World’s Rich Pay Top Dollar for UK Art
Since the financial crisis, the world's wealthy have increasingly parked their cash in tangible items such as classic cars, fine wine and art, in order to preserve capital. But while the classic car and wine sectors have weakened, high-end art has not suffered the same fate, with some analysts even warning of an art market bubble.
According to Philip Hoffman, the CEO of Fine Art Fund Group, U.K. art is doing particularly well, as non-traditional buyers bulk out their collections of western art.
"We've seen the British tennis players, [Andy] Murray, doing well. We've seen the British Lions, and now we've seen British artists doing incredibly well," Hoffman said. He explained that art auctions were seeing interest from countries with no history of art ownership, such as Saudi Arabia, Qatar, Mexico and Brazil.
"They have no western art at all. They want Warhol. They want Basquiat," Hoffman said. He told CNBC that works by contemporary British artist David Hockney are selling very well at present, with buyers uninterested in works by unknown artists, however exciting.
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In addition, buyers want art that is as good, or better, than works on view in museums. Hoffman highlighted one of his Russian clients, who has artwork worth over $100 million in his home.
"He's got his assets on his wall, and he loves to show them off. You can't do that easily with wine. I did have a client who put a gold bar on the desk, but it's not really quite the same," said Hoffman.
Christie's will host an auction of modern British artwork on Wednesday evening, with paintings by 20th century English artist L.S. Lowry heading the selection. His "Industrial Landscape" work is expected to fetch £1.2 million ($1.8 million).
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One reason the luxury art market is booming is because of a greater proportion of high-net worth individuals are buying art. According to Hoffman, 10-to-15 percent of the world's wealthy currently own art, up from 5 percent 20 years ago. He forecast that 40 percent of wealthy people will hold art in the future.
"There's so little art that's available at the top end, and there's so much liquidity available, you are going to see massive price growth in the next 10 years," Hoffman said. "I think you're going to see art carry on booming for the next 10 years."
The luxury art market is worth around $10 billion a year. Around 3,000 pieces sell for more than $1 million each year, with prices for top-end art ranging between $1-to-$100 million.