Coronavirus… impact on the art market

[28/02/2020]

Cancelled fairs, postponed or relocated sales… the measures taken in response to the possibility of a coronavirus pandemic are causing severe turbulence on the Art Market.

Hong Kong and Art Basel under strain

AB_HK 2015

Hard hit by the coronavirus epidemic, Hong Kong has closed almost all its borders with mainland China. This decision has dealt a new blow to China’s domestic economy and has repercussions worldwide. Beyond the economic field, the entire cultural sector is being affected and the art market is suffering the consequences.

The first bad news came in early February with the cancellation of Art Basel Honk Kong. “We have studied all the other possible options, however, we have no choice but to cancel the fair”, announced Bernd Stadlwieser, CEO of MCH Group, the Swiss company that organizes the fair due to be held at the end of March. It is a heavy blow for the former British colony which, in recent months, was forced to cancel numerous cultural events due to pro-democracy demonstrations.

It’s also a serious blow for the galleries for whom Art Basel Hong Kong represents a key commercial platform. The cancellation is likely to have a substantial impact on the annual performance of these galleries who rely on the fair to win new international customers.

Following the cancellation of Art Basel, the satellite fair Art Central has also cancelled its 2020 edition, due to take place simultaneously at the end of March at the Central Harbourfront in Hong Kong.

Online to save Art Basel HK

On February 20, an official press release from Art Basel Hong Kong announced the launch of a first experience in the world of “online fairs”, offering exhibitors the opportunity to present the works they planned to present at the fair. Although the digital experience cannot replace a physical visit to the fair or direct contact between collectors and galleries, it is extremely welcome as a way of supporting “all the galleries affected by the cancellation of the March fair”, according to Adeline Ooi, Director of Art Basel Asia. The online viewing rooms will be open from March 20 to March 25, 2020, with VIP access days from 18 – 20 March 2020, as for the cancelled physical fair.

This unique crisis situation represents, by necessity, an opportunity for reflection and exploration of new ways to bring art professionals into dialogue with the public… and quickly.

Postponement and relocation of sales

Among the “side effects” of the coronavirus, a number of auction houses have taken measures in the face of a possible pandemic, by postponing their sales. Christie’s and Bonhams have decided to postpone their auctions scheduled for Asian Art Week in March, fearing that too many Asian collectors would be unable to attend the event due to territorial restrictions. Christie’s Hong Kong sale – 20th century and Contemporary Art – initially scheduled for March, will take place in the last week of May. Bonhams has also postponed its sale. The dates have not yet been fixed.
The Chinese companies China Guardian and Poly Auction also intend to move their spring sales to April, or even May.

Sotheby’s has decided not to postpone, but rather to relocate its sales by repatriating them to New York. A “strategic decision”, “taken after careful consideration”, according to Kevin Ching, CEO of Sotheby’s Asia. Its sales will take place during the week of April 16 at the company’s headquarters on Manhattan’s Upper East Side.

Among the star lots in Sotheby’s sales is a David HOCKNEY canvas titled 30 Sunflowers, estimated around $10 million and an important work by SAN Yu, Quatre nus (1950). The stakes are high, because a major work by Sanyu presenting five nudes fetched $39 million at Christie’s Hong Kong last November.

sanyu

SAN Yu (1901-1966) ©thierry Ehrmann – Courtesy of Musée L’Organe / Abode the Chaos

Waiting for things to improve…

Hong Kong is the world’s 4th largest art auction marketplace. Generating more than USD 1.33 billion, the island hammers just over 10% of the annual global turnover on fine art thanks to a high concentration of wealthy collectors who participate at the highest level of auctions. In 2019, the city recorded lots of new world auction records (The Art Market in 2019).

Hong Kong’s annual results will suffer from this crisis, especially if it lasts. However, it is still not possible to assess the impact of the situation on the Asian market today, nor on the global market. The auction houses are literally brainstorming to find a solution to this temporary paralysis, in order to keep the market afloat, with the most immediate response being a switch to online sales.

Asia is not the only region affected. The turbulence linked to the coronavirus has already impacted the Middle East and Europe. Italy has taken exceptional measures by cancelling the Venice Carnival and closing the doors of museums in the North of the country (Venice, Milan and Turin), at least until February 29. In their wake, several Italian auction houses have postponed their sales… waiting for better news.

Beyond the auction rooms, the entire museum industry is affected. French
museums and monuments have been impacted since January by the abrupt fall in the number of Chinese tourists. “Reservations from Chinese tourists dropped 80% in January and are down 100% for the month of February”, deplores Didier Kling, president of the Chamber of Commerce and Industry of Paris-Ile-de- France (source BFM Paris, 25 February 2020). The coronavirus crisis is therefore impacting the tourism sector in France, but, to date, no fairs have announced either postponement or cancellation. The watchword is to maintain confidence.