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As the financial crisis rocks the world, the art market is experiencing lower auction results and more hesitant buying. Sales are happening at a slower pace, but collectors are still competing for exceptional, iconic works.
It's a nail-biting time for the art world. This month's auctions and fairs have all been taking place during the most tumultuous period the stock market has seen since 1929. Collectors have terrifyingly watched their portfolios diminish in value, leaving some of them short-changed for purchasing works of art. The voracious appetite for snapping up art has been replaced by cautious buying at both Frieze in London and FIAC, France's international contemporary art fair, in Paris.
"I think that FIAC (www.fiac.com) showed signs of resistance; there was a more measured rhythm in sales, with collectors taking more time to make decisions, but we did witness a fairly solid rhythm of sales nevertheless all across the board," says Jennifer Flay, co-director of the FIAC. "Sales weren't even, but our impression is that the market is holding. Art lovers are still in the market buying works of good quality at the right prices at all levels of the market."
Buyers were tending to make more selective purchases. Yet, as sales continue, the mood is relatively upbeat. François Dournes, a director of Galerie Lelong (www.galerie-lelong.com) in Paris and New York, says, "We feel people are very concerned by what's happening on the stock exchange. They are still buying contemporary art, but perhaps they are going more for safe bets rather than young artists."
Lucy Meakin, a sales director at Timothy Taylor Gallery (www.timothytaylorgallery.com) in London, expressed a similar view. "People are still collecting, but it has to be the right work of art. It's a tough time at the moment. Sales at FIAC have been slow and steady, and collectors have been more cautious in making purchases. It certainly wasn't a case of selling out the booth on the opening day. Frieze was held during a very difficult financial week, so it wasn't a great success this year, and there was a drop in sales in London, while Paris, which seems less hard hit [by the financial markets tumbling], has been more buoyant."
Indeed, some big-name collectors, such as the Russian billionaire Roman Abramovich, did not visit Frieze until the Friday, two days after the fair's preview. It was hardly a case of collectors barging through the doors as they opened. Instead, deals were taking place throughout the fair's duration.
Yet some dealers noted a positive side to the more considered approach towards buying art. "The sales this year have been more gradual, with consistent sales, whereas in the past you were selling tons on the first day," says Daelyn Short, a director of David Zwirner (www.davidzwirner.com) in New York. "But you have more time to talk to clients, and the slower pace allows for a more civilized conversation."
While some galleries at both fairs reported selling out the totality of their booth, others had sold only 5 percent of artworks by the last day. Feedback was mixed. Galerie Hopkins-Custot (www.hopkins-custot.com) from Paris attracted stacks of attention with its solo show of Marc Quinn's work, featuring sculptures of Kate Moss and flower paintings, at FIAC. On display was a small gold sculpture of the British model that is a maquette for Quinn's 18-carat, 50 kg gold statue causing a sensation at the "Statuephilia" exhibition (http://www.britishmuseum.org/whats_on/all_current_exhibitions/statuephilia.aspx) at the British Museum in London.
And Luhring Augustine (www.luhringaugustine.com) from New York was thrilled to have sold all paintings by the American artist Christopher Wool on FIAC's preview day. "The Musée d'Art Moderne (www.paris.fr/portail/Culture/Portal.lut?page_id=6450 - 61k) held a fundraising evening in the artist's honor, as they had bought a work by him in May, so maybe that helped," says Lawrence Luhring. "And the artist hasn't had a show in Europe in a long time." Yet other galleries admitted struggling to sell expensive, high-quality works. "We had low expectations because of the financial markets, which are going up and down, and the collectors are wary," says Michael Short, a director from Sperone Westwater (www.speronewestwater.com) in New York, where a map tapestry by Alighiero e Boetti priced at €900,000 remained unsold on the last day of FIAC. "In a situation where things were more certain, we would have sold more. We've had several collectors saying they wanted to buy something and added, 'But I have to see how liquid I am.' They were interested in the works, but their bank accounts weren't."
