Asia Centric by Bloomberg IntelligenceNavigating Art Market Pitfalls With a Citi Adviser
A duct-taped banana, a glass-encased tiger shark, a three-meter balloon dog – all selling for millions of dollars. For centuries, people have invested in art and their creators, with modern investors adding these “alternative assets” to portfolios.
But global art auction turnover fell by about a third to $9.9 billion last year, according to Artmarket. It's also an increasingly tricky industry to navigate, with many sales private and some high risk, and scams not uncommon. So what are the wealthy buying these days, how safe are these investments, and what should they expect in terms of return?
John Lee and Katia Dmitrieva sit down with Betsy Bickar, senior art adviser at Citi Wealth’s art advisory unit. The episode was recorded on March 25, prior to Art Basel Hong Kong, part of the city’s Art Week.
Art is a reflection of our times, a way to convey emotion and communicate. As Picasso wrote, art washes from the soul the dust of everyday life. Visual art is also a major store of wealth and has been for centuries. Global auction houses and private deals see billions of dollars passed between collectors, galleries and museums each year, and many of those sales to the world's wealthiest.
But recently things haven't looked so good for the art market. In twenty twenty four, global art auction turnover fell to nine point nine billion dollars now that's down thirty three percent from twenty twenty three. According to Art Market, China sales were the lowest. There are fewer blue chip art works for sale, and some major art fraud cases have weighed down on confidence.
You're listening to Asia Centric.
I'm Katy Dimutrivo in Hong.
Kong, and I'm John Lee in Hong Kong, and.
Today we're talking all things art and wealth with Betsy Vikar, art advisor and senior vice president at City Group's Private bank Art Advisory Unit.
Welcome, Betsy, thank you.
I'm happy to be here and.
We're happy to talk to you about all things art. Can you tell us a bit about Art advisory as a.
Business, because this is such an interesting corner of the financial world, you know, Can you give us an idea of kind of who your clients would be, what art is generally used for in your world?
Sure?
So we are the Art Advisory Group is part of the private bank at City. We're a group that was founded in nineteen seventy nine, so we've been around for about forty five years. We work with ultra high net worth clients of the private bank, and those clients engage us to build museum quality art collections. We are art historians, we're not bankers. So even though we work in a bank, the idea is not to treat art as investment, but rather as a passion. And what I mean by that is, of course we're interested in how the art will hold its value over time, but more importantly, it's about education and it's showing people how to become connoisseurs and build world class collections that last for generations. We do a lot of due diligence, We do front loading with education. Education is really important. So a lot of what we do with our clients is we take them to museums, we take them to galleries, art fairs, We take them around and show them how the market works. So we educate them on the market on kind of how to navigate a very opaque and inefficient market and pay the correct price in that market. But ultimately our advice comes from a place of wanting them to love the art that they're buying.
Betsy, how does the scene in Hong Kong compare with other regions? Was? As we mentioned earlier, the global art is down about thirty percent in terms of sales and auction prices. Now, given China's week economy, what's the vibe this year?
I think the vibe is, you know, the art market's funny. The art market is not like other markets, so you can have a dip of thirty percent, but it just sort of keeps going in a way. It's so big and it's so nuanced. Roughly fifty percent of the art market is what we call private, meaning that those artworks are transacted through galleries, so there's no data available that's verifiable on those transaction prices.
The other half of the market is auction and there is.
Data so to kind of predict what the market is doing. You're working with a dearth of data, so all of those numbers are always inherently a little bit inaccurate in my opinion. The other thing is, I think Hong Kong is exciting. It's the third largest market for contemporary art. Certainly most of the high all our value transactions are happening in the US, and then you know, behind the US, UK and then behind that obviously Hong Kong. But it is the third largest market for contemporary art and it remains that way. A lot of the dealers have opened brick and mortar galleries here, the auction houses all have new spaces in twenty twenty four, so I think there is a faith in the market for contemporary art here and I think it will continue. Sure it's a buyer's market, but I see it as an opportunity for our clients.
Can you talk a bit about your clients as well, and how the trends have sort of changed in recent decades in terms of using art sort of as a store of wealth or perhaps you know there's a lot of newly minted millionaires out there and bitcoin bros, if you will, and maybe how some of their tastes influenced this.
How have they changed? Sure?
