A Bull Market?

The economic meltdown couldn’t stop British artist Damien Hirst busting records at his recent auction, but is the rest of the art market as robust? asks Simon de Burton

Those hoping that Sotheby’s auction of 223 lots of freshly minted works by the art world’s enfant terrible Damien Hirst would be a flop — especially the well-nourished dealers, who were cut out of the loop entirely — were cheered by the announcement, on the first morning of the sale, that Lehman Brothers had gone spectacularly bust.

However, the three-day event kicked-off with a ticket-only evening sale of 56 prime lots offered before a packed house that sold for an average of €1.64m each to raise a total of €89m. By the time the final hammer came down, the auction had raked in a staggering €140,724,310, the most ever made from the sale of work by a single artist. 

In fact, as the famous symbol of mortally wounded Merrill Lynch, the bull, was being photographed from every angle for the world’s newspapers, Hirst’s The Golden Calf, a formaldehyde-pickled bullock with gold horns, hooves and head ornament mounted in a gold-plated steel case on a marble plinth made €13m, an auction record for the artist. The Kingdom (a pickled tiger shark) went for €12m and Fragments of Paradise (a cabinet filled with manufactured diamonds) fetching €6.4m, five times its estimate. The ‘cheaper’ lots were offered the following day, 88 of which went for under €125,000 and 76 for under £1m (€1.3m).

Those who thought Hirst and Sotheby’s would be left with egg on their faces had, of course, made the mistake of assuming that the main collectors of his work were Europeans and Americans half-destroyed by plunging stockmarkets. In reality, only the mega-rich can afford to spend millions on such frivolities as pickled unicorns (lot 110) and are generally immune to global financial downturns. It is probably the wealthy buyers from the Middle East, such as the Emir of Qatar, Sheikh Hamad Al-Thani (who last year paid a then-record €13.1m for Hirst’s Lullaby Spring) that saved the sale, along with players from emerging markets such as Russia and India – not for nothing did Sotheby’s preview selected lots in New Delhi. One of the secret buyers was later revealed to have been Ukrainian steel tycoon Victor Pinchuk.

“I love art and this proves I’m not alone and the future looks great for everyone!” gushed a buoyant, even richer Hirst. But is this really the case?

Although Hirst – perhaps unwittingly – timed his sale to perfection, there are those who believe that the art market in general is in for a sharp shock as the worldwide financial squeeze begins to hit collectors buying at the important mid to high price range, an area that is the very life blood of the dealers and auction houses. 

Evidence of whether or not this is going to be the case will be seen this month, when Bonhams, Sotheby’s and Christie’s stage their major New York sales of Impressionist, Modern and Contemporary art, events traditionally packed with blue-chip workers that, during the past decade, have been fetching ever higher prices.

According to a Sotheby’s insider, the news of the Lehman Brothers crash resulted in many American commission bids for Hirst pieces being withdrawn before the sale, suggesting that US interest could be severely reduced at the forthcoming flagship auctions. This could, potentially, result in a large number of non-sales which will lead to a reassessment of values market-wide. In other words, a burst-bubble effect. 

Historically, however, Impressionist and top-end Old Master paintings have always weathered financial turmoil, largely because they are in relatively short supply and therefore always in demand, but also because the people who were rich enough to buy them in the first place are usually rich enough to be able to hold on to them until the next boom comes around.

The ‘supply and demand’ situation could, however, be dramatically reversed when it comes to contemporary art: many financial institutions have been building corporate collections of the genre for several years – but now that the writing is on the wall, the paintings might just have to come off it and be turned back into cold, hard cash.
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