Certainly, the financial turmoil has dampened many people's spirits. "It's a tough time for everyone," says Daniela Gareh, a director at White Cube (www.whitecube.com), London, which was presenting a successful solo show of Jake and Dinos Chapman at FIAC, including 11 of Hitler's watercolors that the Chapman brothers have painted over. Neil Wenman, another White Cube director, adds, "We've got an ambitious program planned for 2009, which will still go ahead. It's the smaller galleries that are going to have a harder time."
Sotheby's, Christie's and Phillips de Pury, the three leading auction houses, all witnessed lower volumes of sales during their London auctions of contemporary art during the Frieze week, with many sold lots going for far less than the estimates. This followed Bloomberg reporting Sotheby's shares falling by as much as 21 percent in early October due to concern that the art market would be affected by the worldwide financial crisis. "With markets facing such turmoil and the financial crisis spreading to emerging markets, the fall-off in the art market is not surprising,'' is how Dana Cohen, a Bank of America analyst, advised her clients.
Sotheby's (www.sothebys.com) sold 61 percent of its lots, with the evening sale bringing in £22,008,250, which was far below the pre-sale estimate of £30,620,000-42,750,000. "While our total fell short of its low estimate, the sale was assembled in a very different economic environment from that which prevailed today," says Cheyenne Westphal, chairman of Contemporary Art for Sotheby's Europe. "It is important to keep perspective; this market has witnessed rapid growth; five years ago, our October contemporary art sale yielded £3.5 million, and last year, our October sale realized £34,865,300."
Similarly, Christie's (www.christies.com) sold only 55 percent of its lots in its contemporary art evening sale, realizing £31,978,500 as compared to the pre-sale estimate of £57-75 million. A highlight of the sale was one of only two portraits of Francis Bacon by Lucian Freud, which fetched £5,417,250. Freud's other painting of Bacon was stolen from an exhibition in Berlin in 1988 and has never been recovered.
"Given the economic backdrop of the last several weeks, where other markets have frozen, the art market continues with liquidity and active buyer participation, albeit at different levels," say Pilar Ordovas, head of Post-War and Contemporary Art, Christie's London. Both Christie's and Sotheby's pointed out that the sales realized the second highest total for October auctions in London of contemporary art, even though they lagged behind the staggering results achieved last year.
Phillips de Pury (www.phillipsdepury.com), which was bought earlier this month by Mercury, a Russian luxury goods group, sold 54 percent of its lots at its Contemporary Art evening sale. The unsold lots included a huge Takashi Murakami sculpture that was estimated at £3.5-4.5 million. "While we are obviously disappointed by our results, we feel confident moving into the next round of sales in New York, as this fall season, we have almost entirely eliminated giving guarantees," says Ariel Childs, a spokesman. "We experienced in this past sale that a number of vendors did not wish to revise their price expectations downwards, preferring to hold on to their works rather than selling them for less. This explains the unusually high percentage of unsold lots."
The auctions were characterized by selective bidding with collectors concentrating on the most desirable, top quality, exceptional works. As Westphal says, "Works of high quality that are fresh to the market and properly estimated continue to perform well, as illustrated by the prices achieved for Warhol, Richter and Basquiat."
However, the market has been dealt another blow by the news that Picasso's "Arlequin" (1909) has been withdrawn from Sotheby's Impressionist and Modern Art sale on November 3, 2008, in New York. Sotheby's had estimated the Analytic Cubist painting at over $30 million but was selling it without a guarantee (an undisclosed sum promised to the seller regardless of the sale's outcome). The painting had been consigned by the estate of the Surrealist painter Enrico Donati. "It's been withdrawn for private reasons," David Norman, a co-chairman of Sotheby's Impressionist and Modern Art department worldwide. The withdrawal follows weeks of speculation that the work would be withdrawn out of fears of falling art prices, and indicates how the financial turmoil is affecting even the high-end of the art market. As Art Forum Berlin kicks off, followed by the auctions in New York, all eyes are on the stock exchanges to gauge what might happen next.
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