When I started in this industry almost three decades ago, there were just a handful of household names of collectors and also a handful of household names of emerging artists. If you were in the industry now, I mean you can't keep up it is. The lists are enormous. The art market has expanded exponentially. I think in recent years since the pandemic, there has been a real sort of democratization, if you will, of the art market. You have new participants, you have a more diverse crowd of participants, you have younger collectors. Tastes are changing. I think tastes are now much more about things of a digital nature, things that have to do with youth culture, cartoons. You know, there's a sort of a freedom with subject matter that you didn't see pre pandemic, and I think a lot of that came out of that period where people were not able to see art in person. And you know what we see. We see a lot of really really good collections coming out of Asia. But certainly, I think our clients are global, so we're a global service. We have advisors in New York and London, but we work with clients everywhere, and those clients are interested in art that's being shown globally.
Yeah, just to your point on art buyer is getting younger, there's a stat from art at Millennials and gen Z now account for a quarter to a third of bidders and buyers at the two major houses in twenty twenty four. The two major houses being in the States, Yeah, Christie's and Southeast.
Yeah.
So thos as US data.
Yeah, and I think you know, at the same time we did last year, as you were talking about the statistics, we saw dip in artworks being sold over ten million dollars. But for us, what we're seeing is like I have clients that I've worked with for ten years and we were instrumental in building those collections. Now some of those pieces they bought ten years ago, they can sell for ten times the price because they've appreciated. But it's not because they went in as investment.
It's because because they educated themselves.
And they bought the right things. And those artists have flourished and they have good gallery representation, and those galleries have helped those artists gain international recognition and institutional support, and their markets have just blossomed. So you know, I think for us, we're seeing a lot of clients who now really have a store of wealth of art that they didn't expect.
Because you had mentioned, you know, as long as you buy the right thing, just to jump off that. So to your point, how do you buy the right thing?
It's a very complicated answer, but the short version is one of the reasons that someone would hire an art advisor is to do the due diligence. So you want to make sure first and foremost that you're buying an artist whose overall practice.
Is very sophisticated.
So obviously emerging art, you know, you're taking a risk, and that's great and it can be fun. But when we're talking about anything other than emerging art, you want to look at does the artist have institutional support? You're looking at their CV the way if you were interviewing someone, you're going to look at their CV. So you're looking at which institutions are collecting them, which galleries have they shown in, which other collectors hold their work. Also, you're looking at how has their pricing evolved over time. A good gallery will control an artist's market to the extent that the pricing sort of goes up in a very gradual line. It shouldn't have spikes. Now we are in a moment in history where that there are exceptions to that, certainly, but I think, you know, the underlying principle should be the same that a gallery is slowly and surely growing the artist's market, and that they have good gallery representation. Then if you're buying on the secondary market, there's due diligence to be done, and.
We do a lot of that for our clients.
You know, our clients are supposed to have fun, so we do all of the work so they can just have fun doing it. And that involves anything from researching any questions of authenticity, provenance, history of the artwork condition. If it's in bad condition, it can affect the sale price, or it can be unsaleable. So they're all kinds of ways that we work with clients to help them feel comfortable around what they're buying.
Betsy, you've mentioned something quite interesting. You mentioned that you have to look at like the institutional support of an artist. That almost sounds like a finance book build or finance deal.
I don't even know what that means, but.
I'm an art historian, so you know, I think one of the things we're really looking at when we're talking about building a private collection that is quote unquote museum quality. Would a museum look back and say, oh, if it were a small museum, that's the kind of collection I would have built. Would those curators look back? So we are essentially curators for private individuals, wealthy individuals, and we're unlike a museum. A museum has certain criteria that they need to follow, right they're looking to represent certain geographies or certain art historical movements. We don't need to do that. We have more freedom with a private collector. But it is about is that artists work in major museums and you'd be surprised, you know, even some young artists that are up and coming are in very good museum collections. But you need to look at that, you know, is it an artists that has a market. There are lots of artists that have markets and they're trading actually for hundreds of thousands, if not millions of dollars, but they're not in major museum collections because they're just what we would call more commercial, and so it's important to just understand those distinctions.
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Yeah, so it's a good question.
We tell clients not to expect anything oh interesting, Yeah, don't expect anything. Be pleasantly surprised when n if it does.
