The art market in 2012 – The emergence of Asia as a decentralising and liberalising factor in the art market

The contemporary art market remains untouched by the economic crisis – over the last 12 years its value has grown by 86%. This remarkable growth can be largely ascribed to the strength of the Asian art market (+120% in volume over the last 5 years). At the turn of this century, players in the art market indeed viewed Asia as a growth driver, but since then it has rapidly become a key marketplace thanks to the emergence of art fairs, new galleries and an explosion in the number of auctions. For the purposes of this review of 2012, Artprice will be focusing on the auction results.

In the midst of dizzying double-digit annual growth figures, an increasingy tally of sales in excess of the million dollar mark, records tumbling every month and negligible numbers of unsold works, this analysis of the Asian art market in 2012 enables us to identify the major trends in a market that is shifting to the East and that in future will be setting the rules for the rest of the world to play by.

From a tale of two cities to a tale of two continents
Since 2011, 45% of the proceeds from worldwide auctions of contemporary art have been achieved in Asia. Of course, a large proportion of these sales are made in Beijing and Hong Kong (76%), but other cities such as Singapore, Tokyo, Seoul and Taipei are now producing higher sales volumes than traditional marketplaces such as Paris, Berlin, Milan and Geneva. Today, more contemporary art is sold in Taipei than in 49 of the USA’s 50 states put together (excluding only New York State).The emergence of Asia is not only important in that it is a growth driver for the global art market, but it also raises some interesting questions about a new economic multipolarity. Ten years ago, 80% of the art market was dominated by London and New York, with a few other cities being left to pick up the crumbs. But since 2011 the spread of the contemporary art market has grown exponentially. From 2011 to the present day, over a million dollars’ worth of contemporary art has gone under the hammer each year in 40 cities. These not only include the traditional centres of New York, London, Paris, Beijing and Hong Kong but also Seoul, Berlin, Singapore, Brussels, Jakarta, Amsterdam, Melbourne, Taipei, Tokyo and Hangzhou, to name but a few. Half of the top 40 marketplaces in the world are now in Asia.

And if the market is shifting towards new cities, then the same is happening to the auction houses. The traditional duopoly is suddenly finding itself under pressure. The proof is in the figures: in 2002, Sotheby’s and Christie’s represented 72% of the proceeds from sales of contemporary art worldwide, but over the last two years their share has dropped to just 50%. And the two market leaders are only managing to limit their losses by opening up auction rooms in Asia. Ten years ago, sales by Christie’s and Sotheby’s in Hong Kong were insignificant: for Christie’s it represented at most 2% of its worldwide proceeds from contemporary art sales, while for Sotheby’s the figure was a mere 0.1%. But over the last two years the contribution made by the Hong Kong sales rooms to their business has skyrocketed. Hong Kong is now providing Christie’s with 21% of its contemporary art sales and Sotheby’s with 29%. Outside of the nerve centres of New York and London, more contemporary art is today being sold by these two auction houses in Hong Kong than in all their other sales rooms put together.

Ten years ago, only five sales rooms in the world generated over five million dollars in revenue. They were all located in London or New York, and the market was fiercely guarded by Christie’s, Sotheby’s and Phillips de Pury & Co. Today, thirty sales rooms are generating over five million dollars in contemporary art sales each year, and of these, two-thirds (19, to be precise) are in Asia. Outside of Asia, Sotheby’s and Christie’s continue to have 73% (31% and 42% respectively) of the contemporary art market and only three other auction houses hold more than 1% of the market (Phillips de Pury & Co with 19%, Artcurial with 1.1% and Bonhams with 1%). In Asia, where the market is much stronger, the number of sales rooms achieving a market share in excess of 1% has grown to 19.
And competition from the auction houses is less passive than in the rest of the world – in Asia, they are snapping at the heels of Sotheby’s Hong Kong (17%) and Christie’s Hong Kong (16%). Let’s take the example of Poly Auction, which is breathing down the neck of Christie’s with a market share of 15%. Another example is China Guardian with 12% of the market. Rong Bao claims to have 4% of the market, Ravenel has increased its share to over 3.5% and Beijing Hanhai, Beijing Council, Beijing Tranthy and Hosane all have over 2% of total sales of contemporary art.

