Several of the bellwether auction sales in New York and London such as Impressionist & Modern Art, as well as Post-War & Contemporary art sales declined by 40% and 33% respectively between 2015 and 2016.
However, an ArtTactic survey among art market experts conducted in January 2017, showed that most respondents expected an improvement in art market conditions during the coming 12 months, with a particular strong positive sentiment towards art markets in Africa, South Asia, US and Latin America.
A sign of a potential art market recovery came during the recent Impressionist and Modern Art Evening sales in London in March 2017, when Christie’s and Sotheby’s raised £234.8 million, up 87% from February 2016 and even 8.1% higher than February 2015. These results set a positive tone for the upcoming spring and summer auctions.
Financial guarantees are returning
The slowdown in the art market last year reduced the auction market’s dependency on guarantees in 2016, and shifted the balance of power away from the consignor towards the auction house and the buyers. The value of financial guarantees in New York’s post-war and contemporary auction sales (based on Sotheby’s, Christie’s and Phillips) fell from $1.13 billion in 2015 to $518.6 million in 2016, a significant reduction of 54.3%.
The latest round of post-war and contemporary evening sales in London in March 2017, saw only £22.9 million (13.8%) of the sales value guaranteed (based on the low estimate), which was lower than £27.7 million (21.9%) guaranteed a year ago. However, despite lower levels of guarantees in the post-war and contemporary segment, Sotheby’s increased their level of financial guarantees for their Impressionist and modern sales. The recent evening sale on the 1 March 2017, had 61.5% of the sales value guaranteed (based on low estimate).
Political uncertainty the main risk for the art market in 2017
So far this year, world stock markets have rallied, underpinned by expectations that President Trump will relax regulation, lower taxes, increase infrastructure spending—and essentially fulfill his pledge to make America great again.
However, the ArtTactic expert outlook survey conducted in January 2017 cites ‘Political uncertainty’ as the biggest risk to the global contemporary art market in 2017. With the advent of Brexit and the uncertainty created by Trump’s presidency, a different type of political and economic landscape is likely to emerge in 2017.
However, the last 15 years shows that single events, political or economic, have had little long-term negative impact on the global art market. Although the financial crisis in 2008, saw art market sales contracting globally, it’s recovery was swift. And whilst the sovereign debt crisis was raging in Europe between 2010 to 2012, art sales kept reaching new heights.
Of course the art market is not immune to external factors and events, but recent history could indicate that uncertainty is not a bad thing for the art market, in fact, one could argue it’s the raison d'être for why wealthy individuals diversify their wealth into art and collectibles in the first place.
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