China, Socialism & Consumer Behavior: Asia’s rich to splurge more on art as investments
Despite giddy Chinese art prices showing some strain from global economic uncertainty, art collectors think values will continue to rise due to limited supply and continued strong demand as Asian collectors become more affluent.
“As East and West get into more of a confluence in taste and in the market place, it will still go up,” said Kai-Yin Lo, a Cambridge-educated writer and jewelry designer, a slim, elegant woman known for wearing mis-matched designer shoes.
She is one of Hong Kong’s leading art collectors – her home is stacked with rare Chinese furniture, stone carvings and paintings, including an inkbrush panorama of the Grand Canyon by Chinese 20th century master Wu Guanzhong.
“These days art investment has entered into the mainstream of investment, especially for younger people. You cannot divorce love of the piece from what lies behind, the value of it.”
Hong Kong has played a key role in Asia’s art market boom. Its auction market turnover – anchored by Sotheby’s and Christie’s – soared 300 percent from 2009 to 2010, powered by a wave of Chinese millionaires buying art with avid fervor.
“Hong Kong has became the sales center of the world,” said Patti Wong, chairman of Sotheby’s Asia, with revenue on the market there on par with New York and London.
Despite the art market’s vulnerability to shocks, including the 2008 Lehman Brothers collapse, when unrealistic estimates left scores of unsold lots amid tepid bidding even in the red-hot Chinese ceramics market, Asia’s rapid wealth accumulation will likely see more and more money flow into art and alternative investments such as wine.
Asia’s wealth management and private banking industry remains a growth area for many struggling banks, with an estimated 3.3 million high net worth individuals worth exceeding US$1 million, according to Capgemini and Merrill Lynch’s latest annual World Wealth report.
With a combined wealth of US$10.7 trillion, Asia’s wealthy have even eclipsed the US$10.2 trillion held by Europe’s generational millionaires.
“The exponential growth in the number of emerging market (millionaires) … is expanding the global market for investments of passion,” the report said.
While art often comes straddled with hefty commission, storage and insurance costs, it can serve as a fun portfolio diversifier, mixing decent returns with aesthetic pleasure.
Even as the eurozone debt crisis rages and buffets regional stock markets, theMei Moses Global Art Index, a widely tracked art indicator, rose 11.8 percent in 2011 to November.
“It may not be a good time for sellers but it’s an excellent time for buyers. During late 2008 and 2009, I highly advised clients to buy,” said Bobby Mohseni, director of MFA Asia, an art consulting firm