From decentralisation to diversity
The art market’s new geography has resulted in a much more diverse contemporary art offer in response to this new and growing demand. Never before have so many works by contemporary artists gone under the hammer (75,000 since 2011 compared to an average of 20,000 from 2002 to 2005), and Asian artists have never before been so strongly represented. They alone generated 35% of auction sales and 45% of sales proceeds in 2011/2012. Artists from China are now the most prolific in the art market. This Chinese dynamism is spreading across the whole of Asia, with less productive economies such as Indonesia being better represented than France (0.9% against 0.8% of total sales proceeds). Japanese artists are more popular than Spanish or Italian artists (with sales proceeds of 3.2% compared to 2%), and artists from the Philippines, Korea, Taiwan and India now feature amongst the top 30 nationalities in the art market.

Turning to the high-end market, of the 500 top contemporary artists in 2011-2012, 49% came from Asia. Chinese artists are of course most strongly represented (199 in the top 500), well ahead of artists from England (31), the USA (86) and Germany (27). What is more, the Asian art market is certainly not limited to China. Nowadays, artists from India (7), Indonesia (10), Japan (14) and Korea (7) are as well represented in sales rooms as artists from France (9) or Spain (3). The global art market has been turned upside down.
The market share of Asian artists is growing each year. Let’s not forget that in 2005 only 40 Asian artists managed to make the list of the world’s top 500 artists. And there is no let-up in demand, as is shown by the very low number of unsold works in Asia (26%), a figure that has even dropped below the 25% barrier in countries such as China (22%) and Taiwan (21%). This rate is much better in Asia than in the West, where the rate of unsold works is stagnating around 35% (rising to 45% in France and 37% in the UK).
Asian artists are also being swept along by strong demand for works by new artists. This is a powerful force that is lacking in other areas of the world and is leading to the rapid rise in popularity of certain young Asian artists. For example, half of the most popular artists under 40 years of age are of Asian origin (among them two hundred and twenty Chinese, who are also in the top 500 of artists under 40). New records are constantly being set in contemporary art, and over the last two years there have been at least one thousand three hundred and fifty new records set in Asia.

The most popular artists
The most popular artist in Asia is none other than Zheng Fanzhi from China. There is no sign that demand for his works is slackening, with only 13% unsold over the last twenty-four months. In 2011/2012, thirty of his works sold for over $1 million. After the West’s legendary Jean-Michel Basquiat, Zheng Fanzhi is the artist who has most often exceeded the one million dollar mark since 1st January 2011. He is followed by his compatriots Zhang Xiaogang (16), Chen Yfei (13), Wang Yidong (11) and by Japanese artist Takashi Murakami (9).

The latter is the most expensive living Japanese artist (My Lonesome Cowboy was sold in 2008 for $13.5 m) and the strong market for his work is largely being fuelled by demand in Asia. Since 2011, 47% of his works have been sold in Hong Kong, Tokyo, Beijing, Seoul, Singapore or the rest of Asia. This is evidence of a real shift over recent years, as in the past his works were mainly sold in London and New York. Murakami has always been appreciated within his own country, with around 10% of his works being sold in Japan each year, but the connections that he makes between Asian and Western culture have also made him one of the favourites of global sales rooms, from Hong Kong to New York via London and Paris. He is also the only living Asian artist (along with Zao Wou-Ki), to have his works sold at Christie’s and Sotheby’s more than one hundred times around the world (a hundred and thirty three times for Murakami) since January 2011. He is also the only artist under 50 to inspire so much demand for his works on the part of collectors. Along with Damien Hirst, he has sold over a hundred lots at Christie’s and Sotheby’s.

