Fairs Analysis Market France

Paris bounces back as an art market hub

But possible tax changes, political upheaval and crime mean confidence is fragile

Thaddaeus Ropac’s space in Pantin, Paris, featuring an exhibition of work by Georg Baselitz. Photo: Charles Duprat, courtesy Galerie Thaddaeus Ropac

Paris is a difficult city to write off. Just as its art market seemed to be declining in favour of international cities that don’t come to a standstill in August, support came from some of the world’s leading art galleries. One year ago, Thaddaeus Ropac (FL, F8) cemented his commitment to the city, and Larry Gagosian (FL, C13; FM, C11) added to his empire, when both opened huge spaces in Paris. And others are following. The Berlin stalwart Max Hetzler (FL, D13) is opening his first foreign gallery in the French capital next year, and this month the auction house Phillips will unveil an office and exhibition space in the fashionable Saint-Germain-des-Près design district.

“It has been an unexpectedly quick success,” says Ropac of his first year in the new space. “It’s incredible how Paris is such a hub for collectors.”

The city’s leading contemporary art fair, Fiac, which begins next week (24-27 October), is a favourite for many collectors, with dealers at Frieze looking forward to showing in the venerable halls of the Grand Palais after their week in a temporary tent. Fiac’s growing satellite events now include the first Parisian edition of the Outsider art fair (Hôtel Le A, 24-27 October).

Meanwhile, France’s major art collectors (and rival luxury goods magnates) François Pinault and Bernard Arnault are both back in the capital, having flirted with cities elsewhere. Pinault, who blamed French bureaucracy in 2005 when he chose Venice instead of Paris to show his collection, opens the first exhibition of his privately owned works at the Conciergerie next week (“A Triple Tour”, 21 October-6 January 2014). Arnault, who threatened to leave France for Belgium when the president François Hollande proposed an upper tax rate of 75%, has now shelved his relocation plans and intends to show his collection in a Frank Gehry-designed museum next year.

Commercially challenged

The charms of Paris have never been in doubt, but the city’s reputation as a centre to trade art has been gradually eroded from its dominant position in the 1950s and 1960s. More recently, New York, London and now Hong Kong have risen out of a fragmented scene to become the cities of choice for the international art trade. France had 5% of the global art market’s share in 2012, while the US, China and the UK accounted for 33%, 25% and 23% respectively, according to figures from Arts Economics.

Today’s more pertinent problem is a series of proposed tax policies that call into question culture’s historically high status within France. “The relationship between [France’s] government and the art market oscillates from love to hate; we are currently not in a love phase,” says Guillaume Cerutti, the chief executive of Sotheby’s France. At the core is the uncertainty over import tax on art: this is set at 7% but will either fall to 5% (the same level as in the UK) or rise to 10% later this year.

While art was eventually not included in France’s wealth tax (0.25% on assets over €1.3m and 0.5% above €3m) and plans to introduce an upper income tax rate of 75% were scrapped, the uncertainty has undermined the confidence of Paris’s wealthier inhabitants. “France’s problem is that its taxes changes every five seconds,” says Patrick Perrin, the president of the PAD fairs, which he launched in Paris in 1997 (London edition: Berkeley Square, 16-20 October).

Several influential Parisian galleries are opening elsewhere: Emmanuel Perrotin (FL, C15) has just unveiled a space in New York, in part to stop his artists jumping ship, while the New Yorker Marian Goodman (FL, G5), who has also been in Paris since 1995, is opening in London in October 2014. Daniel Templon, in Paris since 1966, opened in Brussels this year—a city with a more business friendly environment—where he joins fellow Parisians Nathalie Obadia and Almine Rech (FL, F12).

Wealthy tourists

Yet Ropac and Gagosian must be onto something—Ropac describes business in Paris as “fantastic”. One clue to the city’s latest appeal is the chosen location of their new mega-spaces. Gagosian’s most recent gallery is in a private airport in the Parisian suburb Le Bourget, also close to Charles de Gaulle airport; Ropac is also on the city’s outskirts, in Pantin, which is nearby. A major draw of Paris is the city itself and what is really driving business are people from outside of France. “Given the size of our gallery, we couldn’t live on the French market alone,” says Ropac.

Paris is certainly top of the list as a tourist destination for today’s international set, who are attracted by the city’s high-end boutiques as much as its density of museums and monuments and who can avoid France’s national taxes. According to research from wealth-research firm Ledbury, while luxury sales to Parisians fell by as much as 30% in 2012, luxury tax-free shopping—whose buyers often overlap with art collectors—is on the rise. Russians registered a 26% increase in luxury tax-free purchases in France that year, followed by the Chinese (16%), Japanese (8%) and Americans (6%).

Overseas artists are also attracted by the city—and galleries need to please their artists alongside their collectors. Paris, which is steeped in art history, and has socialist roots, creative freedom and evocative architecture, has long welcomed those escaping culturally prohibitive regimes. Today, artists from politically volatile countries continue to move in. “Due to colonisation many Lebanese, North Africans and Syrians speak French as a second language and this helps with integration. On a deeper level, the revolutionary, democratic and libertarian spirit of [Paris] resounds with our artists who mostly come from highly politicised countries such as Syria, Lebanon, Iran, Egypt and Palestine,” says Khaled Samawi, the founding director of the Syrian gallery Ayyam (which now also has bases in Dubai and London).

The bottom line

But for how long can Paris rest on its laurels of luxury and liberty? The “negative fiscal environment” in France has been compounded by a “generally downbeat atmosphere”, says Hervé Aaron, the president of the Paris-headquartered Didier Aaron gallery (FM, B2). In September, Hollande saw his approval ratings fall to their lowest level (23% of voters registered as “satisfied”). Meanwhile, a surge in crime in the country is jeopardising its position as a luxury shopping destination with Chinese tourists and jewellery stores targeted.

Cerutti says that the new gallery arrivals and the momentum of events such as Fiac have certainly made the Paris market “more dynamic”. However, he says, an agreement on the level of import tax ascribed to art—which will be finalised in December—will prove the make-or-break decision for the city’s relative competitiveness. “Things are better here, but the art market is very fragile.”

Fiac, Grand Palais, Paris, 24-27 October

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