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Chinese Investors will continue to drive the Art Market in 2012

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Last year China’s art market exceeded US$ 31.75 billion, primarily because diversification away from China’s stock market and the real estate sector that will fuel the art market even more this year. 

The Chinese Auction powerhouses like Guardian and Poly foresee  continued strength in the domestic Chinese auction world in the year ahead, though excess speculation could see some bubbles within the traditional Chinese art and antique less on the contemporary art.

Jing Daily says “An art market can not thrive without a booming economy. Despite weak external demand due to wobbly recovery in US and the sovereign debt crisis in the EU, China’s economy managed to expand 9.2% in 2011.

Experts say that when the per capita GDP reaches 1500-2000 US$ its citizens create demand for art investment. When it hits 5,000 US$ in a country, the art market will enter a fast expansion period. China’s GDP per capita has just reached 4,000 US$ and is in an early stage but market experts believe the art market has huge potential.

China’s art market is facing tremendous opportunities, underpinned by the prosperity of the cultural industry and the gradual maturity of consigners, buyers and other market players.

There is also a growing interest in art funds in China, noting that China had more than 70 art funds as of November last year, with an initial capital of US$ 14.6 million, noting that excessive speculation in nascent domestic art funds could cause a problem.

The holding power for art funds is a key factor in generating returns. Generally, it should be 3-5 years but art funds in China hold only for 1.5 years in an average because investors have no patience to wait too long. It takes time for an art fund to establish a position, wait until the price of the works rise and then close the position. As illiquid assets, art suits investors rather than speculators, according to experts.

 

 

 

 

Daniel Brostrom