Making predictions about the art market in 2017 is one of the most challenging tasks I have ever undertaken, with so many variables that have either happened or are still in the works. Past events, such as the UK’s vote to leave the European Union and the election of Donald Trump as US president, and forthcoming elections in Europe, which could see populist politicians take power, are overturning the established order and creating enormous uncertainty about the future. Pundits worldwide are scratching their heads—and so am I. How might these changes have an impact on the art market, and what other elements are likely to affect the players in 2017? Here are my very tentative thoughts on the subject.
1. A tide of change in the West
At time of writing, President-elect Trump had yet to finalise his economic policies. However, it seems certain that he will reduce taxes for the rich. Some changes, such as increased spending on infrastructure, could benefit the US economy. As 2016 drew to a close, stock exchanges worldwide were buoyant and oil prices looked likely to rise, too. The results of the bellwether November auctions in New York were encouraging, albeit with reduced tallies compared with the same season in 2015—even more so compared with 2014. The polarisation of wealth in the US seems sure to increase, and I predict that this could have a positive impact on art sales there. Even with a rise in interest rates, art remains attractive as a tangible investment. However, the possible abolition of tax incentives for donating works of art to charity could have a discouraging effect on collectors.
French presidential candidate Marine Le Pen. Photo: Blandine Le Cain
In Europe, a win by the French far-right populist Marine Le Pen—unlikely but not impossible—would be a major political upset, though the country’s relatively small art market is already stagnant, as is Germany’s, which has been hit by stringent export laws; both might shrink further. More worrying is the “Brexit effect” in the UK. A weaker pound has proved beneficial for sales so far, but a contracting economy and loss of City jobs could be negative for the market in the long term. I predict little short-term change but a long-term weakening of the UK’s position, depending on the currently unfathomable terms of the Brexit deal.
2. Auction houses grow apart
Brett Gorvy, Christie’s rainmaker for post-war and contemporary art, left to found a new advisory and dealing venture with Dominique Lévy. Meanwhile, Guillaume Cerutti is replacing Patricia Barbizet as CEO. Gorvy’s parting broadside that “the market was crazy, it was all deal, deal, deal” underlines the intense competition between the two auction houses, which appear to be taking very different paths to boost profitability. Christie’s seems to be continuing to go after consignments at all costs, while Sotheby’s has broadened its services, buying the art data firm Mei Moses Art Indices, the scientific research firm Orion Analytical and introducing advisory services for artists, estates and foundations by hiring Christy MacLear, the former CEO of the Robert Rauschenberg Foundation.
After spending $85m to buy Art Agency, Partners and the unprofitable sale of the guaranteed Taubman collection, Sotheby’s share price and profits dropped, and long-serving executives were leaving. But in September, the Chinese insurance company Taikang Life Insurance took a 13.5% stake in the company. Taikang’s super-wealthy chairman Chen Dongsheng helped found China Guardian, the world’s fourth biggest auction house. The Sotheby’s share price has rebounded to almost double its lowest point since then.
Could Taikang’s investment in Sotheby’s be a “suck it and see” step? China Guardian is in fierce competition with Poly Auction, the country’s number-one auction firm. Acquiring Sotheby’s would give it instant scale and global reach, though much of this will depend on Trump’s policies towards trade with China, as well as China’s planned restrictions on outbound foreign investment. I predict Christie’s will continue to fight aggressively for the best consignments while cutting costs quietly behind the scenes.
3. Art fairs feel the pinch
Last year, a glut of fairs, coupled with a shrinking market, led to closure or postponement (Art17 and Art International Istanbul, respectively), while other fairs cut exhibitor numbers (Art Cologne) or reduced their duration (Frieze New York). In particular, smaller and mid-size galleries—which constitute the bulk of fairs’ client base—are facing tough conditions. Many are being far more selective about participation.
I expect to see consolidation continuing with the launch of the MCH group of regional fairs. A few more will disappear, more will downsize. WME-IMG, which took a 20% holding in the Frieze group in 2016, might complete the buy-out this year. Would it then launch other fairs under that brand name, in China or on the US West Coast? Again, this would depend on the hard-to-predict impact of Trump’s economic policies.
4. Trouble in the Gulf
UAE visitors inspect Saadiyat Island Project at Abu Dhabi Tourism Development and Investment Company. Photo: EPA/ALI HAIDER
It is difficult to avoid the impression that the Gulf mirage is fading. The Guggenheim Abu Dhabi project seems stalled and no acquisitions have been announced recently; the opening of the Louvre Abu Dhabi has been delayed again, although buying continues; while the Qataris, having accumulated a sensational selection of works of art, appear to be cutting back on spending. And falling oil revenues have caused budgets to be slashed widely. Unrest in the region is discouraging tourism. I see this market continuing to stagnate.
5. Data wars hot up
The battleground for big data heated up in 2016; Mei Moses index was bought by Sotheby’s and Tutela Capital by Artnet. Tutela is a neat fit with Artnet, providing research and analysis of the market using its database. But trouble is brewing. The German entrepreneur Magnus Resch saw Magnus, his application touted as the Shazam of the art world, withdrawn from Apple’s app store after complaints its data was lifted from Artsy and ArtFacts. And Heritage Auctions sued Collectrium, a database service belonging to Christie’s, for allegedly using three million of its listings without permission. Big data will be a major issue in 2017. With software able to easily and cheaply “scrape” the internet, I predict a radical shakeup for art data sites—and, hopefully, more real transparency in the market.
How did our 2016 predictions pan out?
Last year, our resident clairvoyant Georgina Adam predicted big staff changes at Christie’s—and especially at Sotheby’s, under its new chief executive Tad Smith. Indeed, there was a spate of high-profile departures from Sotheby’s, including Henry Wyndham and Cheyenne Westphal. At Christie’s, Brett Gorvy’s departure spells the end of an era and leaves open a possible scrambling of the post-war and contemporary department. Adam also accurately predicted that rival Phillips would continue to recruit staff and be more aggressive with its guarantees, while the big two would scale back on them. Her feelings on Europe’s art fairs proved to be right: recurring terrorist attacks led to a fall in American visitors. WME-IMG’s acquisition of 20% of the Frieze group (almost) fulfilled her vision of a “major European art fair changing hands”. Judging by the past year’s events, however, anything could happen. Ermanno Rivetti