Art & Finance 2017
It is now six years since the first issue of the Deloitte and ArtTactic Art & Finance report was published, and based on the findings of the 5th edition, we continue to see new and interesting developments in the art and finance industry.
Section 1
The state of the global art market
+18 percent
Auction sales growth in the first six months of 2017
Although it is too early to say whether the art market is on the path to a full recovery after a challenging 2016, the signs from the first six months of 2017 suggest that buyer and seller confidence is returning to the overall auction market. Total auction sales at Sotheby’s, Christie’s, and Phillips were up 18 percent, primarily fueled by an increase in sales of impressionist, modern, and contemporary art, as well as a 21 percent increase in sales of Chinese and Asian works of art. This means that the three auction houses generated US$1.08 billion more in sales from these collecting categories in the first half of 2017, compared to the first half of 2016.
+US$912
more sales generated by impressionist, modern, and contemporary art in the first half of 2017 compared to the same period in 2016.
Impressionist and modern art auction sales saw a 62 percent increase in the first six months of 2017 compared to the same period last year; this was followed by a 25 percent increase in sales of post-war and contemporary art. Post-war and contemporary art accounted for 30.2 percent market share of overall sales in the first six months of 2017.
+21 percent
growth in Chinese and Asian auction
+31 percent
Growth in auction sales in London in the first half of 2017, followed by 29 percent growth in New York auction sales.
All auctions at Sotheby’s, Christie’s and Phillips – by total sales per location
Section 2
Art and wealth management survey
Estimated wealth allocation to art and collectibles in 2016 US$ 1.62 trillion of UHNWI
Estimated wealth allocation to art and collectibles by 2026 US$ 2.7 trillion of UHNWI
This is the second time in six years of monitoring the art and finance
industry that we see an alignment of the wealth management industry
with collectors and art professionals:
Confirmation that art and wealth management is part of a long-term industry
trend.
Should art be part of a wealth management offering?
Particularly as the wealth management industry moves toward a moreholistic asset management model:
Of surveyed wealth managers consider
holistic advisory relationship as key for
their future business performance
Of wealth managers believe that
the move toward a holistic wealth
management model is the strongest
argument for including art and
collectibles in a wealth management
service range
64 percent of wealth managers,
67 percent of private banks, and
55 percent of family offices surveyed
said they were actively offering
services related to art and collectibles,
including entertainment and client
hospitality
Highest overall reading to date foranticipated investment in art wealth management services over the next
12 months. An average of 44 percent
of wealth managers reported that
increasing focus and resources
would be dedicated to art and wealth
management services in the coming
12 months, up from 38 percent in
2016. This is the highest reading since
the launch of the survey in 2011, and
is supported by a positive trajectory
for all art-related products and
services
Estate planning is the primary service that private banks and family offices will focus on in the next 12 months.
72 percent of the wealth
managers surveyed said
they offer services related
to art philanthropy. This was
up from 64 percent in 2016
and suggests that art is now
playing a bigger role in the
spectrum of philanthropic
activities
69 percent of wealth
managers said they
expected their clients to
want to include art and other
collectible assets in their
wealth reports
55 percent of wealth managers said that finding the right talent remains
one of the key challenges in building an art-related service offering. Lack of
management support: 51 percent of wealth managers said that lack of interest
internally was a major challenge, up from 26 percent in 2016. This could suggest
that as interest in art and wealth management is gaining momentum, there is a
lack of leadership support for these types of initiatives.
Section 3
Art-secured lending
The art-secured
lending market in
the US reached
an estimated
US$17-20 billion
in 2017 which
represents a 13.3
percent growth
from 2016
Two thirds of wealth managers
surveyed said their institutions offer
art-secured lending services
2/3
Top 3 challenges to the art-secured
lending market: valuation, lack of
liquidity, risk assessment
Section 4
Art as an investment
Global art fund industry struggles to gain momentum after 5 years of decline, but art investment remains relevant
Chinese art fund industry
declines: the estimated AUM
for the Chinese art investment
fund/trust business has fallen
from US$ 1.48 billion in 2012
to an estimated US$ 373
million in first half 2017
Only 11 percent of the wealth
managers surveyed offer an
art investment fund product
as part of their in-house
offering (down from 18
percent in 2016)
Top 5 challenges for wealth managers in terms of
imbedding art investment fund into a bank’s offering:
Valuation (mark-to-market), due diligence, lack of
track-record, regulation and lack of liquidity
Section 5
Art and technology
Development of new analytical tools
A number of new and recently launched activities
in the art and technology space which may help
understanding of the risk and the performance in
the art market.
Blockchain could revolutionize the art industry by resolving questions of provenance, and improving transparency, copyright and ownership issue.
Section 6
Risk managing and regulation
Over 77 percent of art professionals and 76 percent of collectors prefer a self-
regulated approach to establish trust and credibility. A mixed approach seemsrecommended to support sound growth of the market.
Government Regulation vs Self-Regulation
The majority of the respondents are in favour of a self-regulated art market
Top 3 – Biggest threats to the reputation of the art market
Authenticity
Price manipulation
Lack of transparency
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