Wednesday, August 29, 2012

The Art Market July 2012

1. "The top end of the art market appears to keep climbing, despite fresh crises in the currency and banking markets and ongoing turmoil in the Eurozone. The reportedly strong sales at Art Basel (13-17 June) indicate a buoyancy bearing little relationship to the problems in the global economy and the fact that major financial institutions are still struggling with risk management—J.P. Morgan was one of several banks to be downgraded by the credit agencies in June after losing $2bn in trades of illiquid credit derivatives. Meanwhile, according to a report in the New York Times, the growth of the art market is outstripping GDP (gross domestic product).
The $78m price tag for Untitled, 1954, a large orange canvas by the late Mark Rothko offered by Marlborough Gallery at Art Basel, was both a statement of intent and an indicator of confidence, at least at the very top level of the market. Works of this quality are rarely offered so openly by dealers, but the piece had been coaxed out of a private Swiss collection after the record-breaking $86.9m sale of another work by Rothko, Orange, Red, Yellow, 1961, at Christie’s a month earlier. “The best art has proved resilient.

Art Basel, and the quality it purveys, proves rather reassuring in such turbulent times,” says Andrew Renton, the director of Marlborough Contemporary. The 1954 Rothko was yet to find a buyer as we went to press, though Renton says that there are “very serious offers under discussion”.

Remarkably, 11 of the top 20 works ever sold at auction have hammered down since 2008, including the top three lots, which have all sold for more than $100m since 2010. New records have also been consistently set for individual artists. There was excitement at Christie’s sale of contemporary art in London on 27 June when a record £12.9m ($20.2m) was paid for Jean-Michel Basquiat’s Untitled, 1981, breaking the previous record of $16.3m, set in May at Phillips de Pury in New York. This came 22 lots after a new record was set for a work by Yves Klein, when Le Rose du bleu (RE 22), 1960, sold for £23.6m ($36.8m), edging past the $36.5m record paid at Christie’s New York—again, just a month before.

According to Benjamin Mandel, an economist at the Federal Reserve Bank of New York who has been studying the art trade, comparing the overall economy and the art market is misguided: it is the fortunes of the super-rich that should be used as the measure at the highest end. “The historical relationship between the global economy and art purchases is pretty normal at present,” he says. “The fraction of income that the super-rich are spending [on art] remains consistent—they just happen to have more money.”

Changes in wealth distribution since 2008 mean that the number of high-net-worth individuals (commonly defined as having at least $1m in divestible assets) reached its highest ever level of 11 million last year, holding an estimated $42 trillion in net wealth, according to a report by Capgemini/RBC Wealth Management. Following in the footsteps of wider economic changes, the very top of the art market is enjoying rude health while the middle is struggling. At the recent London sales of impressionist and modern art, Joan Miró’s Peinture (Etoile Bleue), 1927, made a record £23.6m, but works of lesser quality were shunned.

The geographic concentration of wealth has expanded, too, and this is having an impact on traditional investments. In newer econ­omies with more volatile, or less mature, financial markets, the rich spend more on luxury assets, including art, jewellery, wine and cars. According to a recent survey of 2,000 of the world’s super-rich individuals by Barclays Wealth, respondents in the United Arab Emirates hold 18% of their wealth in such assets, closely followed by the Chinese and Saudi Arabians (both 17%) and the Brazilians (15%)—compared with 9% of Americans, who tend to focus on more traditional investments.

Buyers from China and Qatar are entering the trade at this luxury level: they account for at least a quarter of the top 20 works sold at auction. There has been a parallel boom in private sales, including the reported $250m acquisition of Cézanne’s The Card Players, around 1893, by Qatar last year. The expansion is not without problems, however. One of the most expensive works to sell at auction, an 18th-century Qianlong-dynasty porcelain vase that went for £51.6m ($83m) in 2010 at Bainbridges Auctions in England, is a record only on paper—the buyers have yet to pay for it.

Although many of the buyers might be new, they are largely ­adhering to the traditional tenets of the trade: provenance, rarity, condition, supply and demand. Ten of the 11 record works sold since 2008 came from a named, established seller. “In the previous boom, between 2006 and 2008, people were more risky about what they were buying, but now they are looking for things with a historical footprint,” says the art economist Clare McAndrew. “Art at that level is an infrequent purchase, and an easy way to reduce your risk is to rely on established patterns set by other people. This is why people tend to be influenced by what others are buying, which reinforces the idea that some artists are the best.”

Sotheby’s 2007 auction of Rothko’s White Centre (Yellow, Pink and Lavender on Rose), 1950, is a testament to the power of provenance. The work belonged to David and the late Peggy Rockefeller. Because the proceeds were going to charity, David Rockefeller agreed to be photographed on the cover of Art + Auction magazine: the work sold for a then-record $72.8m. The next evening, Christie’s sold a Rothko comparable in size and date, albeit with less dramatic colouring and a less impressive provenance, which went for $29.9m. This is noted in the recent book The Value of Art by Michael Findlay, a director of Acquavella Galleries and former head of Christie’s impressionist and modern department. Pointing out that such prestigious pedigree is unusual, he argues that “if something is great, provenance isn’t actually necessary—it lends more value to works of secondary quality, because the buyer will boast about the name if it is of note.”

