The rising power of Korean buyers was demonstrated at Sotheby’s sale of Chinese, Korean and Japanese contemporary art, held in New York on 27 March (p68). Three of the top ten lots went to Koreans: a Korean-American collector bought two works by Chinese artists, Zhang Xiaogang’s Bloodline Series: Comrade Boy, 2000, for $824,000 (est $600,000-$800,000) and Mask Series 1997 No. 11 by Zeng Fanzhi, for $504,000 (est $150,000-$250,000). Another work by Zhang Xiaogang, Bloodline Series: Pink Baby, 1998, was sold to the Korean trade for $540,000 (est $450,000-$650,000).
Natsuko Hidaka, private client manager at Sotheby’s, said: “Korean buyers have been buying Chinese contemporary art largely in China and Hong Kong but the number of Korean buyers is now increasing in auctions in New York.”
The art market in South Korea grew dramatically in 2006. Turnover at the two major auction houses (Seoul auction and K auction) reached $63m, two and a half times the amount they reported for 2005. The Korean International Art Fair, held in May, has become Korea’s major art event: last year it attracted 150 galleries from 13 countries, and was attended by 50,000 visitors. Sales were reported by the organisers as $10m, 50% higher than in 2005. This month (9-11 May) the fair is being held at Coex (Convention & Exhibition Centre) in Seoul, with 208 exhibitors from seven countries including Korea.
The auction record for the best-known Korean artist, Park Sookeun, doubled in March this year, when K auction sold On the Road, 1962, for $2.5m (est $2m-$3m). The previous record was $1.24m, for Seated Woman with Jar, 1962, set at Christie’s New York in 2004.
One factor in this sudden growth is a proposal to curb property speculation by the South Korean government. It is planning to impose capital gains tax and higher property taxes on owners of substantial housing portfolios. As a result, surplus investment has been diverted to the art market.
The new Corporation Tax Law, which came into effect last year, allows works of art to be regarded as corporate assets for business purposes, which is also boosting the market. The effect of this was highlighted at a K auction in July 2006. The firm targeted corporate buyers at an auction of major paintings. Ten companies bought 23 works out of 70 offered.
A final boost is coming from a tax deduction scheme on donations to museums, which is expected to be passed next year. Individuals will be able to deduct the total price of a donated work from income tax, and companies can deduct 50% of the value from their corporation tax. It is expected that this will prompt more companies to open private museums, alongside the existing ones: Leeum and Hoam museum (Samsung), Art Sonjem (Daewoo), Sunggok (Ssangyong), the Lotte gallery (Lotte), the Hanmi photography museum (Hanmi), the Ilmin Museum (Donga), the Kumho Museum (Kumho), the Daerim Museum (Daerim), and the Chosun Ilbo Museum (Chosun daily newspaper). The beer company Hite is planning to set up a museum next year and has been buying heavily.
Three art funds have been founded in Seoul recently. The first, Seoul Art Fund, was established by the financial company Good Morning Shinhan Securities and the Pyo art gallery in September 2006. It is investing $7.5m in established Korean and Chinese artists such as Kim Hungsoo, Paik Namjune and Zhang Xiaogang. Hana Bank has launched the second, a Korean art fund with Seoul Asset Management Co, mainly aimed at the bank’s VIP clients; plans are to invest $8m in Korean art and international art. The third is Star Art Fund, a private equity art fund, created by five art galleries (Gallery Bhak, Park Ryusook, Johyun, Shilla and Insa) and a financial institution, Korea Art Invest Co. Star Art Fund is spending $10m on established Korean artists such as Kim Tschangyeul and Kim Kangyong.
Bhak Young-Duk, the director of the gallery Bhak, said the fund is only open to institutional investors: “Until recently, big companies such as Samsung and Paradise Group were major corporate buyers but now some mid-sized companies and a number of private equity firms are active.”
Seo Jin-soo, the head of the Art Market Research Institute in Seoul, said: “The current interest in art is not just a question of investment. South Korea is becoming one of wealthiest countries in the world. We did not have enough time to look at culture until we got to this stage but we finally have more time to enjoy art.”
Kim Dal-jin, the founder of the Art Research Institute, said 63 exhibition spaces, including museums and galleries, were established last year. Among them are the Seoul National University Art Museum, designed by Dutch architect Rem Koolhaas, and Atelier Hermès, a small gallery in Seoul featuring French contemporary art.