Brighter days seen for beaten-down art market

Fri Apr 16, 2010 12:29pm EDT
 
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By Christopher Michaud

NEW YORK (Reuters) - The art market plummeted with the onset of the global financial crisis but experts, fund managers, collectors and auctioneers are rallying on signs the once-hot investment is on the verge of solid recovery.

Less than two years after an unusually long-lived art boom came to an end with lower prices and a decreased supply, bidders have returned to salesrooms, prices are mostly ticking up and records are being set once again.

Independent fund manager Castlestone Management, which specializes in alternative assets for global clients, has said it anticipates a 40 percent rise in art prices over the next two years.

Citing a 70 percent rise in equities prices since late 2008, Castlestone noted that "equities is considered to be a key indicator when analyzing trends in the art markets."

It compared the market to gold, which has appreciated 50 percent since November 2008 and which, like art, "is an unleveraged, irreplaceable real asset which investors turn to" during unsteady economic times.

Strong results at February's impressionist, modern and contemporary sales in London, where Swiss sculptor Alberto Giacometti's "Walking Man, I" set the record for any work sold at auction with a $104.3 million price tag, seem to bear out the optimism.

More recently, the Hong Kong sales set records and exceeded estimates, driven in part by flush Asian buyers.

In the art world, solid results boost confidence, encouraging owners of top-quality works to re-enter the market. The availability of rare or fresh-to-the-market pieces stokes bidding, which drives up prices, and a cycle is born.   Continued...