Verdult, Clarice ©
According to Artprice.com (major web site that tracks prices in the art market) art prices continued their ascension in 2006 with sharp accelerations observed on most major markets. At a worldwide level, Artprice's global price index was up a further +25.4% over the year, to just 5% below its peak level in 1990. In the United States, however, prices are now 32% higher than the speculative bubble peak in 1990.
Driven, by galloping prices and a whole new generation of rich art collectors, the number of over-a-million-dollar sales has taken off. Today's prices are in effect without precedent. In 2006 no less than 810 works sold for over a million dollars, generating total auction revenue of USD 2.7 billion. In 2005, 487 Fine Art sales generated figures above a million and total auction revenue of USD 1.4 billion. Until the end of the 1990s only 100 to 200 auctions per year broke through the million-dollar threshold.
In total, the global public auction Fine Art market generated total revenue of USD 6.4 bn which represents double the amounts regularly posted during the 1999 - 2003 period and an increase of 52% compared with 2005.
In 2006, there were 9,000 auctions of Fine Art worldwide compared with 9,600 in 2005 and more than 15,000 in 2000. However, while the number of catalogued sales appears to be diminishing, the volume of works on offer at each sale is growing sharply: more that 400,000 lots were offered for sale in 2006. For the third year running the bought-in rate has remained stable at around 34%. This level, still high considering market conditions, has less to do with buyer indifference towards the less interesting pieces and more to do with sellers asking very high reserve prices. Indeed we are seeing a number of collectors taking advantage of the current climate to sell off works they acquired expensively in 1989-1991.
Looking more closely at the market we see very contrasting market performances on the different segments. For example, the top of the market (i.e. expensive works) is much more dynamic than the lower end. The top-end is also the most dynamic in terms of growth.
In effect, for works carrying reserve prices of USD 10,000 and above, the bought-in rate is only 26.2%. Below the USD 10,000 mark, the bought rate is 35.5%. The price index for works bought for under USD 10,000 grew only 8% in 2006 and today stands at 20% above its 1990 level. Inversely, for works above the USD 10,000 threshold, the 2006 growth rate was 33% and the index is now at 32% above its 1990 level. At less than USD 10,000 minor works by reputed artists rub shoulders with the mass of reproductions and the works of less well known artists. Indeed, the fame of the artist and the rarity of the work appear to account for the essence of a work's value.
The future profitability of a work of art depends above all on the fame of the artist. Art collectors with average budgets exceeding USD 10,000 per work stand to benefit the most from the current price rise context.
Alton Perkins,
CEO of Wealth Enterprises Corporation/Yazzy's Fine Art Corporation
Comments