Post-pandemic, the art market might return to 'normal'—but do we want it to?

Historically, the myth goes, disease has been spread by the poor. But the spread of coronavirus (Covid-19) gives the lie to that claim today. In the words of Marc Glimcher, the president and chief executive of Pace Gallery, “It is wealthy, well-travelled people that are serving as vectors for this virus.” As witnessed by the fallout following last month’s Tefaf Maastricht fair, it is a cautionary tale for the art world: as this virus permeates the walls of glamorous fairs and high-end auction houses, no amount of oysters, champagne and hand sanitiser will render the privileged immune.

In Maastricht, the atmosphere was “febrile”, says Martin Clist, of the London-based antiquities specialist Charles Ede, “as though the fair was happening underwater, muffled”. As Georgina Adam, The Art Newspaper’s art market editor at large, aptly puts it: “There is now BC and AC: before and after coronavirus.”

Its enormous impact on the art market is unprecedented, closing the behemoths of Christie’s and Sotheby’s, with nearly all sales postponed and thousands of staff working remotely—something previously unthinkable. But how are people coping, and what legacies will be left once, as Iwan Wirth, the president and co-founder of Hauser & Wirth, puts it, we are out of “the eye of the storm”?

Wirth foresees “a recalibration, a consolidation of fairs and a move to slow programming—the rhythm of the market will slow”. But with numerous fairs postponed to the autumn that seems unlikely and, as Glimcher warns, “that hysterical, fast pace of double-time fairs is not the way people are going to recover”.

Fearonomics

While too early to quantify the financial impact on their businesses, Glimcher and Wirth agree that the challenge is unprecedented. “This is going to be a very, very tough year for the industry,” Wirth says. “Because it’s a virus, it has an existential element. It affects everyone.” This is not, Wirth says, a “systemic crisis” like the 2008 economic crash. Glimcher says: “This is more like 9/11 than 2008. It will change our society.” Unsurprisingly, people are “just not buying”, he says.

The economist Clare McAndrew says: “When you’re concerned over health, safety, security etc, it’s hard to consider higher-level discretionary aesthetic purchases. Even if this doesn’t have a financial impact on some collectors directly, this psychology seems likely to filter down to the market.”

Grinding to a halt

Coronavirus could compound the trend of reduced international movement, due to increased protectionism, tariffs etc, McAndrew says: “Cross-border trade and the globally diverse range of buyers and sellers is what has driven growth and protected the market’s downside in the last decade or two, so it does threaten growth if markets become more local.”

As flights are grounded, “prices [for art airfreight] are skyrocketing”, says Adam Fields, the founder and chief executive of the shipping firm Arta. Road freight continues for now but, with growing border restrictions in place across Europe, that will be impacted soon.

Numerous European countries have ceased issuing export licences and the UK’s Arts Council Export Licensing Unit “has been suspended until further notice”, according to an email sent on 20 March, leaving many dealers in the lurch—the UK-based rare books and maps dealer Daniel Crouch is awaiting licences for £350,000 worth of stock sold abroad: “But I won’t get paid until it can be exported,” he says.

Simon Sheffield, the executive chairman of the shipping company Martinspeed, says that the price of air freight is “five to six times higher than usual”. He expects that any art shipping “will be minimal shortly. We’re entering unknown territory”.

Insurance and legal implications

Many millions have been lost due to cancelled fairs and, at present, “[insurance] coverage for Covid-19 cannot be bought for love nor money”, says Filippo Guerrini-Maraldi, the chairman of the private wealth division at the insurance broker RK Harrison. “For upcoming events, cancellation due to disease will be impossible—but, for events several months away, it will become available again but at a price.”

Pierre Valentin, the partner in charge of the Art & Cultural Property Law Group practice at Constantine Cannon, says: “This situation is unprecedented. We are trying to work out the potential implications.” Regarding contracts between now-postponed or cancelled fairs and exhibitors, Valentin says, if they are not clear on which law is applicable, it will be even challenging if the exhibitor, the fair organiser and the fair itself are not all in the same country. Numerous fairs have been “postponed”—many to next year—rather than “cancelled”, which could have implications. “If a fair is cancelled it is likely a refund will be paid to the dealer (possibly less administrative costs),” says Rudy Capildeo, a partner at the law firm Charles Russell Speechlys. “If a fair is postponed, the fair will likely retain the dealer’s deposit.” But, Valentin says, this “will again depend on the law of the contract and its content. It is difficult to offer generic advice”.

Although at the moment, “there is a sense of togetherness within the arts community”, Capildeo says, there’s room for things to turn ugly. “It is unfortunately inevitable that as the pressures on businesses begin to creak, that goodwill can only last so long,” he says.

The virtual world

As for how to cope in the meantime, the industry has been forced into a corner from which the only way out is online. “If you compare the fashion world with the art world, our digital retail offering is miles behind!” Wirth says. Speaking after a Zoom conference call of 90 Hauser & Wirth staff working remotely, he says: “The legacy will be the technology.” Evan Beard, the national art services executive at US Trust, concurs: “Social distancing and travel restrictions give auction houses, galleries and art fairs an opportunity to test digital sales strategies, such as virtual reality, and online auctions. So, the crisis may reveal lower-cost ways of doing business that will quickly become industry standard.”

Like Beard and Wirth, MacAndrew sees this as an opportunity to stress-test digital and remote working models. While the market won’t entirely shift online, she says: “It’s often some seemingly unrelated catalytic event that can cause changes in the market, so it will be interesting to see how this unfolds.” As Glimcher, whose gallery has just launched a series of curated online selling shows, says: “If I put up an online show of an [in demand] artist like Adam Pendleton or Loie Hollowell, will people buy? We’re going to find out.”

Recovery and restructuring

Given the unprecedented economic volatility of recent weeks, it’s too early to predict what sort of recession and recovery we may be headed for. “I hope it will be a V-shape recession, short and sharp, with a quick recovery,” Wirth says. “But people are saying it will more likely be a longer U-shape recovery which, unfortunately, I tend to agree with.” While a V-shape recovery might see the art market bounce back in the autumn with pent-up demand, a U-shape would likely mean a 1990s-style readjustment, with prices reset lower as the market contracts.

Looking to Asia may give some clues. Craig Yee, the gallery director of Ink Studio in Beijing, says: “With the health crisis more or less under control, China, Hong Kong, Singapore, Taiwan, Korea, Japan and South East Asia are well-positioned to respond pro-actively to the unfolding global economic crisis. Euro-Anglo-American economies, on the other hand, are still confronting the underlying epidemic and by many accounts failing miserably.” Yee predicts “a restructuring of geopolitics and global economics… tectonic shifts in the cultural, political and economic environment of which art is an integral and constitutive part”.

Finding the positives

Perhaps a silver lining can be found in the enforced slowdown of the frenetic global art market and a recalibration of values, as Wirth—one of the most powerful contemporary art dealers in the world—is finding while self-isolating in Somerset: “I know now how to change the cartridges in my printer and clean the coffee machine. I speak to my mother for an hour every day now. It’s a chance to show kindness to people, so let’s try to keep a lot of that.”

Times will be tough, but, as Guerrini-Maraldi says: “Don’t panic. Things will return to normal soon—it’s in our nature to bounce back with vengeance.” Because, this too shall pass.