Art Market May Take 3-5 Years to Recover, Survey Company Says

By Scott Reyburn

Jan. 20 (Bloomberg) -- Confidence levels in the contemporary-art market have fallen 81 percent since May 2008 and may take between three and five years to recover, according to a survey by research company ArtTactic Ltd.

ArtTactic’s Western Art Market Confidence Indicator dropped to 10.5 from 56, the lowest level reached since the survey was first conducted in May 2005, the London-based company said in an e-mail today.
“Confidence has hit rock-bottom, but prices will fall further,” said Anders Petterson, founder of ArtTactic, in an interview. “There’s negativity in the market that’s saying we need to get to the bottom and start again from scratch.”

The latest biennial survey of 145 U.S. and European collectors, auction-house specialists, dealers and art advisors was taken from Nov. 20 to Dec. 10. It followed Sotheby’s and Christie’s International’s evening contemporary-art auctions in New York, which raised $125.1 million and $113.6 million respectively with fees, below their presale lower estimates.

Almost a third of lots failed to sell at both houses. The equivalent sales in 2007 made $315.9 million and $325 million.
The ArtTactic sample was asked to give either a positive, negative or neutral response to six unchanging questions. Negative responses outweighed positive by a ratio of 10 to 1, said the survey.

When asked how far auction prices would fall from their May 2008 highs, 47 percent of the respondents said they expected them to drop by 30 to 50 percent. More than half those questioned thought it would take more than three years for the contemporary- art market to recover, said the survey. Of those, more than 50 percent said the market may take more than five years to pick up.

‘Vulnerable’ Artists
“Prices have fallen somewhere between 30 to 50 percent across the board,” said London-based dealer Ivor Braka, who was not one of the ArtTactic respondents, in a telephone interview. “Artists whose prices rose quickly over the last two years are particularly vulnerable.”

Braka said he thought the market would recover within the next two to three years. “It’s impossible to predict what will happen. There’s so much bad news around. We’re still in the maelstrom,” he said.
The survey said confidence in high-end works valued at more than $1 million had seen a “significant weakening” because of the diminished buying power of hitherto “recession-proof” collectors from Russia and the Middle East.

Owners’ reluctance to test the market with high-value contemporary works is reflected in the content of Sotheby’s and Christie’s evening auctions in London in February. The combined low estimate of 31.55 million pounds is 78 percent lower than the 143.7 million-pound minimum valuation of their February 2008 equivalents.

‘Survival Rating’
Looking forward, the ArtTactic survey also includes a new “Survival Rating” of artists who respondents believe will be considered of high importance in 10 years’ time.
German artist Gerhard Richter led the Top 10 “Survival” list, followed, in descending order, by Jeff Koons, Cindy Sherman, Robert Gober, Bill Viola and Richard Prince. Damien Hirst came 21st in the list of 46 contemporary artists.

The survey rated David Salle, Jake & Dinos Chapman and Franz Ackermann as the names least likely to be considered important in 2019.
“We wanted to try to find out who will still be standing when the dust settles,” said Petterson.

Surveyor Survey
ArtTactic’s findings were reinforced by the latest quarterly survey from the Royal Institution of Chartered Surveyors, a professional body representing U.K.-based real- estate surveyors, auctioneers and art valuers, also published today.
Forty-one percent more surveyors reported a decline than reported a rise in contemporary-art prices, according to the RICS survey. The previous quarter, it was the other way around.
“The previously robust contemporary-art sector has suffered a turnaround in fortune, with buyers reining in spending as they come to terms with the continuing global financial crisis in the fourth quarter of 2008,” said RICS in an e-mailed release.

(Scott Reyburn writes about the art market for Bloomberg News. Opinions expressed are his own.)
To contact the writer on the story: Scott Reyburn in London at sreyburn@hotmail.com.
Last Updated: January 19, 2009 19:00 EST