"Unlike previous periods of peak prices," points out Lisa King, international managing director of Christie's, "this boom is not fuelled by one particular category. In the late 1980s and early 1990s, for example, the high prices were largely in the Impressionists category and were being pushed up mainly by Japanese corporate buyers. This time the spread is much wider and more even. All categories are doing well, and the geographical spread of buyers
is much wider than before.
Rich buyers are shelling out large sums for art, reports Joanna Pitman. But is a crash imminent?
It all began with money, as everything usually does. The Russian
oligarchs have had lots of it available to spend on houses and yachts
in the past few years, and now they are trooping into the art auction
houses to buy up not only their own artistic heritage, but also some
serious Western art.
Sotheby's, which opened an office in Moscow a few weeks ago, has
notched up, in the first six months of this year, sales of just under
Pounds 60 million. This is an enormous amount considering that the
company's sales of Russian art for the whole of 2000 reached just
Pounds 4 million.
The Russians have been buying all sorts of things, says Sotheby's UK
Chairman, Lord Poltimore. "Traditional works of art such as Faberge
eggs, porcelain and silver have been doing extremely well, but also
Russian paintings from the 1850s up until the revolution. In fact,
pretty well anything Russian is very hot at the moment and the buyers
are 99 per cent Russians."
Poltimore recalls a British woman who recently decided to sell a
Russian painting given to her by her Russian grandmother. "She was
amazed at the estimate of Pounds 100,000 which we put on it, and even
more amazed when it sold for Pounds 250,000.
It's an extraordinary market and even Russian contemporary art from
the 1970s is making colossal sums. The buyers are mainly
oligarch-type people who have been buying houses all over the world
and now want some art to put in them."
The auction houses are also pleased to report that the Russians are
not only buying Russian art. In New York earlier this year, a mystery
middle-aged man, reportedly Russian, spent Pounds 51.5 million at a
Sotheby's auction on Picasso's portrait of his mistress, Dora Maar
with Cat.
They are buying Old Masters, jewellery, furniture and rugs as well.
This is art as investment, art as status, art as another toy in the
game of he-who-has- the-most-toys wins. In buying serious art, these
Russian billionaires are acquiring social cachet and a tangible
manifestation of their power. Just like the American industrialists
of the early 20th century, the Fricks and the Carnegies and the
Mellons, who bought only well-known names as investments, they are
consciously acquiring status when they buy art. After all, great and
memorable art has always been traded and appreciated as much for the
power it symbolises as for its aesthetic qualities. Good art speaks
of wealth, sophistication and power. As a commodity it can be useful.
But Russian activity is just one part of an overall art auction
business that has been booming for the past couple of years. Never in
living memory has there been so much interest in buying art as there
is now. Across the categories, from Old Masters, to Impressionists to
photographs, the international appetite has been steadily building
into a major art market bull run.
Both Christie's and Sotheby's have recorded dramatically increased
record sales for the first half of this year. A combination of
high-quality consignments, a heady auction atmosphere and an
increasing range and number of extremely wealthy buyers has boosted
prices dramatically.
Auctioneers are consistently being taken by surprise at the
frequency and degree to which records are being broken. Prices for
popular blue-chip names such as Mark Rothko, Willem de Kooning, Roy
Lichtenstein and Andy Warhol seem to rise and rise.
The record price for a Lichtenstein, for example, has risen from $7
million (Pounds 3.7 million) to more than $16 million in the past
three years, and prices for works by Rothko have ballooned too,
rising from $11 million to $22.4 million in five years.
"Unlike previous periods of peak prices," points out Lisa King,
international managing director of Christie's, "this boom is not
fuelled by one particular category. In the late 1980s and early
1990s, for example, the high prices were largely in the
Impressionists category and were being pushed up mainly by Japanese
corporate buyers. This time the spread is much wider and more even.
All categories are doing well, and the geographical spread of buyers
is much wider than before.
We are also seeing good sales not only at the top end of the market
but in the middle levels too. So because of this broad spread of
strength, we're confident that markets will remain strong."
Christie's has recently opened an office in Dubai to tap a new
market of buyers in the Middle East and the Indian subcontinent. "Our
first sale this year since opening our office there raised $8.5
million for sales of Indian and Middle Eastern art," says King. The
company has also opened an office in Bombay. "There is a great depth
of wealth in these emerging markets," says King. In spite of the
worsening political situation in the Middle East, Christie's is
confident of business growth in the region and is planning another
Dubai sale in January of Indian, Middle Eastern and Western
contemporary art and jewellery.
While these new markets are showing great promise for the auction
houses, their traditional buyers in the United States and Europe are
still active too. The most consistent of these are individuals, aged
between 35 and 50, who have made huge amounts of money in the
financial services industry. Steve Cohen, the Wall Street hedge fund
manager is typical of such collectors, buying only at the top end of
the market. He has bought Damien Hirst's shark in formaldehyde and
spent $32 million on Warhol's Superman. He also owns Impressionist
paintings and Old Masters and has a team of art experts paid to
advise him.
Fuelling a heady auction atmosphere is also part of the secret to
boosting sales, and Christie's has just set up Christie's Live
website, which allows a wider audience to log on at home, watch an
auction taking place and, of course, place bids. It is expecting
heavy internet bidding on Christie's Live for its New York sale in
October of Star Trek memorabilia.
But how long can it last? "The business is without doubt cyclical,"
says Poltimore. "But there are new markets, such as Russia, out there
which we have only just begun to tap. The Chinese contemporary art
market is going through the roof. These areas will grow for some
time, and in the traditional markets the top end will always do well."
A good indicator will come in November when Christie's New York
sells Andrew Lloyd Webber's blue period Picasso; Christie's is
looking for a Russian, Chinese or Indian billionaire buyer.
The market most susceptible to a crash, says Cristina Ruiz, editor
of The Art Newspaper, is the contemporary market. "The market calls
it a 'correction' and it will happen -I would think in the next five
years -because the market for contemporary art is full of speculators
at the moment. There are buyers and dealers in it just to make money,
hedge fund guys who like the risk attached. They tend to buy the next
big thing straight out of art school, an untested name, at a vastly
inflated price. Cecily Brown, who is a good artist, was being sold up
till a couple of years ago for a few thousands pounds. Last year, in
New York, one of her paintings sold for Pounds 1 million."
Ruiz says that the boom in contemporary art is unsustainable: "Eventually the speculators will desert the market. The new galleries
which have flourished in the East End will close. The really young
dealers will crash. It happened in the early Nineties and it will
happen again."