The Turkish Art Market in Focus: High Tides Between West and East
For the last two decades, the Turkish art market has been an important topic amongst art circles, especially with its peak in the late 2000s. Spiral movement in the Turkish market is caused and impacted by the country’s politics, economics and cultural landscape. However, the conjunction of East and West has the potential to grow even further and attract international art world participants to its doorstep.
But what is the current state of the Turkish art market today? As an emerging market, how does it compare to the international stage and different asset classes? Has the present digital evolution impacted the Turkish art market for better or worse?
Before diving into this topic, MADE IN BED would like to acknowledge the terrible earthquake in southeastern Turkey and Syria on February 6, 2023. When it comes to life and death, nothing, not even art, can have the same impact. As the current situation improves, we hope the cultural landscape will return to its vital position at its core and help the people who deal with hardship with great joy and richness.
Contemporary Istanbul Fair.
Part 1: Turkish Auctions and Fairs
Transparency has been an ongoing issue in the wider art world. Although auction records have been published, innumerable transactions are happening in private deals through galleries, auction houses and dealers that have never been accounted for. Thus, in this environment, auction records are the art world’s fundamental data point. Despite its shortcomings, this is viewed as a trustworthy source in most developed countries.
But in Turkey, explicit or public records about auctions are getting hard to access. Unfortunately, the art market gates in Turkey have become more and more obtuse every single year. Thus, research in this area needs to be more efficient and reliable compared to the annual reports from Western art market observers. This is evidenced by Turkey’s first and most comprehensive online auction & fine arts portal’s decision to stop adding new data to its servers starting in 2021. This date marks perhaps a new era for the Turkish art market because of its lack of transparency about artwork prices.
Data Source Courtesy of Lebriz.
Recently updated data from Lebriz Fine Arts Portal highlights the tremendous rise and fall of in-person auctions in the Turkish art market. Especially after 2004, the market gained momentum and peaked in 2010. However, this landscape resulted in the fall of the participation rate, a pressurised political climate, economic crises in the upcoming years, and decreased interest in in-person auctions.
Data Source Courtesy of Fatma Büşra Hasboyacı.
As mentioned earlier, Turkey's data available through auction houses or fairs could be more reliable and transparent. Specifically for art fairs, we have only data from 2006 and 2017 from Contemporary Istanbul, the country’s most famous art fair. According to Contemporary Istanbul’s sales records, 2010 was the height of its annual turnover in sales. After 2010, fluctuations emerged much more rapidly, and the fair was heavily impacted by the sales channels, leading to a greater revenue decrease.
In 2023, many fairs, including Art Basel and Frieze, will take place more often in different regions of the world compared to the last 20 years. Moreover, the growing presence of fair business in the art world has gained significant interest with the added participation of valuable galleries and artists. Within that perspective, it is interesting to see that Turkey’s once successful fair, Contemporary Istanbul, is losing value. This is only heightened by the fact that it is a crucial fair that creates an important bridge between Europe and Asia, West and East, Contemporary and Old Master.
Part 2: International Stage and Other Asset Classes
One of the critical aspects of the Turkish painting market index compared to the Artprice paintings index and S&P 500 is the volatility of the Turkish market. In this time frame, the Artprice index peaked in 2007-8 before the financial crisis and has shown more stable valuations. On the other hand, within a period of 26 years, the Turkish market had more ups and downs compared to others and showcased its unpredictability.
Data Source Courtesy of Ender Demir, Giray Gozgor, Emre Sari.
According to a journal article by Assoc. Prof. Ender Demir and his colleagues, the standard deviation of the indexes is 11.29 for Artprice Paintings Index, 24.79 Turkish Paintings Market Index and 17.46 for S&P 500, respectively, where a high standard deviation denotes large price swings and higher risk. Looking at this information, the fluctuations in the Turkish market are more prominent and more common compared to the Artprice and US’s biggest 500 companies' index in the long term. On the other hand, sharp ratios for the markets are -0.30 for the Artprice, 0.034 for the Turkish Paintings Market Index and 0.50 for the S&P 500 for the same period. Reviewing data of 26 years, it is remarkable to see that the Turkish market’s annual return beats the Artprice index. The Artprice index contains many blue-chip, world-renowned artists, reflects worldwide interest and is followed by thousands of investors, whereas the Turkish market is riskier and an emerging market. Therefore, the Turkish market’s performance is impressive compared to the former.
This could have happened because of the economic crises in Turkey in 1994 and 2001, where the interest rates for bank deposits went through the roof, liquidity was low, and a bubble-wise situation happened in the Turkish art market. When an atmosphere such as this one merged with a time when the artists couldn't keep up with the demand, the paintings market in Turkey became overpriced in this timespan. In a hypothetical portfolio, the Turkish market would have been a winner compared to the world index of paintings but a losing one compared to the S&P 500 index.
