Art market is a real winner

THE art market proved beautiful for investors last year, with a 10.2 per cent growth in prices shown by the Mei Moses World All Art Index.

The index, which measures returns on art mainly by tracking repeat sale prices in New York and London, was boosted by growing Chinese demand and estimate-beating auctions. They included the sale of Andy Warhol’s 1981 work “Dollar Sign”, which sold at Sotheby’s for just under $700,000 (£454,000) – twice the original estimate – plus the sale of the pop artist’s “Liz#5” and “Flowers” which went last May for $27m and $8.1m respectively.

Meanwhile, Roy Lichtenstein’s painting “I Can See The Whole Room...and There’s Nobody in It!” set a new auction record for the artist when it sold at Christie’s in November for $43m – reaping a stunning $40m profit.

Returns from traditional Chinese works rose 20.6 per cent during 2011, as Chinese investors sought to reclaim cultural assets that had been sold to western investors.

Impressionist and modern art gave returns of 14 per cent, postwar and contemporary art were up 6.4 per cent, while Old Master and 19th century art increased by 4.8 per cent.

The index’s 10.2 per cent growth followed a 16.6 per cent rise 2010. That in turn followed a 23.5 per cent plunge for 2009 in the wake of global recession.

Index creators Jianping Mei and Michael Moses were upbeat about the profit potential for art, pointing out that market outperformed the S&P500 US equities market by nine percentage points last year.

Furthermore, the Mei Moses has beaten the S&P 500 in six of the last 10 years, with an average annual return of 7.8 per cent compared with 2.7 per cent for the benchmark US index.

However Moses warned that gathering signs of economic gloom may depress the market for this year.

“Recent economic conditions have made art investors much more cautious and thus have tempered their enthusiasm, resulting in somewhat lower growth,” he said.