Super rich bolster the market
The super rich and international buyers are bolstering the arts and antiques industry as signs show the credit crunch is beginning to bite, says RICS.
Chartered Surveyors reported no change in all lot prices in Q2 compared to Q1 indicating that the industry has remained relatively stable throughout this period.
However, there was a stark divergence between the trends in the lower and upper price tiers.
While prices of all lots slipped in the lower tiers, this was not the case further up the value chain, with activity in the £50,000-plus price sector remaining buoyant.
43% more Chartered Surveyors reported a rise than a fall in lot prices, demonstrating that the super rich are continuing to invest in unique items as an alternative to stocks and shares.
Signs of a slowdown in the market are beginning to show, particularly in the sub-sectors of:
- ceramics
- clocks
- furniture
Performance of all lots in the lower price tiers (£1-£1,000 and £1,000 -£5,000) were more subdued.
41% more surveyors and 18% more surveyors respectively reported a fall than a rise in these tiers, as buyers in the lower end of the market begin to feel the impact of the credit crunch.
The super rich are only prepared to buy good quality items that will provide a high return in future sales.
This is evident in the weakest performing sector - furniture - as 20% of surveyors reported a fall than a rise.
In the £5,000-plus price tier, 12% more surveyors reported a rise in furniture lots showing that buyers are prepared to pay a premium for classic quality pieces as shown in the furniture sales of Lord Sainsbury’s private collection.
This survey period has seen some big auctions take place.
Prominent items from private collections have led to soaring sales in the £50,000-plus price tier.
Many records have been shattered with surveyors reporting that the spending power of the super rich and overseas buyers - particularly Russians and Middle Eastern nationals - is having a positive impact on the industry.
For the second quarter running Contemporary Art was the strongest performing sub-sector and has continued to outperform all other sectors.
48% more Chartered Surveyors reported a rise than a fall. 56% and 68% of Chartered Surveyors respectively reported a rise than a fall in the £5000-£50,000 and £50,000 plus tiers.
Recent sales in this sub-sector included:
- A life-size Lucian Freud painting entitled Benefits Supervisor sleeping sold for £17.2m, at Dreweatts Urban Art Sale3,
- Nick Walker, Ratatouille Stencil sold for £10,000;
- Adam Neate, Red Lips Mixed media sold for £40,000;
- Banksy, Laugh now but one day we will be in charge sold for £100,000,
indicating that the popularity of urban art continued to prosper.
In contrast, Oil and Water Colour Paintings did not perform as well as Contemporary Art, with 7% more Chartered Surveyors reporting a fall than a rise.
However, the £5,000-£50,000 and £50,000-plus price tiers remained strong, with 35% of Chartered Surveyors reporting a rise than a fall in the £50,000-plus tiers.
Noticeable examples are:
- Monet's Le basin aux nympheas, painting which sold for £41m;
- Kyffin Williams A Welsh Farm canvas oil painting, (£26,000).
The continuing rise in diamond, gold and silver prices has increased interest and pushed up prices, with Silver and Jewellery performing positively in all price tiers.
32% more surveyors reported a rise than a fall in the Silver sector and 24% of surveyors reported a rise than a fall in the Jewellery sector.
Jewellery, Militaria, Silver and Contemporary Art were the only sectors that saw sentiment in all price tiers remain positive.
Surveyors’ confidence in the arts and antiques market in coming months appears to be weakening with 11% more surveyors expecting the number of lots offered to fall than rise, as a slowdown in house sales leads to less house clearances, reducing the number of items being offered at auction.
For Q3, surveyor’s sentiment for demand is also waning with 25% more surveyors expecting a fall in demand than a rise.
As house sales fall and the cost of living rises, buyers will be less likely to refurnish homes.
However, as arts and antiques are collectors items, the super rich are likely to still be prepared to pay a premium for rare items.
RICS spokesman Jeremy Lamond commented:
"Investors at the top end of the market see arts and antiques as an alternative investment in this uncertain economic climate.
The credit crunch has bolstered the sale price of more expensive items but has depressed the lower end of the market where liquidity is extremely tight.
The cost of living is on the increase making the purchase of antiques a luxury few can afford.
The situation is unlikely to improve in the near term but as long well-heeled investors remain the market will continue to feel supported."
View a historical index of the survey at www.rics.org/aas.
