Art for profit’s sake

Press, 20 December 1988, Page 12

Art for profit’s sake

From a correspondent in Tokyo for the “Economist”

WILL Mitsukoshi one day be ranked alongside the. Medicis as art dealers and wheelers? On November 28, the Japanese department store paid SUS3B.2 million for Picasso’s “Acrobat • and Young Harlequin” at a Christie’s auction in London.

The painting, which Picasso never finished, will go on sale at * Mitsukoshi’s flagship branch, close to Tokyo’s financial centre. The price paid in London was a J record for a twentieth-century painting. Its new owners hope it will fetch even more on sale in , the window of their Tokyo store. «

Japanese investors, both corpo- J rate and individual, have been r queuing up to buy Western fine * art, particularly since the stock- , market crash in October, 1987, « hurt their confidence in foreign * equities. And each day that the » yen strengthens, the canvas » seems cheaper. « The average Japanese pur- i chase at international auctions ’ has now reached SUSI.4M, » against a pre-Black Monday ‘ average of $US500,000; in the ’ last two years roughly a quarter t of international art sales at * auction have gone to Japanese « buyers. Fine-art imports in the * first nine months of this year * were SUSI.2 billion, compared » with SUS94IM for the whole of ’ last year — itself nearly double s 1986’s figure. ’ Thanks to the Japanese, im- * pressionist and post-impressionist s prices are bounding ahead — > adding nearly 50 per cent in a , year. In contrast, old master price-tags are increasing at a mere 15 per cent a year. But paintings, like shares, can drop in value, especially when they become too fashionable with moneymen. In the 19205, Wall Streeters rushed to buy British eighteenth-century portraits; after a savage fall, prices are only now matching 1920 s levels in nominal terms — i.e., ignoring inflation, insurance and 60 years’ worth of lost interest on cash invested.

Never mind. Many Japanese companies buy as much for corporate aggrandisement as for investment. In March, 1987, Yasuda Fire and Marine Insurance bought Van Gogh’s “Sunflowers” for SUS 46 million prompting finger-wagging from Japan’s Finance Ministry. The picture is now hanging in the company’s art gallery at its head office in Tokyo. Mitsukoshi, however, wants a (quickish) turn on "Harlequin.” Snooty dealers in London or New York would not dream of selling a picture through a department store. But the Japanese are used to it. Many stores have regular exhibitions. (The Seibu store, which this week bought a Monet at Sotheby’s in London for SUSIO.4 million, ran a Paul Klee retrospective as long ago as 1961).

And young and inexperienced buyers, many of them newly rich from Tokyo’s high stock and property markets, are more comfortable buying art from stores than from snobbish galleries. Two years ago the favourite to buy “Harlequin” might have been a provincial local authority, many of which had built new art galleries. The city of Nagoya, for example, paid SUS 2.2 million for Modigliani’s “Girl with Pigtails.” This was matched by steady purchases by companies for their own galleries. Most art museums are run by companies in Japan, because they get tax breaks that individuals do not. The State is not a great sponsor of the, arts in Japan. Now the main buyers are property developers, stockmarket dealers and owners of small companies. Such nouveaux riches are also buying diamond and gold jewellery and gold bullion. Banks, security firms and property companies are sufficiently worried about the diversion of savings out of financial instruments that they are studying new services for the super-rich. The Medicis, bankers themselves, would have approved.

Copyright—The Economist.