By Nalini S Malaviya
The global financial meltdown has spread its tentacles to encompass art in its grips as well. The art market appears to have slowed down its frenzied pace; recent auction figures indicate that there has been a slump of sorts. In view of the economic situation, it is not surprising that the recession has also hit sales of art.
As the mayhem at the stock market continues, one would have expected more investors to opt for alternate investment avenues. This is a common trend that one asset class faces a slump, others pick up (as can be seen with gold prices). However, the issue of lowered liquidity associated with the art market seems to be detracting a major chunk of investors. Unfortunately, liquidity has long been an issue with art collectors and investors as an urgent need for funds cannot be translated into hard cash. In practice to resell art at a good price requires a lot of time, effort and the right contacts.
There is also growing concern and speculation regarding the prices of artworks - will they sustain or fall drastically in the short term? Upcoming auction results will indicate the direction prices are likely to take.
Another perceptible shift that has been noticed is that investors once again appear to be more inclined towards the modern artists as compared to the contemporary artists. Readers will recall that prices of contemporary artists have shot dramatically upwards in the recent past and the buyer base had shifted allegiance to the younger and more experimental category of artists. This trend may not have been completely reversed but buyers do appear to be now inclined to invest in the more stable and established modern artists.
What also emerges is that there is an urgent need to establish a system which can enhance the liquidity of art which will boost the art mart tremendously.
Well, to sum up the good thing is that this could be the right time to pick up quality works at competitive prices. This is a buyers’ market and prices are open to negotiation.
(Published in Financial Times)