Global wealth creation is fuelling the booming visual art market, and the growth looks set to continue over the coming year – albeit with a few corrections in areas that have become over-inflated. That growth is enhanced by the infrastructure that is growing up to support it.
That is the view of Anders Petterson, founder of ArtTactic, which provides art market research, analysis and advice for art collectors and other art professionals.
“The high end of the market is influenced by the amount of people that can now afford to be involved in it,” he says.
“It has been fuelled by very wealthy people that are now seeing art partly as an asset, and then further down there is more public interest. We now have a far more complex art market infrastructure than we had 10, 15 years ago: the number of galleries and the number of art fairs, for instance, has grown and new buyers have far more opportunities for engagement and so many more places to experience and buy art. Everything has been expanded – including the prices.”
ArtTactic recently asked its top 100 forecasters about their outlook for the market for the coming year and 66% reported a positive outlook. Some 29% were neutral and 5% were negative.
“I think there is a generally a feeling that the market will continue were 2014 left off,” says Petterson. However, he does not believe the market is in a bubble.
“We’re not talking about a global bubble but about individual segments of the market that might be more bubble-like,” he says. “The prices paid for works by some artists have escalated very quickly, in a very short space of time, and I think everyone will question whether that is sustainable. It’s likely that there will be relatively isolated incidences where an artist maybe falls out of fashion and their prices drop or the market will evaporate, but I don’t expect to see a major collapse in the markets as a result of an over-speculation.”
While he does see speculation is an issue, he does not see it as the biggest threat in the market at present.
“Gradual changes in taste could have a major impact on segments of the art market, i.e will the next generation of collectors collect what their parent’s generation has been buying? If not, this could have a major impact on the many of the artist markets we see today. However this could take decades.”
He adds that when defining a ‘bubble’ it is important to look at the market from the point of view of the high net worth individuals actually driving the market’s growth.
“Ultimately we need to establish what is and what should be defined as fair value. As long as people have and are willing to spend multimillions, for them that might be considered a fair value for the work. Yet to most people they may seem to be paying extraordinarily high prices not really founded in any reality.
“The idea that the market is in a bubble can come from people with that perspective, but actually people who are really involved in the market don’t see it that way. That’s why I think it probably will continue in a similar vein to last year – but with mini bubbles and regional bubbles.”
He adds that the more people are looking at art as a potential investment, the more characteristics of the financial market the art market will take on. With this will come more volatility, more ups and downs and more markets that might have bubble-like features.
“However, I don’t see a global phenomenon that would suggest all markets around the world are suddenly going to lose their value – I think it might be regional and geographical but not a global thing. For example, we have seen in the Chinese market undertake an extraordinary rise up to 2012 and then the market has dropped back since then”