Originally published November 2021.
The art market has historically been subject to generational shifts. Old Master paintings dominated the market until the 1980s, at which point a diminishing supply of great works saw Impressionist and Modern art take over, fueled at the high end by an influx of Japanese collectors chasing masterpieces by Monet, Renoir and van Gogh. In the 2000s, a new era took hold as Post-War and Contemporary art began to represent an ever-increasing proportion of the art market: five years ago, almost half of global sales at auction were in this category and this growth has continued since.
In the 21st century art market, the internet, globalisation and cultural shifts have created a greater demand from more people than ever before to collect art, and while many of the major works by Old Master and Impressionist artists are now secure in museum collections, it is far easier for today’s collectors to acquire a top-class work by a more recent or living name. This in turn has prompted a huge industry, supported by countless galleries, auctions and art fairs which offer a plentiful supply of work, particularly in the contemporary field, where artists can keep producing work to meet demand. Before the Covid pandemic, there was enough supply to support more than 250 global art fairs, the majority offering contemporary art.
“The more traditional approach to the market, whereby people inherit or buy and keep works of art for a long time, has been eclipsed by an investment-driven approach”
Regular supply also helps to maintain the momentum of an artist’s market, and if the value of their work is seen to be increasing through regular sales, it can attract investors and speculators. In the last decade,the more traditional approach to the market, whereby people inherit or buy and keep works of art for a long time, has been eclipsed by an investment-driven approach, where people often buy works of art in the hope of a relatively quick financial gain. This is often helped by headlines filled with the big prices and extraordinary returns; however, these are usually the exception rather than the rule, and those who do best tend to be either market specialists or reliant on a good art advisor.
As a result, the values of artworks are far more changeable and sensitive to market shifts, and they require more regular valuations for insurance purposes. The fundamental rules of the art market apply as much with Modern and Contemporary as with any category of fine art: if you buy the best, with a long-term view, you tend to have a better chance of seeing a return in the longer term. However, the more contemporary the art, the less established the reputation of the artist and the greater the risk – or reward! Many paintings went unsold at the first Impressionist exhibition in Paris in 1874, which featured paintings by Monet, Renoir, Degas, Manet and Pissarro; yet who can tell today if Banksy, Hirst or Koons will have a comparable reputation to art historians of the 22nd century? In the shorter-term, there are some contemporary artists, like Lucien Smith or Jacob Kassay, whose works were selling for hundreds of thousands of dollars a few years ago but would struggle to make even half those prices today.
Most recently, the market has been rocked by the arrival of ‘crypto art’. In March 2021, Christie’s staged an online auction offering a digital work by Beeple. With no physical presence whatsoever, and less than a month old, the artwork was attached to a non-fungible token (NFT), a digital certificate of authenticity that runs on blockchain technology. It sold for almost $69m, the third highest price for any work by a living artist – and a higher price than those realised for countless legends from centuries of art history, from Rembrandt and Rubens to Freud, Hirst or Munch. However, it was soon revealed that both the buyer and underbidder were crypto-currency market-makers, raising some questions about their intentions and how the dynamics of the NFT market might develop. Perhaps this is another speculative moment in the market or perhaps the next generational shift is upon us. Either way, it highlights the timeless benefits of a long-term approach, and – most of all – of sound, independent advice.
Originally published on astonlark.com and reprinted here with permission.
