Super rich bolster the market - RICS Arts and Antiques Survey Q2 2008

Submitted by on Wed, 9.07.08

The super rich and international buyers are bolstering the arts and antiques industry as signs show the credit crunch is beginning to bite, says the RICS Q2 Arts and Antiques Survey published today (8th July 2008).

Chartered Surveyors reported no change in all lots prices from quarter one1 indicating that the industry has remained relatively stable throughout quarter two. However, there was a stark divergence between the trend in the lower and upper price tiers.  While prices of all lots slipped in the lower tiers, this was not the case further up the value chain, with activity in the £50,000 plus price sector remaining buoyant. 43 percent more Chartered Surveyors reported a rise than a fall in lot prices, demonstrating that the super rich are continuing to invest in unique items as an alternative to stocks and shares.

Signs of a slowdown in the market are beginning to show particularly in the ceramics, clocks and furniture sub sectors. Performance of all lots in the lower price tiers £1-£1,000 and £1,000 -£5,000 price tiers were more subdued. 41 percent and 18 percent more surveyors reported a fall than a rise in the second quarter of 2008, as buyers in the lower end of the market are feeling the impact of the credit crunch, the super rich are only prepared to buy good quality items that will provide a high return in future sales. This is evident in the weakest performing sector - furniture as 20 percent of surveyors reported a fall than a rise. In the £5000+ price tier, 12 percent more surveyors reported a rise in furniture lots showing that buyers are prepared to pay a premium for classic quality pieces as shown in the furniture sales of Lord Sainsbury’s private collection 

The second quarter of the year has seen some big auctions take place. Prominent items from private collections have led to soaring sales in the £50,000 plus price tier. Many records have been shattered with surveyors reporting that the spending power of the super rich and overseas buyers - particularly Russians and Middle Eastern nationals - is having a positive impact on the industry. 

For the second quarter running contemporary art was the strongest performing sub sector and has continued to outperform all other sectors. 48 percent more Chartered Surveyors reporting a rise than a fall. 56 percent and 68 percent of Chartered Surveyors respectively reporting a rise than a fall in the £5000 -£50,000 and £50,000 upwards tiers. For example, a life sized Lucian Freud painting entitled ‘Benefits Supervisor sleeping’ sold for £17.2million2. At Dreweatts urban art sale3, Nick Walker, 'Ratatouille Stencil' sold for £10,000, Adam Neate, 'Red Lips Mixed media' sold for £40,000 and Banksy’s ‘laugh now but one day we will be in charge’ sold for £100,000 indicating that the popularity of urban art continued to prosper. Alongside Jewellery, Militaria and Silver, contemporary art were the only sectors that sentiment in all price tiers remained positive.

In contrast, oil and water colour paintings are not performing as well as contemporary art; with seven percent more Chartered Surveyors reported a fall than a rise. However, the £5,000-£50,000 and £50,000 plus price tier remains strong with 35 percent of chartered surveyors reporting a rise than a fall in the £50,000 upwards tiers.  A noticeable example is Monet’s ‘Le basin aux nympheas’ painting which sold for £41million4 and Kyffin Williams ‘A Welsh Farm’ canvas oil painting sold for £26,0005.

The continuing rise in diamond, gold and silver prices has increased interest and pushed up prices in the antiques market, with silver and jewellery performing positively in all price tiers. 32 percent more surveyors reported a rise than a fall in the silver sector and 24 percent of surveyors reported a rise than a fall in the jewellery sector. 

Surveyors’ confidence in the arts and antiques market over the next three months appears to be weakening with 11 percent more surveyors expecting the number of lots offered to fall than rise, as a slowdown in house sales leads to less house clearances, reducing the number of items being offered at auction.

For quarter three, surveyor’s sentiment for demand is also waning with 25 percent more surveyors expecting a fall in demand than a rise. As house sales fall and cost of living rises buyers will be less likely to refurnish homes. However, as arts and antiques are collectors item, the super rich are likely to still be prepared to pay a premium for rare items.

RICS spokesman; Jeremy Lamond, said: 

“Investors at the top end of the market see arts and antiques as a secure investment in this uncertain economic climate. The credit crunch has bolstered the sale price of more expensive items but has depressed the lower end of the market where liquidity is extremely tight. The cost of living is on the increase making the purchase of antiques a luxury few can afford. The situation is unlikely to improve in the near term but as long well heeled investors remain the market will continue feel supported.”