Grim forecast for Korean art market

Both the total sales value and prices of Korean art fell last year despite an increased number of works sold, according to a report on the local arts market by economics professor Choi Jeong-pyo of Konkuk University this week.

Seoul Auction, which accounts for half of all auction sales in the country, sold 1,888 pieces for about 39 billion won ($36 million) in 2013. The amount was down 2.6 percent from 2012.

K Auction, which takes up 28 percent of the market, auctioned off 1,258 works for 18.8 billion won, down 28.65 percent from 2012. The sales were the lowest for the second largest auction house in Korea since the market downturn began in 2008.

However, the auctioneers sold about 200 to 300 works more in 2013 than in 2012.

“The sales decline is attributable to an overall fall in art prices,” Seoul Auction CEO Lee Hak-joon said.

The average price of art sold in 2013 dropped by 7 percent from 2012. Art prices plunged 25 to 27 percent between 2008 and 2009, miring the local art market in a prominent slump.

“The art market may have hit the bottom last year,” Choi said. “Still it faces a tough time this year because the economy is not out of the woods yet and major collectors are hesitant to buy pricey works.”

His report analyzes auctioned artworks by 50 artists, which were traded over the last decade.

Though the overall price level for local artwork dropped, that for top-tier artists such as Park Soo-keun, Kim Whanki, Chun Kyung-ja and Lee Ufan, Kim Tschang-yeul has soared. The Korean art market has been polarized.

Prices of paintings by Park Soo-keun (1914-1965), a first-generation Western-style Korean painter, have skyrocketed by 431 percent over the last decade, according to the report, followed by Chun Kyung-ja with 219 percent, Lee Wal-jong with 194.2 percent and Lee Ufan with 159.7 percent.

“Famous artists may revive the art market. Demand for art by high-profile artists such as Lee Ufan, Sa Suk-won, Lee Dae-won, Oh Chi-gyun and Kim Jong-hak has risen since last year. If sales of works by those artists become brisk, the market will benefit from a trickle-down effect,” said Lee Hak-joon of Seoul Auction.

Auction houses hopefully speculate that the auction of an art collection confiscated from the family of the former President Chun Doo-hwan may be a shot in the arm for the depressed local art market.

“The Chun collection sold out, which is a sign of a living interest in art purchases especially for mid-to low-end artworks,” said K Auction chief executive Lee Sang-kyu.

K Auction and Seoul Auction were commissioned by the Korean government to sell the seized art in order to collect the former leader’s unpaid fine levied by the court in 1997 for a number of crimes including rebellion.

Bidding competition in the auction was heated, resulting in all items being sold off for prices four to nine times higher than the original estimates.

“The auction of the Chun collection drew huge interest from non-collectors as well. The collection aroused a negative perception of art as a means to raise slush funds and dodge inheritance taxes, but in the end, it succeeded in attracting attention to the overlooked art market,” said So Jin-su, economics professor at Kangnam University and director of the Art Market Research Institute.

Art experts note the importance of a legal system to support art collection in reviving the market.

“The new tax law imposing a 20 percent tax on artworks valued at more than 60 million won ($56,539) has dampened demand for artwork. Besides taxes, the law requires traders to file the list of art sellers to the government. In Korea, most art sellers still want to trade artwork anonymously,” Lee of K Auction said.

“It’s regrettable that the government regulates the local auction market as if it was a mature market in a foreign country. The Korean art auction sector is not out of its infancy yet,” Lee added.

By Lee Woo-young (wylee@heraldcorp.com)