Wealthy investors keep art sales high

Global economic gloom might be hanging over world markets, but 2008 also saw a rise in the super wealthy, with Forbes Magazine pegging the number of billionaires at 1,125, the first time the number breached the four figure mark.
With the hoi-polloi battling over-extended debt levels, high interest rates and inflation, an increase in the number of billionaires suggests a class of high fliers immune to the economic downturn who are constantly in search of ways to spend their bling.

“The amount of new wealth that is available is phenomenal, with studies showing that the amount of billionaires is increasing,” said Mark Kretschmer, Chairman of Stephan Welz & Co in association with Sotheby’s.

With prices for some art going through the roof - witness the May sale of a Tretchikoff fetching R3.74-million - Kretschmer stressed that supply and demand was always a crucial factor. “The majority of works are in museums or private collections and when one does become available then huge prices are bid.” Stephen Welz’s upcoming Cape Town auction in November is being billed as “this year’s most prestigious auction of fine art” and will feature a 1941 Irma Stern expected to fetch between R5 - R7 million. Kretschmer said although economic factors had not seemed to have an impact on art sales, there were possibly signs of a rationalisation, but not a cooling off.

“Art has proven to be an asset class of its own,” he said, “It has survived the dot.com crash and the sub-prime crisis, where other asset classes haven’t. I’m talking globally but in doing so I don’t believe South Africa is any different.” Broadly speaking Kretschmer believes the emerging economies of Brazil, Russia, India and China, collectively known as the BRIC countries, are an important factor in driving art sales, with the Russians spending huge amounts of money. “When you have bought your houses and yachts then you need something to decorate it,” said Kretschmer, referring to phenomenal art sales by Christie’s International and Sotheby’s in 2007 on the back of a booming Russian economy. Forbes lists Russia as the country in second place behind the US in terms of the number of billionaires, with 87, while India has four of the top 10 richest billionaires.“Let’s wait and see,” he said when asked if art was recession resistant, referring to “some rationalisation” in the middle section of the market due to economic factors.