Art market faces jittery times as economy slows

ArtTactic Ltd., an independent art market research company, has found a troubling sign. Its data shows confidence in the art market fell by 37 percent between May 2007 and November 2007, the most recent data available. The biannual survey is based on the perceptions of about 160 art professionals.

“The likelihood of a soft landing is becoming ever more distant as the art market continues to diverge away from the underlying economic realities,” Anders Petterson, ArtTactic’s founder, wrote in a recent editorial.

But Marc Porter, president of Christie’s Americas, sees the market steadily expanding upward despite turbulent swings in the financial markets in the past few months.

“There has been an acknowledgment that art has been a good and stable store of value over the long term and none of the problems associated with the sort of financial stress that we now see in the financial markets are associated with works of art,” says Porter.

Art, he says, particularly the blue chip art from the auction houses, can offer investors a measure of stability not easily found in fly-by-night tech stocks or risky derivatives.

“Title is clear, ownership is clear, what you have is clear. How one sells it is clear, what it is is clear. All of those aspects of assuring that the money you’re spending is appropriately spent on what you think you’re buying are all boxes that works of art check very well.”

Good art is good art
Susan Dunne, vice president of PaceWildenstein, which exhibits and represents artists at three Manhattan galleries, says she hasn’t seen much weakening in the market.

She notes that Art Basel Miami Beach, the largest U.S. contemporary art fair with works generally under $1 million, was crowded in December and PaceWildenstein ringed up its most sales ever there.

Other good signs for the company: PaceWildenstein’s recent exhibitions in Chelsea of works by Thomas Nozkowski and James Siena — most under $200,000 — practically sold out in the first few days. And PaceWildenstein plans to soon open a new gallery in Beijing.

“There’s a feeling that even in a climate where people may not be inclined to spend money, if they love and collect art and still want to, they’re going to feel easier making a purchase by an artist of a certain caliber and standing from a gallery of a certain caliber and standing,” says Dunne.

Thea Westreich, a private art consultant, isn’t personally worried about the climate. She stresses quality and value to her clients regardless of market swings. Good art, she says, is good art.

“It’s very important to remember that in the real world, art going up and down in value is no different than real estate going up and down in value,” she says. “Fifth Avenue is hot property. And whatever happens to the market, having a 10,000-square foot apartment on Fifth Avenue is a good thing no matter what.”

Those well-off Fifth Avenue residents so far haven’t run away from art, these experts say. In fact, the megawealthy have kept prices — especially for contemporary art by the likes of Damien Hirst — high.

“The fact that you have these hedge fund guys that are making millions a day — or losing a millions a day — they’re the ones that don’t mind paying $1 million for something because all their buddies are going to say, ’Oh, you got that?’ It’s the power of recognition,” Krulik says.

Other than the hedge fund guys, money from newly rich collectors in Asia and the former Soviet Union also have helped prop up the high end of the art market. And a weak dollar helps make a painting look like a bargain these days in euros: Francis Bacon’s “Triptych, 1976” fetched more than $86 million at Sotheby’s on Wednesday.

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“There’s really a lot of wealth out there chasing too few goods,” Godel says. “When I used to look at the Forbes 400, you needed about $400 million to be a member. Now you need $1 billion.”

Ultimately, Godel says, it may be too soon to see how global financial turbulence has affected the art market. That means another few months at least of jitters.

“The jury is still out whether there will be little fissures or cracks or if the market will not perform,” he says. “We won’t know until June or July if the party’s over.”

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