Increase in value.
I think our goal we look at it as roughly a seven to ten year holding period for artwork, and you want to buy something that you anticipate you will love and want to live with for that period of time and think about it the way you would buy your marry residents. You know, obviously you don't want the value to fluctuate or you don't want it.
To lose value.
Part of that value is that intangible living with the object for those amount of years. And you know, we have clients that their children were not as interested in the art when they started collecting, but now the children have become so engaged in the collecting and it's really a touch point for the whole family. So that value is not something you can put a price tag on now. As I said, if you are doing all of your due diligence and you're paying attention to the right things when you're buying, chances are some of the pieces in your collection will increase exponentially.
So you had mentioned earlier that something like half the market is private deals.
So half of it is.
Auction that's where we get all the data from and all these kind of big pieces we hear about that make it through auction houses. But curious about the other half, the sort of private deals. In your experience, how do those deals happen and is it just straightforward? Do you go to the gallery, you like something and you want to purchase it over your client.
Yes.
So you know, you go into an art gallery and very rarely when you see price tags on the wall, that is not something they do. It's not a retail store. I think a good gallery the main goal is to foster an artist's career, and that means only selling the artworks, not to the wealthiest person. It's selling the artworks to the person that they believe will be a good steward of the art. And one of the things that we do for clients is we provide access. So we're vetting the clients in the sense that the clients are people that we believe, even if they've never purchased a work of art, they have the right attitude and again not going into it as investment, but looking at it as forming a collection. And so when we bring even new clients in, we have relationships with the salespeople, the dealers. It's about relationships and knowing how to select an artist from the gallery's roster that is appropriate for the client. And so let's say, for example, a new client, we take them to some galleries. They have an idea of what they like. We say, let's go visit this gallery. We'll talk to so and so and so. That dealer is a really good source for education about the artists. So I know a lot about these artists, but I don't know everything. I rely on those dealers because they tell me, you know, some backstories about the paintings and about the artist lives and what's happening.
You know, there might be an exhibition.
At the Guggenheim or MoMA that hasn't been announced, so they can give you that information. And then typically, if it's what we call primary market, meaning it's coming directly from the artists through the gallery, there's not a lot of negotiation and not a lot of due diligence. It's pretty straightforward in terms of just looking at the artist's career, selecting the right piece that feels like an important piece of a series or of the artist's body of work in general. If it's secondary market, that's where all of the fun stuff comes in. So secondary market, you know, again you're looking at did the gallery do its due diligence on any parties involved? You know, city Obviously we're as a regulated fiduciary, we do a lot of due diligence on the galleries. We do due diligence on the artwork, you know, where it has been, any gaps and provenance, any gaps. You know, is there a certificate of authenticity? If there is, you know, like for Boscia and Warhol, there are different criteria for each artist. You know, how do you assess is that a good certificate? Does it matter? These days no one really authenticates art, very few people, so it's you know, a leap of faith in some ways. So we're doing that and getting the client comfortable to a point that they can make a decision confidently.
So you're reducing some of the risk, like the fraud risk out of purchasing art.
Yes, you know a lot of what we do and this is not a bank term, but it's almost an informed intuition. So people who in the art world will talk about authenticating and there are certainly forensics that one can do. There are all kinds of things that one can do. But what really comes down to is you've seen I don't know, five hundred examples of Warhol. You know, if I look at a Warhol that looks funny, something goes off. There's something in me that says this is funny, and you know, I'll tell my client, Let's wait, let's do some more research, or maybe not purchase it at all. We often tell people not to purchase things if there's any kind of doubt.
Banana taped to a wall by or no bye bye.
Yes, but the odd market isn't regulated.
There are regulations, yes, and I think further regulations are.
Coming in the EU and the UK.
There are regulations around money laundering and sanctions the US. You know, the galleries are not held to the same standards, but at City actually we are really working at the highest level. We're working at like the way that we do it is the way it's done in the in the EU and the UK, and we're applying those principles in the US, even though I think the galleries aren't there yet, but they're on their way. So there is some regulation. But it is a buyer beware market. So if you don't do your due diligence and you don't ask the questions, you're stuck with it and then you might not be able to sell it in years to come.
