Tuesday, January 20, 2009

The new reality—the state of the art market in 2009 is not easy to predict

Georgina Adam 19.1.09 Issue 198

The general economy and also the art economy is clearly headed for some choppy waters…” This is what mega-dealer Larry Gagosian told his staff in a tough-talking, if ungrammatical, memo published last November in Flash Art, as the global financial meltdown continued to panic investors, the US recession was officially confirmed and unemployment figures for the country soared by 533,000 in that month alone.

Elsewhere in this issue, we look at the effect the credit crunch is having on the art world as the new year begins. In the art market, there have been a few early victims of the crisis, including the 18 employees sacked by PaceWildenstein in New York, and the 17 “fabricators” of pill cabinets, butterfly paintings and pickled animals axed by Damien Hirst. “I want to make sure that we are the best swimmers on the block. The luxury of carrying under-performing employees is now a thing of the past,” warned Mr Gagosian, in a similar vein, in the same memo to his staff.
In Miami, the trendy French dealer Emmanuel Perrotin has shuttered his gallery, and now will only reopen it for Art Basel Miami Beach next December. Sotheby’s is also trimming its workforce, and has announced it has abandoned guarantees for the foreseeable future. The firm, and its arch-rival Christie’s, were badly hit by the collapse in art prices during New York’s sales of impressionist, modern and contemporary art in November, which garnered only half the expected totals. Those sales were prepared before the autumn, when art prices were still riding high. Some works sold in November for half their low estimates, and up to 75% of the works in some sales were bought in.
Today a different reality prevails. The lacklustre 2008 autumn fairs, Frieze and Art Basel Miami Beach, saw dealers prepared to be flexible on prices, accepting discounts of up to 30%. But, as journalist, sociologist and lecturer (and The Art Newspaper contributor) András Szántó points out: “Just as designer brands are now being offered at huge discounts in the high street—were those shoes or handbags really worth the previous prices?—so those [pre-financial meltdown] prices should never have been so huge. Some dealers priced art so aggressively, and the prices went up with such velocity, that it is inevitable that they should fall back sharply.”
These prices rose with the greatest speed for contemporary art. But the picture of the art market, as 2009 opens, is far from simple. It is always worth remembering that the market is not a single block, but a whole series of sub-sections.
More traditional categories, where prices did not rise so dramatically, have weathered the downturn better. The London sales of old master paintings in December, for example, saw enthusiastic bidding for the best works on offer, with Christie’s selling a rediscovered Tiepolo for £2.8m and Sotheby’s making £3.6m for Frans van Mieris the Elder’s A Young Woman In a Red Jacket Feeding a Parrot, 1663, (est. £500,000-£700,000). And there was extraordinarily strong take-up and an 87.6% sell-through rate (by lot) for Victorian narrative painting, an unfashionable category if ever there was one, from the Scott Collection, held at Sotheby’s London in November.
The sale of stock of traditional antique furniture in London by Christie’s from the Jeremy and Hotspur dealers was by no means a rout, and made near its (admittedly “realistic”) pre-sale estimate. Elsewhere, a Seurat drawing made $6.3m in Paris, five times higher than expectations. Everywhere, while sell-through rates are down, there is still money being spent on art and buyers available for the best works.
Against this must be placed dire results for the over-estimated, over-supplied Russian market and severely weakening totals for contemporary Chinese art and Middle-Eastern art. At Christie’s sale in Dubai last autumn, Parviz Tanavoli’s sculpture, Poet in Love, 1998-2007, fetched $242,500, well under its low estimate of $400,000. Again, these were categories where prices had risen the highest, and the fastest, supported by speculative buying.
As this year starts, what are the prospects for the art market? “As long as you see wild fluctuations on Wall Street, no one will spend a lot of money on art. I think 2009 is going to be very difficult,” says Per Haubro Jensen of the venerable New York dealers Knoedler & Company. To this must be added the psychological impact of the meltdown—for many, it seems the wrong time to be buying what is, after all, an inessential purchase.
Supply presents an ambiguous picture. On the one hand, vendors are holding back from selling, for fear of “burning” their pictures by seeing them unsold; the auction houses are struggling to bring in good material for next month’s sales. On the other hand, forced sales by cash-strapped collectors may bring desirable works onto the market. Dealers claim that it is a great time to buy, and a number were acquiring inventory at Art Basel Miami Beach last month. “Cash is king at the moment, and there will be great buying opportunities,” concludes Mr Szántó.
The writer is editor-at-large of The Art Newspaper
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