OK. I have spoken about the different layers of the London art scene. Before attempting to talk about individual shows, I will continue to establish groundwork of the London art scene by talking about how powerful the current market is in the international context.
There were two telling articles in the March edition of the Art Newspaper which help to properly wrap one’s head around the current explosion of the London art market. The first is written by Georgina Adam, who claims that art follows money, and due to London currently riding on the success of a financial boom, the UK capital is leaving New York and other large-scale cities in the dust. She describes the financial boom by mentioning the current and inconceivable property prices in London, citing the recent sale of four Hyde Park penthouses for £84 million each. Furthermore, New York mayor, Michael Bloomberg, has commissioned a report from consultants McKinsey to find out why New York is failing to keep up. Apparently, because of America’s more stringent immigration policies and implementation of the Sabanes-Oxley Act 2002 which tightens accounting practices, it has become a far less desirable place to start a business. The result of this is that hedge fund assets in the
UK are growing at an annual gain of 63% while they grow at a mere 13% in the US. Adams goes on to say how this mirrors the art market as financiers and hedge fund managers are the biggest spenders in today’s art market. Other forces include the geographic ease for which London offers the wealthy from new economies such as Russia, the Middle East, and India. As residents of the UK only need to pay tax on what they earn domestically, London has become quite the tax haven for ‘ultra-high-net-worth individuals’ coming from foreign economies. Adams mentions that the accountancy firm, Grant Thornton, estimates that two-thirds of the 1000 wealthiest Brits are foreign nationals. In addition, because artworks can physically be transferred from one economy to another (a huge bonus for art investors), it is no wonder why Americans have taken advantage of the strong pound/weak dollar and have consigned pieces to London auction houses to maximize fiscal return.
The result of these facts is noticed when observing London’s staggering $750 million (USD) turnover between ‘impressionist’, ‘modern’, and ‘post-war and contemporary art’ auctions between the dates of February 5th and 9th, 2007. In a mere five days, London saw the highest grossing auctions in European history. It is no fluke that the London art market is swelling at such an astonishing rate. For instance, according to Roger Bevan of the Art Newspaper, the Contemporary Art auction on February 7th at Sotheby’s earned £45.8 million, while last year it realized £30.4 million, and the year previous, £28.6 million. Parallel to this was the Christie’s auction which made £70.4 million in its ‘Post War and Contemporary Art’ evening sale. In 2006, the equivalent sale made £37 million, and in 2005, £24.5 million.
This evidence suggests that London art market professionals are currently basking on cloud nine. The success of this city’s market seems to have turned into an annual surprise as each year London tops what was thought to be an unbeatable turnover from the previous year. We are all internally bracing ourselves for a potential crash, but at this point the economic prognosis doesn’t suggest any sign of a weakening market.