I was going to ask just exactly about that. So have you had clients who've come to you and basically told you sort of horror stories of like previous experiences where they maybe didn't have an advisor, maybe had an advisor who you know, wasn't that great. You know.
Have you heard some of those stories.
Yeah, we've had a handful. And in fact, that's how we get a lot of new clients is they've had bad experiences and there are traps that anyone could fall into. I've learned a lot over the years from my clients. We had a client that bought some prints and didn't realize the prince had been screened over. You know, someone else who wasn't the artist, you know, created a whole other screening layer over the prince.
You know.
There are things that we've seen gallerists modify artworks that were not the original artwork, but how would you know if you were the buyer, And so a lot of that was just digging into the history of the pieces and trying to figure out what happened to this artwork in its lifetime, because they're sort of organic objects and they have different owners throughout their life cycle. So a lot of it is piecing together the history of an object, you know. And then we've had other clients that just overpaid, they bought something their friend told them about it. It was fun and cool, and sometimes they've overpaid by a million dollars or more.
Well, so, you know, not like going to the store or buying a pair of shoes not getting the ten percent discount we're talking about. It's a little different.
Yeah, yeah, But so you travel the world, you attend art fairs like you are this week in Hong Kong. But there must be a lot of trends, like some hot artists or some areas of arts and pockets of art that's really going up. What are the cool trends right now you're seeing?
So I think the zeitgeist of the art world right now is about looking at underrepresented, marginalized groups. And I hate to say women maybe are part of that, but I suppose we are. You know, I think there's a lot of focus on rediscovering some artists who didn't get their due in their moment. There are artists who, for whatever reason, their partner, their husband was more famous than they were at the time, and only now their work is sort of being rediscovered by the market. And then I think the other thing you're seeing is a lot of interest in figurative painting, but of painting, not just of Western white subjects. It's really because I think the demographic of the collector base is changing, and so what they're interested in is changing, because art speaks to people's heart and they're interested in something that they can relate to.
Are there some examples of artists like that, Like when you say partner is a famous artist, like Jackson Pollock's.
Wife, I think Krasner. Yeah, yeah, is that sort of yeah?
So Lee Krasner, certainly her market has gone up significantly in the past few years as a result of that. There's another artist being shown this week, Lynn Drexler. She was a second generation abstract expressionist. She trained under Hans Hoffman. She was an extremely experienced colorist, and it's like think of Van goh meets Hans Hoffman.
They're beautiful.
But she was married to someone whose career was front and center. You know, her own career was marginalized, and I think she's offered from some psychological issues and became a hermit. And what's interesting too, is the scholarship is still coming out about her because you know, the market since twenty twenty two has really gone up for her work. So now I think a lot of galleries are behind it, and people are showing it, museums are behind it. It's possible that she was colorblind at the moment she was painting some of these pieces in the mid seventies, and they're about color, so they're really interesting. There's another artist who is Canadian of Chinese descent, Dominique Fung, who I think is really interesting. You know, that's figurative. She's looking at even though she never lived in China, She's looking at these historical female Chinese figures and telling these untold stories about this kind of unspoken heroism. So I think those are two examples of artists that are very, very different, but they're sort of it's what people are looking at right now.
Since you're speaking of the psychist, I wonder if you can tell us what it's telling you. You know, throughout history, both visual art also literature kind of gives us a view into what's going on right now. There's a lot going on globally, So are you seeing that reflected in art?
Is there something in the art that you're seeing some themes.
Or whether it's color or style, or perhaps Ai being involved in some of the processes that's kind of giving you a like, what is art telling us about our current moment.
Right, And I think it's always hard to know until you're you know, hindsight is twenty twenty. And this is actually a really good question because it's one of the things that we tell clients to look at when they're buying art, is what is the art that represents your time, because that will end up in the art historical canon. I think digital art is certainly still you know. I know, there was like a moment for NFTs, and then some people say that they're dead and some people say that they're very much alive. You have all these different camps of opinions about NFTs, But I think apart from NFTs, digital art is still really interesting. AI generated art is very interesting, And as you say, I mean we have a different demographic now, so there are a lot of people who are not as physical object oriented. They're much more interested in this kind of intangible, conceptual concept So I see digital art as really just an extension of conceptual art that began in the sixties. The other thing that's interesting to me is this sort of contemporary surrealism we're seeing in painting, and I think that is artists interpreting what feel like very surreal times.
