CityPress - - Business - GAR­RETH VAN NIEK­ERK gar­reth.van­niek­erk@city­press.co.za

hen we look at the subindices of the me­dia, we see the now decade-old de­clin­ing dom­i­nance of oil,” Ge­orge Her­man, a se­nior in­vest­ment strate­gist at Citadel In­vest­ment Ser­vices, tells City Press.

He’s re­fer­ring to an oil price out­side of the typ­i­cal busi­ness lex­i­con.

“Oil paint­ings dom­i­nate art turnover by a long shot, but it is in­deed de­clin­ing.” Her­man con­tin­ues, as though we were dis­cussing prop­erty or gold stocks: “On the other hand, how­ever, sculp­ture has im­proved ma­te­ri­ally. For the sec­ond year in a row, sculp­tures have been the best-per­form­ing me­dia – up by more than a third from 4.6% of sales in 2014.”

We’re dis­cussing the Citadel Art Price In­dex (Capi), a con­tro­ver­sial South African art-mar­ket in­di­ca­tor that’s now in its fourth year.

This year, the re­port has col­lected the sale re­sults of more than 5 000 auc­tion lots sold at 19 lo­cal and in­ter­na­tional auc­tion houses, re­veal­ing some fas­ci­nat­ing in­sights for those look­ing to make sense of the no­to­ri­ously in­ac­ces­si­ble art mar­ket.

The re­port has been crit­i­cised in the past for its at­tempt to place a value on the in­tan­gi­ble aes­thetic val­ues of art and its ex­clu­sion of con­tem­po­rary gallery sales (most gal­leries refuse to re­lease their sale fig­ures for the year). But as Her­man puts it: “All the re­port does is hold a mir­ror up to the art world, and I think it’s this that they don’t like more than any­thing.”

Ac­cord­ing to the re­port, more than R296 mil­lion changed hands for South African art at last year’s auc­tions – 11.5% lower than 2013 de­spite 6.9% more stock. The av­er­age price per piece is now R53 800 – 22% lower than the 2013 av­er­age, yet Her­man re­mains pos­i­tive about mar­ket growth.

“Dur­ing 2014, the com­mod­ity prices ex­pe­ri­enced a ma­jor bi­fur­ca­tion as en­ergy prices, along with agri­cul­tural prices, de­clined dramatically, but pre­cious met­als held on to their prices. South African art started show­ing its true colours as a safe-haven com­mod­ity and per­formed more in line with its pre­cious metal coun­ter­parts dur­ing 2014.”

Be­neath the head­line Art: as good as gold, the re­port ex­plains that Euro­pean eco­nomic de­fla­tion (and en­dur­ing stag­na­tion), com­bined with a strong US dollar and an oil price that de­clined by 50% dur­ing 2014, has meant that all com­modi­ties, in­clud­ing art, have lost out. Capi cites that the ram­i­fi­ca­tions of Greece’s “dis­or­derly exit” from the Eu­ro­zone, as the re­port puts it, will lead to a dra­matic rise in the price of all safe-haven as­sets.

“It won’t be sur­pris­ing if art makes up the ground it lost against gold dur­ing the next few years. Art will sep­a­rate it­self from con­sump­tion com­modi­ties and stand out as a true store of long-term dollar value.”

A few weeks ago, the art mar­ket hit a new mile­stone – R33 bil­lion in art sales at Sotheby’s in New York. One paint­ing by Pi­casso, called Les emmes d’Al­ger (Ver­sion O), went for R2.1 bil­lion – the high­est price paid for a work of art at any auc­tion in his­tory.

But there is also a big de­bate about whether th­ese boom­ing art auc­tions are a warn­ing to in­vestors of a mar­ket about to plateau or crash. It’s be­ing called the Pi­casso In­di­ca­tor, and has got global eco­nomic an­a­lysts ask­ing whether we have reached the top of this eco­nomic cy­cle.

Ja­son Goepfert, CEO of Sun­dial Cap­i­tal Re­search, has a note analysing the re­la­tion­ship be­tween record art sales and the stock mar­ket.

He has cal­cu­lated the one-year sum of the top 62 largest art sales (ad­justed for in­fla­tion so that ev­ery­thing is re­flected in the dollar price in 1986).

In Goepfert’s ex­am­ples, stocks tend to strug­gle in the months fol­low­ing big records in art sales, but other an­a­lysts have ar­gued that th­ese re­ports aren’t any­thing to worry about be­cause the art mar­ket is dom­i­nated by the global elite – a tiny por­tion of the global econ­omy.

Our lo­cal in­di­ca­tor would be Irma Stern, whose Still Life with a Vase of Pomegranates was sold for R1 023 120 at a prom­i­nent Strauss & Co auc­tion in Jo­han­nes­burg last week.

The max­i­mum price paid dur­ing 2014 for a paint­ing was also for an Irma Stern – Zanz­ibar Woman – which re­alised just more than R16 mil­lion at auc­tion. The Capi in­di­cates that this is slightly up from both 2012 and 2013’s max­i­mum prices, but nowhere near the R44.6 mil­lion her Ba­hora Girl reached in 2010 – the most ex­pen­sive South

IN­TER­NA­TIONAL MAS­TER Pi­casso’s 1955 Les Femmes d’Al­ger (Ver­sion O) is so far the most ex­pen­sive piece of art sold in his­tory. It fetched R2.1bn in New York this year

LO­CAL LEG­END Ger­ard Sekoto’s Self-Por­trait sold for £117 600 (R2.26m at the cur­rent ex­change rate) at an auc­tion at Bon­hams in Lon­don in May 2006

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