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Tuesday, 21 October 2008

Oligarchs Form An Orderly Queue

Oligarchs Form An Orderly Queue
There’s Never Been A Better Time To Invest In Art!

Richard launches the independent artspace in his wristwatch - Black Cylinder Gallery - at Frieze Art Fair 2006

Richard: I've got an art gallery in my watch.
Lady: So you have.

Richard: While you decide what to purchase, help yourself to a glass of wine.

As capitalism careers around the lip of the abyss1, London’s art establishment is mopping up following the frenzied circle jerk spending spree that is Frieze week.

Since Frieze Art Fair’s inception five years ago, sales have seen rapid year-on-year growth, from £20 million in 2003, to £33 million in 2005. Although exact figures have not been released in subsequent years, sources claim that sales could now be as much as £100 million2.

This recent boom is fueled by super-rich non-domiciled residents, as ‘the number of high net-worth individuals in Europe continues to soar’3. According to the New York Times’ Roger Cohen, ‘Wealth is not so much diminishing, as it is shifting to emergent recession-resilient elites in places like Russia, China, India, Dubai and Brazil’4. Prominent among this group are the Russian oligarchs, who are transforming the capital’s art scene5.

If, as many are predicting6, takings at Frieze are down this year then perhaps the recession has finally reached the art market. If however revenue is up, then it may go some way to proving a theory posited in an essay by Sahil Malik in the September 2007 volume of Mute Magazine7, namely that the global art and financial markets have decoupled.

The crux of Malik’s theory is that art is less of a liquid asset than stocks and shares – ie. not as easy to trade – and thus subject to different risks than the stock market. Distribution of risk is key to ‘spreading the bet’ so investing in art is a hedge against the instability of the market.

By this rationale, as investors clamour to find safe havens for savings, the art market should thrive, or as Malik puts it:

‘A crash in the stock market need not result in an accompanying crash in the art market, but instead to an increase in art market prices as a compensatory investment’8.

Also, unlike other financial instruments, the sale of art isn’t regulated.

The reason I am telling you all this is because I have some sculpture for sale.

[1] Quote by broadcaster Michael Burke on Radio 4’s ‘On The Ropes’, 2nd October 2008

[2] International Herald Tribune, ‘Frieze week is a catalyst for London art’ 12th October 2006

[3] Quote by Jonathan Breeze, CEO of boutique airline Jet Republic interviewed on Radio 4’s ‘PM’, 23rd September 2008

[4] New York Times, ‘Premiumize or Perish’, 14th September 2008

[5] The Guardian, ‘Prices soar as world's super-rich invade London art market’, 26th June 2008

[6], ‘Crisis Imperils U.K. Art Fairs’, 12th October 2008

[7] Mute. I can highly recommend picking up a copy of this issue - a lot of the essays have proven rather prophetic, including some very interesting pieces about the Olympics; Did you know that ‘the IOC enjoys tax-free status despite not being a charity, a religion, or a non-profit organisation. And to be on the safe side, its members enjoy diplomatic status’? Mute is published in Whitechapel and is available from Freedom Press Bookshop, just round the back of Artsadmin.

[8] Mute Magazine, A boom without end? ‘Liquidity, critique and the art market’, p92, Vol 2, #6, September 2007

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