J. Tomilson Hill, the vice chairman of Blackstone and one of the world’s top art collectors, predicts the market is unlikely to crash any time soon. An abundancy of demands are flowing in from China, as well as thousands of new Chinese museums that are expected to open in the upcoming years.
Hill, who is set to open the Hill Art Foundation private museum in New York,says bubbles and busts are almost impossible to predict in any market. “In 1949, when Mao took over China, there were 25 museums in China,” Hill told CNBC during its Net/Net Conference. “Do you know how many museums there are in the United States today? 35,000. There are under 7,000 museums in China but they’re growing at between 500-1,000 museums a year. So there is a massive demand for interesting things to either look at, to talk about.”
China’s push for new museums is part of its efforts to become the world’s economic super power, as well as becoming a cultural force to be equivalent with the United States and Europe. The new Chinese museums are continuously willing to pay outrageous prices for top-notch, trophy works. Liu Yiqian, a former taxi driver who transformed his title to billionaire in China, purchased a Modigliani painting at Christie’s in 2015, for $170 million. Yiqian bought the painting for one of his two museums he owns in Shanghai.
The Chinese government is requiring several new real estate developments to build museums as a condition to get government approvals, which will create even more demand for art for many years. Sotheby’s collected more than $466 million last month at its Hong Kong sales, that includes a $65 million painting that shattered a record for HK.
Hill also noted that art remains an attractive asset for the ultra-rich who desire a store of value they can take move offshore, as well as to avoid taxes. He says the extreme amounts of art piling up in Singapore, Hong Kong and Switzerland indicate the rich are utilizing art as an offshore to their wealth.
“If you’re looking to avoid taxes, the art market is a pretty good way to do that,” he said. “And it’s really hard to track.”