Masterpiece is arguably the biggest date in the UK art lover’s diary. Of course, the 2016 fair coincided with another key date, occurring in the direct aftermath of Britain’s historic “Leave” vote in the EU referendum. Tim Hunter, Vice President of art financier Falcon Fine Art, takes the temperature at Masterpiece – not just of the fair itself and trends across the art market in general, but also around how the art market could be affected by a post-Brexit world.
Established 10 years ago, Trinity House is an international art dealership based between the Cotswolds, London and New York – having opened up a gallery across the pond in 2011. Steven Beale, Director and founder of Trinity House, was able to provide us with an international perspective on Masterpiece, and also the Brexit debate.
Meanwhile, we were also interested to hear the views of a European dealer. Dario Mottola founded Scultura Italiana in 2008 – a gallery specialising in the dealership of artists such as Adolfo Wildt, Lucio Fontana, Medardo Rosso and Paul Petrovich Troubetzkoy. It focuses on all the main Italian sculpture movements of the Nineteenth and Twentieth Centuries.
Hunter: Last year saw several record-breaking sales. In addition to the well-publicised Picasso and Modigliani sales at auction, there were also record-breaking private sales of Gaugin’s When Will You Marry, and de Kooning’s Interchange – each selling for around US$300 million. 2016 hasn’t so far seen the same success – why do you think this is?
Beale: That is a good question. The art market is cyclical – if one market is strong, another could be quite weak, and eventually it will rebalance. Likewise, if one country is dominating the market, another might be scaling back its purchases.
The stand-out purchases of 2015 were due to a global interest in the art market – particularly from Asia and the Middle East. The Picasso sale, for instance, was to a buyer from Qatar. Overall, I think 2016 will be strong, yet it will rely on the US market. Good works are recession-proof, but 2016’s success depends on how a market dominated by the US compares to one dominated by Asia and the Middle East.
Mottola: Asia did play a large part in the success of last year. The Modigliani you mention went to a Chinese collector called Liu Yiqian – a former taxi driver from Shanghai. He owns two private art galleries – one of which, the Long Museum in Shanghai, is dedicated to hosting some of the world’s most prized artworks. So it is likely he will be making a few more high-profile purchases.
Of course, the paintings you reference are all at the high-end of the market, and their rarity is their appeal. 2016 has every reason to be as successful as 2015, but only if such pieces become available to buy.
The concern is with the rest of the market – the middle class is suffering, lower markets are slowing their growth, and some smaller dealers have had to close their galleries. Even in China, political changes have made it harder for the middle market to operate.
Hunter: Masterpiece obviously started mere days after the UK electorate decided it wanted to leave the European Union. Has the subsequent market impact influenced how collectors are purchasing art, and indeed on who is purchasing art. Is the increased appetite from US buyers, for instance, mainly a result of the exchange rate working in their favour?
Mottola: The “English dealer” has a strong reputation, and now that the pound is so low, it is certainly encouraging American buyers.
Beale: Currently, the Sterling is weaker than it has been in a long time – making it favourable for US buyers to purchase art from London and UK galleries.
Of course the exchange rate only impacts overseas buyers. If you’re buying art in the UK, to keep in the UK, in sterling, you’re not affected too much by the drop. What’s more, many international clients deal in multiple currencies – meaning they can choose which is most appropriate as per the exchange rates. For instance, we’ve even seen clients who are buying art in the UK asking if they can pay in dollars.
As we’re a global dealer, a lot of the business we do is obviously linked with currency, and as it has become weaker, it has created an appetite for overseas buyers to come to us. The problem is that if the sterling continues to be weak, it also makes it harder to purchase works from abroad. We are fortunate in that we have galleries on both sides of the ocean, and we have the benefit of choosing which gallery to focus on for sales.
Hunter: Many believe that the art market is fairly immune to the EU referendum debate – partly, perhaps, because art is already largely outside the free movement of goods. How do you think Brexit might impact the art market more generally?
Beale: When such a decision is made, there is always a 24-48 hour period of confusion as we wonder what happens next for business and for the country. Yet the day after the Brexit decision, we sold two paintings – one decision had been paused for seven days, and that individual still acquired the work. Whether you wanted to remain or leave, the world still continues.
