Investors flock to art auctionsAn astronomical figure flashed across the display: 1.6 billion won ($1.6 million), the winning bid for a 17th century work of white celadon. It was the most ever paid in a Korean auction, and is enough to buy a mid-sized apartment in Gangnam, one of the nation’s most expensive neighborhoods.
For Seoul Auction House, a leading auctioneer of everything from antique furniture to contemporary art, the message was clear. Investing in art is back.
The lagging economy and a vast number of forgeries had hobbled the Korean art market in recent years. Just last March, four drawings by Lee Jung-seop, one of the best-known Korean artists of the 20th century, were accused of being forgeries by outside appraisers. The drawings, which were also sold through Seoul Auction House, were a wake-up call for art dealers to introduce exacting standards for art appraisal, including analysis of a work’s ownership history and other methods used abroad.
As Korean art dealers implement a new set of authenticity confirmation rules, things are picking up. High bids at live auctions have been one sign of this. Total bids at a recent auction held at Seoul Auction House exceeded 8.3 billion won, and the rate for successful sales was 78 percent.
After a drawing by Park Su-geun was sold for 27 million won on the same day, one member of the audience smiled, saying, “I have about 10 drawings by the same artist. It’s about time that I bring them out here.”
Another factor driving the resurgence in auctions is a changing perception about art. For many viewers, art is no longer just about aesthetics ― for serious art collectors, it’s an investment. As news spread that auctions make money, a flock of starting collectors began swarming into museums and auction houses.
Seoul Auction House, once Korea’s exclusive auctioneer, has been joined by a wave of commercial galleries holding auctions and creating a buzz around town. The Busan-based Gallery Chohyung is preparing to launch a new auction house funded by Kyobo Securities, while smaller galleries in Gangnam, southern Seoul, are partnering to start their own auction house.
Some observers say that the growing interest in art auctions is linked to the rising popularity of online auctions, which create a sense of community among like-minded people through the exchange of goods. Also, a general interest in art has emerged as more Koreans have traveled abroad and seen the great art collections of the world.
Kim Sun-heung, a director at K-Auction, explained that consumer demand is driving the increase in art auctions, which serve a function that galleries don’t provide. Auctions allow the public to decide a value for each artwork through a competitive, open market based on their own standards, not those of galleries.
Art critics say that as a form of investment, buying art provides certain pleasures quite distinct from the experience of acquiring real estate or buying stocks.
“The pricing of art was mainly decided by dealers based on the artist’s name value and the size of an artwork. This was illogical, because there hadn’t been many auctions in Korea,” says Mr. Kim. “There hadn’t been a system in which artworks were purchased through open channels. This was a major hole in the local art scene.”
More importantly, however, collectors also enjoy art. The auction system naturally allows for cultural exchanges, linking investment results to the aesthetic side of people’s lives. It’s an open channel where the public can fully enjoy their assets while they own them, and profit when they decide to sell. The younger generation of collectors says it’s a safe yet promising way of investment compared to the volatile stock market or bank accounts with low interest rates.
But not to miss an opportunity, the traditional investment industry is also getting into the picture.
A collective of galleries, auctioneers and financial institutions recently launched an art fund, which encourages the general public to buy art rather than stocks. Hana Bank and Woori Bank have similar funds in the works.
However, this rising interest in auctions has also drawn fire from critics.
In a general meeting of the Gallery Associations of Korea, Lee Hyun-suk, a director at Kukje Gallery, criticized the auction powerhouses. “The Korean art market is distorted because a few auction houses with connections to major museums have failed to offer fair deals to consumers,” he said, referring to Seoul Auction House, which is affiliated with the Samsung-owned Gana Art Center. The largest shareholder of K-Auction, which opened recently, is Gallery Hyundai, another major commercial gallery affiliated with the Hyundai Group.
by Chung Jae-suk