In this troubled economy, Christie’s and Sotheby’s are doing a booming business. Christie’s year-end results were £3.6bn, up 9%. The percentage rise in sales of contemporary art was even better, at 22%. Sotheby’s doesn’t announce its complete results until the end of February, but its total auction sales increased by 14.5% with contemporary art up a significant 34%.
The gravity-defying surge of this segment of the art world is surprising, but only at first glance. The bulk of revenues comes from “ultra high net worth” individuals, many of whom operate at a level far above national economies. Even those who have taken blows in recent years remain super-rich. If they were worth £3bn in 2007, maybe they’re worth £2bn now. It’s not like they’re feeling the pinch.
The burden for the stinking rich is what to do with their money. There is currently no interest to be earned on cash, so they can’t leave it in the bank. The property market is nearly paralysed and, for these globetrotters, the drawback of real estate is that it is tied to specific currencies. A Mayfair flat sells in pounds, but the Francis Bacon painting that hangs on its wall could sell in Hong Kong dollars and take up residence on a yacht in the South Pacific. Like historic or extra-large diamonds, works by artists with international recognition are a hedge against volatile currency fluctuations.
Fifteen years ago financial advisers were not in the practice of recommending that rich people diversify their portfolios by buying art. Now it is the norm. While buying emergent art is high-risk, speculative investment, acquiring established masterpieces is perceived as the opposite – a back-up in hard times. If all goes wrong in the world, if the eurozone cracks, the Middle East erupts in war, and a tsunami hits Manhattan, that rare, portable 1964 Marilyn by Andy Warhol will still be worth something.
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Image: Illustration by Andrzej Krauze via The Guardian.