Art investor numerology

homeStatistics, statistics, and more statistics. Now that it’s snowing again and I am trapped in the house, I have cracked open the revised and expanded edition of Skate’s Art Investment Handbook. This well-informed, astute, efficiently written compendium deserves to be in the library of anyone seriously interested in the art market, investor or not. It has the additional virtue of treating its topic with a healthy dose of skepticism and occasional humor—as could be expected from a Central European author.

The hefty tome turned up in the mail the other day, and, somewhat to my surprise, I actually enjoyed thumbing through it. The work of a team lead by the Russian financier Sergey Skaterschikov, it includes a solid overview of the art and art-services market, along with detailed analyses of the market’s top tier, the 1,000 top-selling works at auction tallied in the so-called Skate’s Top 1000.

The book should delight all cultural enthusiasts who thrill to obscure quantitative trivia. We learn, for example, that:
• Works by 300,000 artists, valued in total at $400 billion, are available to trade at any time on the global art market, resulting in a trading volume of $60 billion per year (with 90 percent of transactions falling under $10,000).
• One million individuals and estates, 50 art funds, and 500 museums buy art regularly.
• The 1,000 most expensive works sold at auction since 1985 were made by 183 artists and are collectively valued at $13.2 billion as of Apr. 30, 2009.
• The world’s museums hold 100 million works of art; 100,000 of these can be expected to come to market annually through deaccessioning.
• Art valuation decreases with size.
• There are 10 million art works with pricing information available in published databases, and one million additional works come to market and are added to such databases each year.
• Between 2002-2009, the combined value of living artists in the top 1,000 works grew by 350 percent.
• Despite much talk about globalization, and a 20-fold increase in artists from Brazil, Russia, India and China in the market’s top tier, these artists account for only 1.5 percent of the combined value of the top-1000.
• About 70-150 million works of art circulate on the market at any time.

On and on it goes—a seemingly bottomless trove of information, charts, and graphs. I relate these factoids without any ability to vouch for their accuracy. As Skaterschikov himself advises, “be careful what you read here.” Even so, they illustrate the vast scope of the art-investing universe today, and the audacity of those who seek to enter it and gain from it. How do the numbers sound to you?

One thought on “Art investor numerology

  1. During the same period that the combined value of the top 1000 works of living artists rose 350% (according to Skate’s), the NASDAQ Composite Index FELL a net 20% (from about 2050 in January 2002 to about 1630 Jan09). Should we be happy for our market? Or should we be worried? Or should one not take these numbers at face value?

    Remember that when an artwork drops in value it can simply retreat back into a basement or stay hanging on the wall, with no transaction taking place to show that the market value has fallen. It can also be sold privately at a marked down price, where no-one can monitor or comment on the drop in value. This cannot happen with public company shares where all transactions must take place on the open market. So the markets for Art and Shares are not directly comparable. Public equity markets report every transaction for every share. Art markets are multi-layered with some transactions private and some public.

    A better indication for overall health of the Art Market might come from this chart in the January edition of The Art Report. It certainly reflects the mood within the dealerships and the drop in both volume and prices felt at the auction houses.

    TAR

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