But we have to look at the impacts of significant economic, social and political events in more detail to understand these results further. In 1994 and 2001, two local financial crises occurred, and 2008 was the international financial crisis that shook the global markets. Between 2002 and 2010, when Turkey elected its current major leader Erdogan, Turkey had seen sustained growth with a good economy, great relations with its allies, an EU membership process and freedom of speech.
Although local crises had short-term effects on the market, Turkish painting prices bounced back to their original numbers with a resilient force every time. This type of trust and hope continued until 2010. However, these years have pointed out a change of policy in the Turkish regime. Imprisonment of journalists, cancellation of music concerts and theatre plays for political agenda, and a coup attempt in 2016 all contributed to a more oppressive, control-hungry, and corrupt government consciousness. Within this atmosphere, the bubble in the Turkish market started to pop and left a market with lower turnover and revenue.
Data Source Courtesy of Artprice.
As we look at the turnover table of developed nations between 2000 and 2019, we can see that heavyweights such as the USA, China and the UK have boosted their turnover in valuable multiples. Breakthroughs in communication, technology, and the wealth disparity among all these countries have reinforced this situation. Although the turnover rate in countries such as Switzerland and Netherlands within the same two-decade period is low compared to the top tier, these countries have also seen vast amounts of interest within their own borders. When we examine this result, the Turkish art market’s recession-like movement can be seen as contrary to its market’s contraction.
Part 3: Digital Era
Since the early days of the pandemic, the art world has reacted steadily and rapidly to create a bigger online presence than ever before on the internet. Following the resultant necessary online developments, the biggest winners of this movement have been auction houses, galleries and art fairs. With enormous financial backing, these institutions created an online presence in a short time and made record sales without physical viewings.
Data Source Courtesy of Lebriz
However, in Turkey, progress has been tight and limited. One of Turkey’s oldest auction houses, Artam Auctions, takes the lead in online spheres because, nowadays, the majority of their auctions are online. Following in the auction house’s footsteps, Contemporary Istanbul has been doing significant work with its digital campaigns. At the height of the pandemic, their online viewing rooms attracted many people from all over the world. Similarly, blue-chip galleries such as Galerist and Zilberman Gallery in Turkey have started selling their work through online art platforms such as Artsy. Although this has reached a wider geographical spread of audiences from around the world, unfortunately, many Turkish institutions still lack their own online viewing rooms in comparison to their international counterparts.
Turning attention to the digitalisation of the wider Turkish market, it is difficult to come to any concrete conclusions because of the different financial budgets of the institutions. In addition, this is in part due to the protective nature of data among art world organisations, including galleries, auction houses and fairs. Thus, one cannot determine or analyse young collectors’ appetites for this current digital era or auction houses’ efforts to get into the digital world because the Turkish market is more opaque than the international markets.
Thus, over the last 25 years, the Turkish market has seen interesting fluctuations, including economic crises and a positive social and political climate that resulted in a winning art index compared to the world art market. However, after 2016, a downfall movement happened without any backing support, especially from the government’s side. This is foregrounded by the fact that, in Turkey, most of the commercial market is financed by private families and institutions. Therefore, the ups and downs are much more precarious when the government isn’t subsidising the arts sector like the developed nations.
However, the biggest problem within the Turkish market compared to the world's developed markets is price information asymmetry. The term was developed by economists in the 1970s and 1980s as an explanation for market failures, where an imbalance of information between market participants could cause inefficiencies. In this example, the opaque structure of the Turkish market creates inefficiencies in supply and demand, thus causing some people to have more information and, therefore, more leverage than others. This produces critical fluctuations and gives one important opportunity to find low-quality and high-quality goods at the same price in the same time frame.
Secondly, economic crises in the last two decades have impacted many sectors, especially where art is concerned. When poor economics merge with the low supply of artists or artists’ estates, it affects the markets heavily, especially in the case of the Turkish art market.
In this context, the social atmosphere and the recent heartbreaking earthquake disaster, it is hard to define any direct path for the Turkish market going into the future. Although market statistics such as turnover and sales don’t look so promising at the moment, and perhaps the market valuations have seen a dip, this does not necessarily mean it will turn around and start a bull market in the Turkish market for the near future. It is nearly impossible to understand the market movements at the foresight. Unfortunately, there is a negative potential and sentiment in the Turkish market towards more loss and fluctuations, just in time when it seemed that the dust had settled.
Bibliography:
Demir, Ender, Giray Gozgor, and Emre Sari. “Dynamics Of The Turkish Paintings Market: A Comprehensive Empirical Study.” Emerging Markets Review 36 (2018): 180–94. https://doi.org/10.1016/j.ememar.2018.04.007.
HASBOYACI, FATMA BÜŞRA. “The Art Market In Contemporary Turkey: Valuation Of The Artworks And The Practice Of Art Collecting,” 2017.
Rep. Artprice Report: 20 Years Of Contemporary Art Auction History 2000-2020. 2020th ed. Lyon: ArtPrice, n.d.
Türkiye'nin Sanat Portalı. Accessed February 26, 2023. http://www.lebriz.com/.
Cenk Usel
Contributing Writer, MADE IN BED