Christopher Wool’s artworks. Despite them both recording a good result this year above ten million dollars, they are far from reaching their own personal records of 58 and 30 million dollars respectively.
For more than 10 years, the evolution of the price index highlights Contemporary Art as the second most profitable creation period in the Market. Its price increase follows progressively the prestigious post-War period (artists born between 1920 and 1944), whose prices have exploded with the hegemony of Anglo-Saxon stock markets: London and New York.
Taking advantage of the Chinese market’s shift towards “historic” artists, the United States and the United Kingdom together gained five points in market shares. Today they represent 65% of Contemporary Art’s world revenue. Their strength is based on an intense offer (a quarter of the artworks goes through London and New York) and they almost detain the monopoly of the very high-end market and finally on their unique ability to gather the best international demand.
Communication Manager of MyTemplArt®
Source: the 2016 Annual report on the contemporary art market published by Artprice on www.artprice.com
Cover Image: Untitled 1982 (detail) by Jean-Michel Basquiat
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