China Art Bubble
A good friend of my girlfriend works in the Chinese art auction industry. She says business is great and has put a good amount of her own money on the line in buying and selling Chinese artwork, hinting to my girlfriend that there is good money to be made in this way.
Chinese Art Probably is in a Bubble
From the way she described it I was a little suspicious of the whole thing, and thought that Chinese art might be in a bubble. Now I am even more convinced of the matter, what with three new record setting sales this year for Chinese oil paintings (for the most recent, see this article about Danshui by Chen Chengbo that I just posted), and the article below, translated from Modern Times:
Frothy Prospects
As art galleries become a more and more popular diversion of Chinese people, there are some that believe the Chinese art market will turn into an imploding bubble.
Many Chinese people, especially younger ones, are becoming more and more passionate about collecting Chinese art. Chinese modern artworks are setting new price records both abroad and at home, and Chinese art galleries and collections are increasing at a quick rate. But there are some specialists who believe that this red hot market in Chinese art is just a bubble waiting to burst.
Two years ago, Chinese modern art had pretty good showings in New York and Hong Kong auctions, but most buyers were foreign art lovers. Nowadays more and more Chinese art collectors and investors are seriously investing [speculating] in Chinese modern art. A gallery curator says that 1/3 of current customers are from a new generation of rich Chinese. “This group is in reality a little older, composed mostly of thirty or forty year old successful entrepreneurs. Their businesses have done well and they have earned money, so they buy Chinese art as an investment or to show off their social status.” Because of the hot pursuit of many people, a lot of the best works of modern artists are being pushed to new high prices.
Facing unexpected large-scale auctions and unprecedented prices, the Chinese art market is starting to show the signs of overheating. The prices of works of some Chinese modern artists have become bubbly, which brings a large amount of risk with them. Also, with regulation breaking influences such as counterfeit works of art and false bidding, along with an influx of new collectors, funds for these Chinese art works have not kept pace. Since the beginning of this year, there has not been a large-scale Chinese art auction where 90% of the final bids turned into purchases. Also, some smaller Chinese art auctions have begun to fall flat. There is a clear difference in the Chinese art auction world in comparison to last year, when almost 100% of final bids became purchases.
The era of explosive returns from Chinese artworks will soon come to an end. After a period of explosive growth the market will certainly cool off, as the China art market becomes more and more mature.
Apparently the air has already begun to come out of the bubble in Chinese art, although the story linked at the very beginning of this article would seem to refute this.