I hope that in the long-term the art market won’t be as affected as perhaps other industries will be. It helps that fine art is a luxury product that – at the high end, in any case – is only really purchased by high-net-worth individuals. Such individuals will likely continue to buy expensive art, which will continue to keep the art market afloat. The impact on the middle-market, however, could be more profound.
Mottola: I don’t think anything will change for the moment. The problem is what will happen in the future, and what the UK’s international relationships will look like post-Brexit. While I don’t think it will have a significant impact on the art market specifically, it is a bad choice for the country, which will have a long-term impact on growth, and implications for the European economy.
Hunter: Masterpiece, as usual, is a great place to be this year. What do you think makes Masterpiece so successful, what is the mood like, and is there anything that is proving particularly popular this year?
Beale: I think there is always a thirst for works that have been off the market for a while – Masterpiece is often a good opportunity to find a rarity.
Masterpiece is popular because it provides the opportunity to purchase very high-quality works at a fair price. It is a fantastic experience, even if you don’t buy anything. It is an international platform where clients can come to see some of the best works of art from around the world. There are great restaurants, it is a beautiful venue, Wimbledon is on, Ascot has just finished: culturally it is a great time to visit the UK. When you combine all of these ingredients together it makes a great fair.
Obviously, the mood is dampened slightly as everyone is obviously unsure about Brexit, and how that is going to evolve in the future. But apart from that, the mood is quite positive. And people seem to be looking to buy as much as they were before.
Mottola: Masterpiece is a great fair because it offers so much variety – watches, jewellery, Impressionist art, sculptures, to name just a few – all in one small area. And it is located in Chelsea – a beautiful area of a great city. London is also convenient for buyers as it is easy to get to – if you don’t close a deal that day, it is an easy – and pleasant – location collectors return to often. There is always the opportunity to “pick up where you left off”. With some other fairs, like Maastricht, if you don’t close the deal over the weekend, the chance has probably gone.
It has been a very special year for me personally as I sold a great piece by an Italian sculptor. However, feedback from around the fair seems mixed overall. While Antiquities dealers are doing very well, more contemporary dealers seem to be having a harder time, which could support the idea that the contemporary market is starting to slow a little. What’s more, Masterpiece this year coincides with Ramadan, which has meant that there are fewer Arabic buyers. The impact of this timing could be significant – Arabic clients are often big-buyers at Masterpiece, particularly with respect to jewellery.
Hunter: Art financing injects liquidity into the art market. As a dealer, do you think art financing has the potential to change the way individuals collect art?
Beale: Art can be a great investment. It is portable; it can be taken anywhere in the world. You can have a £5 million home, containing £15 million worth of art. You can be the only person in the world with a particular work, which you can choose to either be very private, or share with museums.
But we have had some clients look at the value of their artwork, and then assess the economy – particularly post-Brexit – and consider the potential impact on business, and decide that now isn’t the right time to sell. And they might also find an artwork they want, and realise they don’t have the liquidity to buy. Art financing means they can have both: they don’t need to sell, and they can still buy – all just by leveraging their existing collection.
We have had some clients leverage their collections for liquidity to buy other works of art. Often these are cases where a client has a collection of art they have had for a while, which has increased in value. Through art financing, they can leverage this increased value to buy even more valuable art – enhancing their collection, even if they didn’t initially have the liquidity. The opportunity to leverage art collections that are already in your possession, continue your passion, and keep the art on your walls – as Falcon Fine Art allows – is ideal for collectors.
And it is a good opportunity for dealers. We care about whatever best suits the client – art financing is well respected, and offers the collector a choice. The more options available to them, the better.
Mottola: Art financing could change the way people collect art. The important thing when looking at art as an investment is about getting the right advice. There are so many factors that go into buying art. You need to check if it is in good condition, but taste is also a factor – after a busy day, many people want to come home to something that is simple, rather than busy with lots to look at. Finally, you need advice on how well a piece might perform in the art market. The value of a painting, for instance, that was US$8 million six years ago, may now be worth US$4 million – half the price. Investing in art can be tricky, and getting as much help as possible – advisory, but also financially – is crucial.