The Top, Middle and Bottom Ends

Market Insight
by AAMRA

2010 has been a curious year for art market analysts. The way the market recovered from a seeming breakdown in 2009 that too within a span of just one year was exemplary to say the least. And in doing so, it has actually confused art market watchers to a great extent.

Nicholas Forrest, the Australian art market analyst and columnist writes in his blog, “2010 has been one of the most confusing, unpredictable and unexplainable years for me as an art market analyst. So many of the trends, events and fads that emerged during 2010 did not appear to be caused by the sort of conditions, have the same effects, or follow the same path of logic that one would expect they would, given the way things have panned out in past years. This leaves me with no doubt that the art market is evolving at such a rapid pace that there is little point trying to justify or explain the events of today using logic that is based on the progression and events of previous years.”

How does it defy logic?

Walter Robinson, editor of Artnet Magazine, wrote that, “Art Market Watch has been on something of a hiatus during the last few months. What with the recession, reporting on auction results just isn't as compelling as it was during the boom years”.

Robinson was talking in March 2010. And wonder of wonders, by May, Pablo Picasso, who had recently lost out to Giacometti as the most expensive artist ever to be sold at an auction quickly regained his position, fetching a staggering $106.5 million. As we had mentioned in our earlier issue under this column, a week after that an Andy Warhol self-portrait sold at Sotheby's for $32.6 million. This was twice the higher estimate of the piece. This again was a new record for a Warhol self-portrait at an auction.

So within six weeks, Artnet was busy tabulating records all over again. One can be sure that Mr Robinson could no more afford to feel that writing on the art market was not compelling enough.

Actually, despite what Forrest claims, there is a certain pattern even in this apparent chaos. For oneinvestors at the upper end of the secondary market had become more cautious, what with the downturn in the previous years, and secondly, the lower-end of the same market had become sentimental.

Note that it was in 2010 that a work by an Indian artist fetched its highest price namely Syed Haider Raza's Saurashtra, that fetched $3.49 million. It was also the time that a series of pen-and-ink drawings by Rabindranath Tagore sold for an astonishing sum (when compared to the quality of the works all being rough sketches done on sand-paper), being bought by non-resident Asians. This is what we mean by the lower end being sentimental. They found solace in the kind of art that they identify with best or can relate to emotionally. In Tagore's case there was at least one Bengali residing in Britain who bought the works.

It is exactly this phenomenon that Forrest refers to when he writes further in the same blog entry referred to earlier:

“When it comes to rationalising art market events there is much to be gained from knowing who has money to spend and how much they have to spend. The top end of the market is fuelled by super wealthy collectors whose level of wealth would not have been affected enough by the financial crisis to deter them from buying art. Therefore at the high end of the art market things have been pretty solid as is evident from the number of record auction prices set in 2010. The lower end of the market is fuelled by collectors who focus on edgy and trendy contemporary art by emerging and newly established artists, and who will usually have a high level of interest in the cultural and artistic side of fine art. Collectors at the lower end of the market are a very determined group who are always going to be around even if they appear a little less active at times. Things at the lower end have improved but have done so at a less than rapid pace which makes it difficult to judge where this sector of the market is heading. Without a doubt the sector of the art market that has suffered for the longest period of time due to the effects of the global financial crisis and the art market down-turn is the middle market. The middle market includes lesser works by big name artists, and the more expensive (less justifiable) works by the trendy contemporary artists, which makes the middle market a sort of currently unnecessary compromise for the super rich, and a stretch too far for the modestly well off. Middle market works are, however, perfect for the financial advisor and hedge fund manager types who are more interested in art as a status symbol than the quality or art historical importance of the works they are buying. With the pay packets of hedge fund managers and financial advisors taking a massive hit due to the financial crisis, there is little interest in the middle market works. The super rich are still rich enough to not have to compromise and settle for middle market works and the modestly well off continue to fuel the lower end of the market.”

As far as Indian artists like Raza and Souza are concerned, because of their relative naivety in the market, they are the ones who at this point of time form the lower segment of the market. And the presence of an appreciable number of well-to-do Indians abroad, as well as a burgeoning GDP back home, has actually given rise to a new breed of Indian art-collectors who are dominating at this end of the market. Safdar Hasmi by MF Husain was the first painting to cross the 1 million rupee mark and the same painting auctioned in 2007 by Emami Chisel Art was the first painting by Husain to cross the million dollar mark.

The phenomenon in spirit is the same for Chinese artists too. We say in spirit, and not in practice, since compared to Indian contemporary and modern masters, their Chinese counterparts fetch a much higher sum thus entering into what Forrest describes as the middle market segment. And that is where Forrest, in his very informed analysis also goes wrong when he says that it was this segment that had seen the least growth.

True, seen from the global perspective, this IS the segment that has suffered the most stunted growth, when compared to the upper of lower market segments, yet placing the middle-market in the Asian perspective, one is forced to note that it has seen a genuinely healthy growth.

And that has been possible because of the presence of Chinese patrons and Chinese auction houses, as well as the duopolyas in Christies and Sotheby's presence in Hong Kong.

Thus, in both the cases of the lower as well as the middle markets, it has been emotion that has guided investors. And frankly speaking, at the top end too, investors have fought shy of anything that's not time-tested blue-chip. Reason why names like Warhol, Giacometti and Picasso or for that matter a Mattise or a Hirst have kept on cropping up in auction-house handouts. That is an emotional attachment too, since, even this sector has invested in works that they feel emotionally at ease within this case the best works of the blue-chip artists.