The Mei Moses index, shows art prices falling 35 per cent in the first quarter following the financial crisis. The overall index fell 4.8 per cent last year. What's a collector to do?
The over-inflated bubble in the years preceding September 2008 in the art market, particularly in 2006 was bound to pop. With works of some (living) artists' quadrupling at scary rates without any real justification and instead fueled largely by speculation -the worst enemy of sustainable growth in any market. Non-speculative reasons for investment in art is key, because most people who have made money have not made it by purchasing art as a short-term investment.
The art bubble bursting means the end of speculative flipping. Sotheby's Spring Auction last week brought in a conservative US$8.9 million compared to US$51.77 million last year for contemporary art. Like the stock and property markets, a return to fundamentals, following a period of readjustment before prices stabilize is much needed in order for good work that can weather the test of time to once again start to appreciate.
Prices have yet to bottom out in our region as much as in the west and China, with works by star contemporary artists, notably Chinese Zhang Xiogang and Indonesian I Nyoman Masradi, selling at Sotheby's last week for a fraction of the prices they fetched last year. However, auctiongoers, art investors and art collectors will be faced with great opportunities in the coming months as quality works by masters will be more realistic if not at an all time low. Or maybe just buy something you like.
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