Markert Analysis

International Art Perspective

People often ask me: “in case the whole financial system fails and governments go bankrupt, then what will happen to the art market?”.
Simply put, I think most markets and industries will be in for a rough ride should that scenario play out. However, as people are withdrawing monies from the financial markets and looking for real assets, I think the contemporary art market will be less impacted by the global turmoil. There are people looking to invest in art, as an asset with long-term tangible value and a hedge against inflation, which, much like the value of gold has done well during inflationary periods.

We are seeing new collectors emerging these days. People from emerging markets like China, Indonesia and Brazil are starting to play an increasingly important role in the market. So, the money is still in the market there is just a geographical change of where the funds are coming from.

The top end of the market remains strong, as we also saw during the last recession, and people are back to buying with their eyes - not their ears. Good art will always be good art and the high prices for masterpieces by the established and historically important artists will remain high regardless of how the financial crisis develops.

We have seen countless examples of this including as recently as the 12th October this year when Gerhard Richter's work, titled "Abstaktes Bild" (804-9) sold for $34.2 million at Sothebys in London and broke the record for the most paid at auction for a work by a living artist. A few months earlier in June, Yves Klein’s magnificent sponge relief painting from 1960 sold in London for $37M. In the same sale Jean-Michel Basquiat’s ‘Untitled’ from 1981 sold for $20M and Edvard Munch’s ‘The Scream’ went on to sell for $120M just weeks before in May, not to mention Mark Rothko in the same month setting a new world wide record for any contemporary work at $86M. We saw similar examples of this during the last recession, when Sotheby’s in November 2009 sold Andy Warhol’s ‘200 One Dollar Bills’ for $43.8M against an estimate of $8-12M There is no doubt that all of these are masterpieces and the demand - which in the end are driving the market - for such rare works remains extremely high compared to the supply and the scarcity of quality works.

In the short term, the mid-market might see volumes decrease, as people are sitting on the fence waiting to see and understand the impact of what is happening in the global financial markets. In essence there will be less funds chasing the mediocre and perhaps an increased willingness to spend money on the emerging artists.

I'm not interested in the short term.

I look at art and its quality in the same way regardless of how the economy is doing. It’s a process of selecting the right artists, understanding their practice and the importance and impact of what they are doing today - and on this basis finding the best pieces. When we work with our clients we like to build collections that make a statement. We appreciate cohesiveness and strive towards creating a consistent red thread, so the collection becomes an artwork in itself. The collection should have character and individuality, reflecting a strong vision that will stand the test of time.

My job is to predict art history and create collections for the future. But no matter how much you think you know and how much you think you are on track, you never know what comes next, and that’s the excitement I love about collecting and buying art!

Michael Frahm
Frahm ltd