This column has for the last few months been sounding an alarm bell regarding the increasingly rosy picture being presented by the media regarding the recovery of the global art market. We have also shown concern over the bullish trend that the Indian artists seem to enjoy at European and American auctions. Come October, and alarmists seem to be waking up in different art market forums around the globe too.

A few examples from some of the best known art business webmags will suffice. artprice.com, in a post under its market insight section in October, focusssing on  Damien Hirst's results in the Chriesties auction of Contemporary art says: “And yet… the major auction houses  who anticipated a recovery of the Contemporary art market in 2010 (…after a 42.8% contraction between 1 January 2008 and end-2009, the Contemporary art market's overall price index rose 5.4% in the first half of 2010) are now posting pre-sale estimates measured against the speculative bubble's peak prices (in 2007 and 2008). For example, among the star lots in the catalogue of Sotheby's prestige Contemporary Art sale on 15 October 2010 in London, Andreas GURSKY's superb cibachrome Pyongyang IV (1 of 7) has been priced at £500,000 - £700,000, a range that Sotheby's justifies by referring to the $1.25m (£637,750) that another copy of the same work fetched in 2008. Needless to say, at that time, the market was in the midst of a major speculative bubble… and the copy of Pyongyang IV which fetched that lofty sum was presented at a sale organised by none other than Damien Hirst (RED AUCTION) where it tripled its high estimate, assisted by the particular context of a charity sale in which buyers' generosity was an undeniable spur to the bidding.”

This comment brings to light that confidence among the buyers/investors is far from the peak, especially when the same article refers to the fact that “The second season of 2010 Contemporary art sales kicked off on 16 September at Christies in London (with) the sale's best results, lot 71, Damien HIRST's Untitled (Birthday Card Suite) more than doubl(ing) its pre-sale price estimate of £50,000 - 70,000 with a final bid of £180,000 ($280,000)… perhaps suggesting that the Contemporary market may already be back on the path towards new auction records.”

In this light, art-market observer Robert Frank's observation that the market may not be honestly self-correcting itself seems ironically contextual. Writing for WSJ, Frank says “Don't get the wrong Impression….

Many market-watchers have been predicting such a correction for months and even wishing for one. If prices tumble, the news will (be) covered in the same “we told you so” tone we saw in the housing crash (referring to the American housing scam, that eventually ripple-effected the global economy and plunged it into a recessive mode). But so far, to everyone's surprise… the art market hasn't corrected.

Or has it? The media likes to focus on the big spring and fall auctions at Sotheby's and Christie's as bellwethers.” But, and this is where Frank concedes to the concerns that Art: News and Views has continuously raised over the last few months. The reasons why what is apparent may not be the fact, according to Frank are:
  1. They're (the auctions that is) managed. Sotheby's and Christie's have slashed their sales offerings by as much as 25% this spring. That helps ensure better prices, since they're effectively shrinking supply.
  2. They're selective. In the last week of October the media (focused naturally) on the evening sales of contemporary art, since those (were) the big glamour nights with the highest prices. But any weakness in the market is more likely to appear in other, less-noticed parts of the market, such as Impressionist sales.
  3. They're (the duopoly that is) mainly selling blue-chips. Gauging art prices based on the record-shattering prices for an Andy Warhol (or for that matter an S H Raza) is a bit like gauging the stock market based on the share price of Google.”

On the Indian front too, apparently there has been a recovery of 'confidence', with the overall Indian Art Market Confidence Indicator increasing 26% from 49 to 62, as reported by ArtTactic. It also notes that the gap in confidence between the Modern Indian and the Contemporary Indian art market is widening, with the Modern Indian Confidence Indicator standing 51% higher than the equivalent confidence indicator for the Contemporary Indian market.

The above information comes from ArtTactic's recent survey of the Indian art market, but the survey ends with a note of caution: “Respondents are concerned that the rapid recovery and the bounce-back in valuations in the Modern Indian art market have once again attracted speculators to the market.”

But here lies the biggest irony. Without speculation, the art market, which is a lot like the stock market cannot survive. And with the emergence of the Chinese, West-Asian and Indian markets, this will only leave the rest of the global players more and more exposed to competition and in a bid to guard their positions, the traditional players, especially the duopoly of Southeby's and Christie's will carry on with their 'managing' tactics.