Art & Finance report 2016 This year’s report comes at a challenging time for both the art market and the wealth management industry. With art market growth showing signs of slowing toward the end of 2015 and in early 2016, combined with slower economic growth, increasing volatility in the financial markets, and geopolitical uncertainty, the picture is becoming more complex and unpredictable. Maybe it is exactly this uncertainty that draws people toward art, and as this report shows, the awareness and motivation for including art in traditional wealth management are becoming increasingly apparent, although not without its own set of complexities.
To address these issues we have invited 39 key opinion formers, representing different key stakeholders in the market, to express their views on what they believe are opportunities and challenges for the art and finance industry now and in the future.
As the art and finance industry is becoming increasingly global, we are also pleased to announce that what started as a local initiative in Luxembourg in 2011 has now become a truly global Deloitte initiative. Also, we are proud to announce a new partnership with the Van Gogh Museum in Amsterdam to provide complementary services.
Moreover, in collaboration with Deloitte Italy, we are delighted to have contributed a chapter to the book L’art advisory nel private banking—Opportunità e rischi dell’investimento in arte, which was published in December 2015—an AIPB initiative (Associazione Italiana Private Banking). This publication analysed various aspects of the Italian and international art market, including articles on investing in artworks, related tax and legal aspects as well as art advisory models for banks. We are also thrilled to have participate with Deloitte Austria to an Austrian publication called “Das Sammeln zeitgenössischer Kunst,” a manual for all art collectors and art enthusiasts who seek practical guidance for an increasingly complex art market....MORE
The Latest Art Market Trends
Here’s what caught our eye in the just released the 2016 Art & Finance Report, an annual account of the financial state of the art market, as compiled by Deloitte Luxembourg and the London-based research firm ArtTactic. The art market is cooling rapidly, art lending is up, and supplying back room services to the art market is a booming cottage industry.
The market cools down. That’s especially true for the U.S. and European contemporary art market, which contracted for the first time since 2009. Auction sales fell 6% last year, to $3.7 billion, from the market peak in 2014, which hammered down $4 billion. This downward drift continues well into 2016. Take, for example, London’s winter sales, when Christie’s, Sotheby’s, and Phillips came in 43% lower on post-war and contemporary sales than they did in February 2015. The slowdown is a global phenomenon. According to the latest 2016 TEFAF Art Market Report, total recorded sales were $63.8 billion in 2015, a 7% year-on-year drop from the record-breaking $68.2 billion reached in 2014.
Photo: Courtesy of Deloitte
If these scary figures induce panic, resist the urge to sell. “Prices will go back up eventually. If you can wait to sell, then you should wait,” says Phillip Ashley Klein, the U.S. leader of Deloitte’s art and finance practice. As in all markets that are in decline, there’s a noteworthy flight to quality taking place. Quality works have a higher chance of faring well at a sale, and are often the only pieces that don’t need a hefty discount to move. (For more on this, read Penta Daily’s “Pablo Picasso Is Out, Joe Bradley Is In.”)
Art-secured lending on the rise. Deloitte and ArtTactic estimate there is $15 billion to $19 billion in art-secured loans outstanding in the U.S, which means this relatively obscure field of finance has been growing annually at over 13% for the last five years. Traditionally, private banks lending up to 50% of the artwork’s value, and generally charging a rate of 2% to 3%, have been the drivers of this specialist lending market....MORE