Korean art market is expanding, but still faces challenges to becoming Asia's hub

The Korea Times

The Korea Times

Lifestyle

Wed, November 29, 2023 | 06:27

Trends

Korean art market is expanding, but still faces challenges to becoming Asia's hub

Posted : 2022-12-04 08:31

Updated : 2022-12-05 08:15

A green pumpkin by Yayoi Kusama is on display at a preview of Seoul Auction's Hong Kong sale at Grand Hyatt Hong Kong, Friday. Korea Times photo by Park Ji-won

By Park Ji-won

HONG KONG ― The Korean art market has not been the first choice for collectors over other options like the U.S., Hong Kong or the U.K. when art auction season starts. But with Korea's increasing cultural footprint in the world, demand for Korean artworks has also grown. The latest indication of this trend is Frieze's art fair that was held in Seoul in September of this year, which was the first-ever art fair in Asia that drew over 110 galleries.

The Korean market, scaled at 915.7 billion won ($703.4 million) in 2021, has been expanding over the past couple of years. One of the largest auction houses in the country resumed its overseas activities in Hong Kong.

Seoul Auction's Hong Kong sale was held for the first time in two and half years from Nov. 25 to 27. It grew considerably in size this year and the pre-sale estimate of the auction house this year was 21.1 billion won, up some 185 percent year-on-year.

Yayoi Kusama's green Pumpkin painting was sold at the auction for 6.42 billion won, the highest price for any Korean artwork sold this year. The auction was held in Korea, but collectors were also able to make their bids from Hong Kong and through online platforms.

The offline Hong Kong sale has been a symbolic venue for the Seoul Auction, one of the two largest art auction houses in Korea along with K-auction, to communicate with international galleries, whose Asian headquarters are in Hong Kong, and to attract Chinese and international collectors, while introducing artworks by Korean artists, officials said.

"Many art galleries are pulling out of the Hong Kong market, but many international galleries are opening up or adding branches in Korea," Yoon Hyun-sik, head of sales at Seoul Auction, said at the Hong Kong exhibition. "More foreign buyers are inquiring about Korean artworks and buying them over the last few years."

Hong Kong Autumn Auctions by auction house Christie's is being held at the Hong Kong Convention and Exhibition Centre on Nov. 28. Korea Times photo by Park Ji-won

An official of Christie's Hong Kong, presenting its autumn sale from Nov. 25 to Dec. 3, said, "More collectors and buyers are asking us about the artworks from Korea." This year, up to 10 artworks by Korean artists were on sale during the auction in the city.

Lehmann Maupin gallery and PACE Gallery both expanded in size this year, while PERROTIN, another art gallery, opened its second branch in August, which was also the first of its kind for a foreign gallery in the affluent Gangnam area of southern Seoul.

The move reflects the overall expansion of the Korean art market. Global fine art auction proceeds reached $7.49 billion during the first half of this year, an increase of 8.8 percent compared to the same period of 2021, according to artprice.com data released by Art Market.

According to the Korea Arts Management Service (KAMS), the total sale of artworks in Korea is estimated at 532.9 billion won in the first half of this year, compared to 915.7 billion won in all of 2021 and 327.7 billion won in 2020.

"Fluctuations in exchange rates make collectors hesitant to buy more. But still, the prices of many artworks have been soaring over the last few years during the pandemic," an art market insider said.

"Also the establishment of Frieze art fair will make a big impact. Younger collectors are now becoming more prominent, including BTS members," a foreign buyer said.

Hurdles for foreigners

Some unique taxing rules are motivating buyers to buy more artworks. Korea does not charge value added tax (VAT) for people who buy artworks. There is also no VAT on the sale of artworks costing less than 60 million won. VAT is also exempt on artworks worth more than 60 million won if the artist is still alive.

But things could become tricky, since different tax rules are applied to individuals and companies that collect art and each group should take different strategies for better deals.

As the information is not widely shared among foreign collectors, however, it is harder for them to access the Korean market.

Some also point out that the Korean art market is insular compared to bigger markets and local galleries tend to be reluctant to sell their artworks to foreigners, which result in blocking the influx of more foreign capital.

"You have to build a relationship with a gallery," a British collector living in Japan said, adding that Korean artists and galleries are rarely open to international collectors.

"There is a limited amount of works produced and they are poorly managed by galleries. A lot of Korean collectors are companies or wealthy people and they buy everything."

When asked how the Korean art market can become more accessible to collectors overseas, the collector stressed, "It's very simple. Sell them to the foreign collectors."

jwpark@koreatimes.co.kr