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The global financial turmoil and state of the art market
“The world's super-rich were all out in force in the city of London to participate in one of their ‘favorite pastimes’, which is seemingly impervious to the prevailing turbulence of the global economy: the purchasing of contemporary art. Their gossip might be casually littered with impending talk of financial meltdown.” The above is an extract from a recent repot in the UK Financial Times that pointed out how the annual Frieze art fair in October acted as a focus for frenetic activity, which witnessed well up to £200m worth of art changing hands. The evening sale easily surpassed pre-sale estimates, in fact, took place on the very day the collapse of Lehman Brothers became public. The auction was significant for the depth of bidding, and for foreign, notably Russian, interest in the sale.

Matthew Slotover, the co-director of the Frieze art fair, was quoted as saying that advertising for Frieze's monthly magazine was up by almost 15 per cent from last year’s level, although the ‘frenzy’ in the international art market had calmed down. "That is a good thing," he added. "There has been a certain amount of speculation in the art market, with works going straight to auction as people wanted to make a quick buck. Galleries don't like that and even artists don't like it."

Another report in the International Herald Tribune (IHT) noted: “Of all the economic sectors, the art market alone is beating a fairly orderly retreat from the wild excesses, which characterized it in the last four or five years. The recent major auctions of Impressionist and Modern art at Sotheby's and Christie's delivered two unequivocal messages. First, money is still available in aplenty when rarities of stellar importance or, more simply, very beautiful works of art turn up. “This is because, unlike the financial services or manufacturing sector, the players here are driven by desire. And as anyone who ever yearned to buy a coveted picture or object knows, the fear of missing out on an opportunity - unlikely to come back - is perhaps powerful enough to overcome awareness of prevailing economic difficulties.” However, the newcomers loaded with money and ‘playing the auction field as if works of art were chips in a game of poker’ have all vanished, leaving the floor to traditional buyers who know something about the art they chase, the IHT report concluded. The art market even while diminished by the global financial turmoil is in no way dead & buried, wrote Colin Gleadell of The London Telegraph who noted: “The global financial crisis may well have changed the art market, but for many there still could be a positive result.”

On the home front, Painting the meltdown, Francis H D’Sa for DNA India noted: “The financial markets sneeze and the art world invariably catches a cold, but for the discerning buyer and young artist, this could herald good times.” Checking whether the current global financial crisis has really, hit the Indian art market, the report hinted that seasoned players will now prefer to adopt a wait-and-watch policy. And for others, this is the time to fulfill that dream, and acquire that painting one has always wanted to.” Has the time now come to invest in some artistic bargains is the query posed by The Independent, UK. Considering the pros and cons of the debate, it looks at both sides of the spectrum. Looking at the positive side, it points out that the art market has always outperformed the stocks in the past decade or so.

Art is a great investment, it argues, since it gives pleasure every time you choose to look at it. The same cannot be said for your share accounts or savings plans. Prices are low right now, it suggests, so even if you do not like the art, it can be sold in a few years' time for good profit. On the other hand, the report cautions that the market might well deteriorate further, so this still might not be the right time to enter it, it states, adding that insurance premiums for pieces of artworks can be high so even if your investment does well over a period of time, there are other costs attached. The last bit of precious advice is to involve experts when buying art because it's too easy to get trapped.