Art market booms amid financial market turmoil

A Sotheby's employee holds Winston Churchill's ''Marrakech'' at Sotheby's auction house in central London December 11, 2007.

LONDON (Reuters) - Auction prices of arts and antiques are rising on the back of growing demand from investors trying to mitigate financial market volatility, a survey shows.

A growing number of consumers are turning their attention to these alternative investments as the credit crunch continues and investors take a "flight to safety", according to the Royal Institution of Chartered Surveyors' (RICS) first art and antiques survey.

Increasing demand stoked prices in the sector during the first quarter of this year -- when many City workers received annual bonuses -- the data shows.

A fifth more surveyors reported a rise than a fall in lot prices overall, and 50 percent more said they had seen price rises in the 5,000 pound-plus bracket.

Lower-priced art and antiques also saw price increases, but at a lower level.

Four percent more surveyors reported price rises, rather than falls, in lots worth up to 1,000 pounds, while seven percent more said they had seen prices rise in the 1,000 to 5,000 pound price bracket.

RICS said the figures suggested that consumers with disposable incomes were looking to buy arts and antiques as long-term investments, but that amateur enthusiasts were reining in their spending.

"Many investors are using their disposable incomes to buy in at the high end with the hope that value will continue to stay firm while stocks and bonds ebb and flow," said spokesman Christopher Ewbank.

"High salaries and large bonuses in many employment sectors have led to a high volume of new buyers entering the arts and antiques market, which has helped to push up the prices of lots.

"This is most evident in the arts due to the rise in popularity of 21st century art."

Silver was the strongest-performing sector of the market during the first three months of the year, with 40 percent more surveyors reporting rises than falls in lot prices.

In furniture, around 14 percent more reported prices rises than falls -- 37 percent more in the 5,000 pounds-plus price range.

That reversed a downturn in the demand and value for antique furniture apparent in recent years as homeowners favoured modern, minimalist décor.

Five percent more surveyors reported a rise in picture lots than a fall, but lots in the 5,000-pound and over range again performed particularly well: 44 percent more surveyors reported a rise than a fall.

Surveyors linked this to a boom in interest in the urban art market, with painting from the likes of Banksy, Damien Hirst and Peter Doig selling for more than 10,000 pounds.

The weakest performing sub-sector was the clocks market. One percent more surveyors reported a fall in lot prices than a rise.

Looking ahead, 17 percent more surveyors expected art and antique lot sales to increase during the second quarter, and 32 percent more expected prices to increase.

Ewbank said the sector would "continue to perform while other investment opportunities carry a higher risk", despite many American investors shying away from British auction houses due to the continuing strength of the pound against the dollar.

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