Asia's Wealthy Flock to Art as Markets Plunge

The New York Times, December 18, 2011

HONG KONG - The confidence in the Chinese contemporary art market remains high despite art market confidence dropping sharply in the U.S. and European contemporary markets. Top Chinese and Asian art is still comparatively cheap compared with Western impressionists or American contemporary art. Traditional Chinese art showed a 24 percent jump in the first three quarters this year. Despite giddy Chinese art prices showing some strain from global economic uncertainty, collectors like Lo think values will continue to rise due to limited supply and continued strong demand as Asian collectors become more affluent. Hong Kong has played a key role in Asia's art market boom. Its auction market turnover -- anchored by Sotheby's and Christie's -- skyrocketed 300 percent from 2009 to 2010, powered by a wave of Chinese millionaires buying art with avid fervor. Hong Kong has become the sales center of the world," said Patti Wong, chairman of Sotheby's Asia, with revenue in the former British colony 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 sparkling growth area for many struggling banks, with an estimated 3.3 million (2.1 million pound) high net worth individuals worth more than $1 million, according to Capgemini and Merrill Lynch's latest annual World Wealth report.

With a combined wealth of $10.7 trillion, Asia's wealthy have even eclipsed the $10.2 trillion held by Europe's generational millionaires.