Jeff Rabin is principal and co-founder of Artvest Partners, a firm that offers investment advice for the art market, including custom strategies acquiring and selling, financing, protecting art wealth and passing it on to future generations. Prior to co-founding Artvest Partners LLC, Mr. Rabin was vice president of financial services at Christie’s, where he was jointly responsible for the structuring and development of an opportunistic art fund. The fund, designed as a private equity offering, was first to be developed by a major auction house in partnership with a leading investment bank. He began his career as an investment banking analyst at Bear, Stearns & Co., Inc., in the Financial Institutions Group and then spent most of his career in the investment management business. At Barclays Global Investors (BGI), now part of BlackRock, Inc., Mr. Rabin ran global trading for the then USD 400 billion asset manager. In 1997, he left BGI to join the hedge fund side of the industry, which...
The art market is growing on a global scale, but it is expanding faster in some countries than others, and the purchases often reflect local tastes, says Jeff Rabin.
Is there a such thing as emerging markets when it comes to art? We’re talking about that today with Jeff Rabin. Jeff, is there such a thing…do markets emerge, in that sense?
I wouldn’t say emerge. I think it’s a global picture, and much like the commodities and debt and equity markets. The information is out there.
It’s a little harder in the art space because all you have is auction market data. But, for instance, China over the last five to six years has become the dominant player, and they are buying—not as aggressively as they were just two years ago, but still quite significantly, to put them as the largest consumer of art as of the end of 2011.
What they are buying, mostly, is traditional Chinese works of art, not Western art. Many people think they’re buying Western art, and they are at times, but it’s not in significant numbers or dollar values.
So, is their buying then, pushing prices of this traditional Chinese art higher in other markets?
Yeah, I mean again, it’s global. So whether the sale is in Hong Kong, London, or New York, the three major global centers for auctions, the participants are there, and they’re being represented.
What other markets are you seeing growing right now?
I think Brazil is growing quite rapidly. The wealth creation in Brazil has been dramatic as well. You’re seeing, obviously, there’s Russian money that’s come in and continues to be active in the market.
There’s really not a place in the world that’s not buying. I mean, the Middle East has been an extraordinary buyer of top-quality works of art, and of course the Americans and Europeans have pulled back a little bit, but they’re still quite significant.
And you mentioned just now Europeans and Americans having pulled back. Any place you’ve really seen shrinkage in this market?
No, I don’t think so. I think it depends on the sector. I think different people or different regions go for different types of art. Again, the Chinese are trying to repatriate their culture, and much of the property has found its way outside of China, so they’re trying to bring it back. And so you see a lot of great property in the United States that’s being bought in New York sale rooms.
And in addition to these traditional Chinese pieces that are selling in the US, what else is working here?
Yeah, I think it’s great properties selling. I think if the property is what we call fresh—means it hasn’t been on the market, hasn’t been shopped around, and it’s a great piece by a great artist, what we would call a Tier I artist and a Tier I piece of work, whether it’s sculpture or flat art—it should sell well if it’s properly estimated at auction or if it’s got the right asking price privately.
Customers or collectors, as well as investor collectors as we call them, are extremely sensitive to mispricing of artwork since the pullback in 2008 and 2009.
Now is this the kind of thing where a few years ago there was that big fad for flipping real estate? I mean, that’s gone by the wayside.
But do people do that with art?
They try to. It’s a grave mistake, because people do not want to purchase something that was just purchased a year or two ago. It’s not fresh to the market anymore.
If it’s a phenomenal work of art with great provenance by a Tier I artist, then the likelihood to resell it in a short period of time is certainly possible. But generally you want something that’s, again, fresh to the market.
Unless there’s only a few of them in existence. The Munch ["The Scream"] is a perfect example. I mean, the Munch, there were only four made. Three were in museums and this one came to market in May of this past year, and it reached the world record price at auction of almost $120 million worth of premium.