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Slow recovery

April 14, 2011

The art market is gradually recovering from the financial crisis. Fairs and auctions are taking in more money again.

Fruit, shirana Shabhbazi
Art Cologne shows works by young artists, like 'Fruit' by Shirana ShabhbaziImage: Koelnmesse GmbH

When a catastrophe like Fukushima happens, even the art market has a duty to comment. The current nuclear crisis in Japan inspired Thomas Zander, who runs an art gallery in Cologne, to showcase a gigantic photo by American artist Mitch Epstein at the 45th Art Cologne fair.

The photo, taken for Epstein's "American Power" series in 2004, shows an empty house which lies in the shadows of a nuclear power plant's smoking cooling towers in Cheshire, Ohio as it awaits demolition. The word "gone" is scrawled on the roof of the abandoned house.

Art dealer Zander specializes in photography based on conceptual art. He serves a niche market which is nonetheless in high demand.

"The art market is doing very, very well at the moment," Zander said. "I think people are worried about inflation and are investing in art so they don't lose as much money."

Mother of all art fairs

There is plenty of art for investors to choose from at Art Cologne. One of nine art fairs in Germany, it is also the world's oldest art fair, having first opened its doors 44 years ago. In 1967 the world's first art market opened in Cologne and it became the forerunner of Art Cologne.

Photo of a yellow house in front of the chimneys of a coal power plant
Epstein's spooky photo of Amos coal plant in West Virginia is another in his "American Power" seriesImage: picture alliance/dpa

From the 1970s to the 1990s, Art Cologne transformed itself into an art fair which commanded worldwide attention. Business was going so well that art fairs sprang up all over the place. First came Art Basel, which started a spin-off art show in Miami Beach at the turn of the century. Later came the FIAC in Paris, Art Brussels and the Frieze Art Fair in London. From Dubai to Mexico City, nearly every large city, it seems, has its own art fair now.

This competition nearly spelled the end of Art Cologne. But since the financial crash in September, 2008, gallery owners seem to be playing it safe again. Once more, they are opting to showcase their work at Art Cologne, especially given that the Rhineland is famously home to many collectors.

Stay-at-home mentality

Harry Lybke, who founded Eigen & Art gallery, has come back to Cologne for the second time after a long period of absence.

"There are so many collectors in and around Cologne," he said. "That means there's big potential. Five years ago prospective buyers traveled like crazy so you didn't need to be where the collectors were - they were all traveling anyway."

But times have changed now, he added with a tinge of regret. "People have to work more now to be able to buy art so they are bound to the places they come from."

The financial crisis did not spare the art market. While hardly any galleries have closed in Germany, most of them experienced a downturn in revenue. Gerrit Friese, chairman of Germany's Federal Association of Galleries, is convinced that the effects of the financial crisis are much worse than is commonly believed.

Photo of Gerd Harry Lybke
Lybke is a gallery owners who has returned to Art CologneImage: DW-TV

"There are clear developments which show that revenues dropped around 20 to 25 percent between 2007 and 2009," he said.

In the few years prior to 2008, the market filled with speculators. Rather than buying art for its quality or to fulfil a personal passion for collecting, they chose works based on artist's name. In 2006, two years before the onset of the financial crisis, the art market had a turnover of nearly 1.3 billion euros ($1.8 billion).

Still, even if things are improving, Germany lags behind other countries when it comes to the art trade.

Smiling through the pain

"The German auctioneering market is always in pain when it smiles because big business is done in London or New York. The auction houses in New York make as much in sales during an auction week as they do in a year here," Friese said.

A recent study conducted by the internet platform artprice.com showed that since last year, China has had the highest volume of sales, followed by New York and London. And this strong regionalization trend is having a negative impact on the German art trade. Unlike in the US, Great Britain and France, Germany does not have a set address where the art scene can convene. Instead, it has many centers, including Hamburg, Cologne, Berlin, Frankfurt, Dresden and Munich.

Gerrit Friese believes that this variety gives the German art business a distinguishing feature. "Germany has a thousand professional galleries and that's very unusual on the international stage - you won't find that in America or England."

Author: Sabine Oelze / mm
Editor: Jennifer Abramsohn