Before it sees a recovery, the art market has a lot to learn from the banking industry, particularly at a time when its facing yet another global economic crisis. Or at least that’s what Patric Johnson, a former investment banker and now newcomer to the art world, firmly believes. Johnson currently serves as a managing partner of the London-based boutique art advisory firm Beaumont Nathan, starting last year, after a long career in investment banking and finance.
Art, according to Johnson is merely “a store of wealth and an asset class. The drivers of the value of art may be different [from other assets] but the impact of the crisis is likely to manifest in a similar way.”
While art’s merits as an asset are arguable, valuations certainly seem to be taking a hit, matching those of volatile stock markets globally. Johnson believes the recovery will arrive, will be “pronounced” and that the most prized art will retain its value.
“Real confidence will only come back to the fore once a vaccine is widely available. Our animal instincts dictate that we’re not typically at our most acquisitive when the financial markets and world seem to be imploding.” Johnson recalled that even during the 2008-2009 financial collapse, record-breaking prices were sometimes still paid for art, notably the massive sale of the collection of Yves Saint Laurent at Christie’s in Paris which made a total of €380m, with 60 lots fetching over €1m in February 2009.
Echoing many analysts before him, Johnson said that a recovery won’t happen overnight. “The aggregate global economy dropped 54 per cent during the 2008 to 2009 crash and took 48 months to recover,” Johnson explained. Johnson’s experience in finance is exactly what landed him the job at Beaumont Nathan, a firm founded in 2014 by two art experts, Wenworth Beaumont, previously at Christie’s and Simon Dickinson gallery, and Hugo Nathan, who ran Dickinson’s gallery in New York.
The art market often resists analogies comparing it to the world of finance, but the areas are proving to be increasingly linked as art prices increase, regulation tightens and buyers look for increasingly sophisticated ways to buy and leverage works. Johnson compares the role of an advisory firm to some of the boutique banks that emerged after the financial crisis.
“The global banks, like the major auction houses, are inherently riddled with conflicts. They have some excellent specialists, but however good they are, it can be difficult to balance what a client wants with what management wants. A third-party adviser generally works with a clean lens,” he was quoted.
Johnson considers this to be particularly important when it comes to art and he proclaims that there is too much emotion and not enough information guiding decisions in the art world.
Beaumont Nathan was planning to open an office in New York but all such plans have been put on hold. They began investing in their digital communications strategy, focusing on Instagram and launching a new series of podcasts.