Along with eighteen Chinese artists and Japan’s Murakami, the Indian Anish Kapoor has edged into the top 20 of contemporary artists who have sold the most works over $1 million. He takes fourteenthth place in a listing of artists by revenue, mainly thanks to six sales over $1 million recorded since 2011. Anish Kapoor is the only Asian artist in the top 20 who has never been sold for more than $100,000 in Asia, and he has not sold a single lot in Asia since 2008. But Anish Kapoor can hardly expect to be well represented at home, as auction houses are almost non-existent in India (only Asta Guru and Osian’s are active in contemporary art on the sub-continent). The artist has been based in London since the age of 19, when he came to England to study at Hornsey College of Art and then at the Chelsea School of Art and Design. Reason whyhis market is very much focused on the UK, where 60% of his works are auctioned.
During 2011 and 2012, Anish Kapoor continued to make news with the exhibition of his work Leviathan at the Grand Palais in Paris (autumn 2011) followed by the unveiling of his Orbit tower at the London Olympics (summer 2012). In light of his current fame, it is hardly surprising that prices for his works have skyrocketed. This is particularly noticeable in the price achieved for his work Turning The World Upside Down #4. Sculpture 2 of 3 was sold for $1.6m at Sotheby’s in New York in November 2009, and then the same work (numbered 3/3) was sold once again by the same auction house in May 2011 for $2.1m – an increase of 31% or $500,000 in just 16 months!

Whether their work is sold in New York, London, Hong Kong, Singapore or Beijing, the most popular artists offer proof positive of how the high-end contemporary art market remains unaffected by the economic crisis. Since 2011, the 500 top contemporary artists (out of 90,000 artists) have produced over $2 billion in sales proceeds, representing 87% of all contemporary art sold at auction worldwide. And of these $2 billion, 45% comes from Asian artists based in countries such as China, the Philippines, India, Indonesia and Korea…

What lies ahead for a market that is hungry but weakened by the global economic crisis?
Although artistic creation has never been better and demand is still strong in many regions of the world, has the global economic crisis tipped the balance towards the Asian art market? What is the future for this booming market?
The number of unsold works in Asia has remained unchanged over the last year. September, October and November 2012 posted unsold rates of 31%, 26% and 27% respectively, figures that were almost identical to those for the same months in 2011. These reassuring figures followed in the wake of an excellent period in July and August when the unsold rate even dropped below the 20% barrier, settling at 18%. This year, there is no sign that demand is starting to slacken. Average sales prices continue to soar with each new auction season.
In the last quarter of 2012, the average price for a work bought in Asia was $70,000, an increase of $10,000 on the same period in 2011. Strong demand is pushing up prices, despite sluggish economies and a lack of global confidence. According to Artprice’s Art Market Confidence Index, confidence has never been stronger amongst respondents of Asian origin. Players in the Asian art market are confident and enthusiastic, despite the general gloom. This confidence is palpable in the sales rooms, with year-on-year sales prices well in excess of their – often inflated – estimates. In November and December 2012, 41% and 34% of lots sold for more than their highest estimates, compared to 42% and 31% for the same months in 2011. If this extraordinary level of demand is somewhat surprising in the current climate, the vitality of the market is even more spectacular. Over the last 3 months, only 27% of lots sold for less than $5,000, compared to 40% the previous year, showing that there are now very few affordable works on sale in Asia. The market is most definitely more high-end than in the rest of the world because it is subject to an excess in demand. The question of whether this can be sustained is crucial in a market where the rarity of quality works makes the presence of trusted intermediaries all the more pertinent.

The figures for 2012 once again prove that the contemporary art market in Asia is booming and not yet sated. The Asian market in contemporary art continues to break records without putting a foot wrong. But although the figures for 2012 are positive, certain questions remain to be asked. Is the market based on healthy growth? The art market is a perpetual bubble whose value is not linked to tangible economic factors. But is it really a speculative bubble? These are important questions, even in the present climate of confidence.
But the current dominance of Asian artists among the ranks of the world’s top artists, the extraordinarily strong demand for their works and the emergence of young artists who are selling well at auction constitute positive signs for the future of the art market in this part of the world.