What does that.
Look like just for the listener, contemporary surrealism. Is that a lot of different conflicting or contrasting colors.
Is it sort of a face but it maybe isn't a face?
Yeah, exactly. I mean I think they're very dream like.
It's there are a lot of you know, a lot of it is figurative, some of it is landscape. There's a Swiss artist, Nicholas Party, who sort of embodies this surrealism, and it's like it just transports you into another time and place and the figures maybe you are a little stretched out, or the trees are red, the fruits are.
Sort of melting.
It's like, but it's it's sort of like a place to rest your mind in sort of uncertain times.
That's the A lot of art is also down to taste, and there's a lot of different cultural differentiations. Do you notice a big difference in taste or preference when you come to Asia in terms of the buyer based versus other regions.
You know, that's a really interesting question. So when art Basil started here I believe in twenty thirteen, a lot of the Western galleries and dealers didn't know what to bring because they didn't know what the contemporary Asian taste was, you know, the new sort of the history of the Chinese painting market.
But they just didn't know.
So they brought ourartists, you know, like Liu Fan Anish Kapur, the artists that they thought would resonate with the Asian buyer. And they also brought some Chinese artists, you know, more emerging. But very quickly they realized that the Hong Kong buyer and the Asian buyer that was coming to Hong Kong was very sophisticated, and those buyers had already been buying at auction. They had been buying here and there, and since then it has really grown. And you know, I was looking at what's up at auction and what the dealers are bringing.
It's a mix.
I mean, there certainly are pieces that are by Asian artists, but there are lots of pieces that are black figurative art or art that's you know, someone like Theastro Gates, whose art really sort of has a very specific conceptual idea behind it that is in many ways very American.
So we're recording this episode on March the twenty fifth, just ahead of Art Baso's opening and by the time we air Art Basle would have been closed. But what can we expect in terms of Art bas or Art Central this week in terms of sales and activity.
Yeah, I think it will be tempered by what's happening in the market in general.
My read on the market.
Is that the big blue chip galleries tend to do well no matter what, because there's so much demand for the art that they are showing. And I think the emerging galleries tend to do well because the price points are lower. It's a little easier, there's not as much risk, or there's risk, but it's mitigated by the price point.
Maybe.
I think the mid sized galleries have been struggling, and I don't think Hong Kong will be any different. I do think, though, contrary to what I just said, the presentations are really great by the mid sized galleries, so I wouldn't be surprised if they do do really well.
And Betsy, before you go, I have to ask you, there's been a lot of newly created wealth. Yes, you know, we can talk about bitcoin, Bitcoin Bros. Some of the stocks in Asia have gone up a lot, Like if you bought Ali Baba two months ago, you're up eighty percent. So just say you know, someone from your private bank says, Betsy, I want to dip my feet into art. Yes, they so, I would say two of their big coins. So maybe is there anyone that you could recommend or any tips you would give them.
I would give them the same tips as anyone else.
You know.
I think we're seeing this enormous amount of wealth creation happening globally, and you know it's not just in the US. It's expected to be significant outside of the US. You know, they're anticipating one hundred trillion dollars of wealth.
Creation in the next decade.
I think the advice is the same as we give to everyone, and that advice is do your homework. Don't just buy something because the cash is burning a hole in your pocket. Buy something that you love. And the only way to really understand what you love is to do a little homework up front, give yourself six months, maybe a year before you buy anything. And I know it's really hard when you have empty walls and a lot of money to burn, but you'll thank yourself in the long term.
It's great advice.
M M.
It's great advice. But before we end.
Is there anything that you had down that you think that we missed, or anything else that you wanted to highlight or no.
I think people should just have fun this week, go and look at the art, do a little education for yourself.
The auction houses have the previews up. It's free, you.
Can walk in. You can see museum quality work there. You can see it at the fair and people should enjoy it and just use it as a touch point to start learning some more about contemporary art.
Great, thanks so much for joining us today.
Thank you.
You've been listening to Asia Centric Katydimitrieva in Hong Kong.
I'm John Lee, also in Hong Kong. You can listen to all our episodes on Apple Podcasts, Spotify or wherever you listen. And this podcast was also produced and edited by Clara Chin. Thanks for listening.