Unique works are not always the record-breakers; the top three works sold at auction so far are serial pieces. Giacometti’s Walking Man I, 1960, which was briefly the world’s most expensive work at auction when it sold for £65m ($104.3m) in February 2010, was cast in an edition of eight. It was overtaken three months later by the $106.5m paid for Picasso’s 1932 Nude, Green Leaves and Bust. The painting is part of a celebrated series that includes Le Rêve, 1932, which sold to the hedge-fund manager Steve Cohen in 2006 for $139m (before its owner, Steve Wynn, called off the deal after accidentally sticking his elbow through the canvas). Edvard Munch’s The Scream, 1895, took the top slot in May when it sold for $120m—the work is one of four versions.

The serial context provides reassurance for buyers and an associated value. It also indicates a conflation of rarity with supply: although there are four versions of The Scream, the others are in public museums and unlikely to come to the market. “Supply is what drives buyers to go higher,” Findlay says. “There are lots of Monet Haystacks, but the opportunity to buy one would be unique because they are all in institutions.” Such limited supply fuels demand. “It takes at least 30 years, on average, for a work to come onto the market if it is in private hands, and these supply dynamics have worked in the market’s favour,” McAndrew says. “Art is a level above luxury goods: prices can catapult with the knowledge of a work’s scarcity because the super-rich compete to buy one piece.”

While condition is key, the definition of “good” varies according to the work. A Donald Judd in great condition means something quite different to a top-notch work by Rembrandt. “It’s all relative. An impressionist painting from 1880 in great condition may be relined, it may have frame abrasion on the edges—but those things are normal,” Findlay says.

The pursuit of blue-chip works has gained momentum because of the turmoil in other markets. “Art is portable and liquid, and can be traded in different currencies,” said Andrew Fabricant, a director at the Richard Gray Gallery, speaking during Art Basel. However, although blue-chip works are seen as safe havens, “the longer-term trend is that they tend to underperform compared with the rest of the market,” Benjamin Mandel warns.

The investment value of art is difficult to track: the art market comprises a series of mini-markets, each performing differently. The trade is lightly legislated, largely private and lacks the underpinning structure of, for example, a stock exchange. Nonetheless, using publicly available auction data, Mandel found that “the patterns of long-run returns for works of art don’t really conform to the definition of a good investment—the average return is very low, around 2% to 3%, and the volatility of those returns is very high.” He believes that the market can be better understood with the introduction of a “conspicuous consumption” model. “Art acquisitions are not only about the quality of a work and the price,” he says. “If a work hangs on a wall, then the buyer gets a ‘consumption flow’. They also get some benefits as a signal of the price they paid, so if you formalise that in a quantitative sense, it helps explain the financial sums.”

Mandel is reluctant to make predictions, but says that “if income inequality continues to increase, then you might expect to turn a profit at the top end of the market. But, on the other hand, if you’re buying a work as an insurance against losing money in other assets, it’s not clear whether the trend might reverse itself once the global economy looks more normal.”

It is worth bearing in mind that the close correlation between regional prosperity and growth in the art market is not a new phenomenon. The $82.5m that the Japanese paper magnate Ryoei Saito spent at Christie’s in 1990 on Van Gogh’s Portrait of Dr Gachet, 1890, equates to $145m in today’s terms, which means it theoretically reigns as the most expensive work at auction. The art-market boom in the late 1980s was fuelled by newly rich Japanese on an art-buying spree. This stopped abruptly in 1991 with the collapse of Japanese property prices and sparked an entrenched art-market recession. If the current slowdown in China accelerates, for example, this could have a major impact on the trade." The Art Newspaper

2. LONDON.- Tonight in a dramatic bidding battle at Sotheby’s London saleroom, a new benchmark was set when Joan Miró’s 1927 modern masterpiece Peinture (Étoile Bleue) sold for £23,561,250 / $36,946,396 / €29,260,764, exceeding the pre-sale estimate of £15-20 m / US$ 23.7 - 31.6 m / € 18.4 -24.5 m and shattering the previous record for the artist at auction. The hammer fell after a tense stand-off among four bidders, with offers jumping in large increments before the work was finally won by a telephone buyer. The sum paid was the highest price for a work of art sold in London thus far this year. Miró’s painting was the top lot in a sale which realised £75,046,850 / $117,680,965 / € 93,200,835 (est. £73- £102.6m / $114.4 -160.9m / € 90.5-127.3m). This brings the combined total for Sotheby’s Impressionist and Modern Art sales worldwide this year to £435m / $692.6 m / €504.2, an increase of 12.4 % on the same period last year.

Helena Newman, Chairman of Sotheby’s Impressionist and Modern Art Department, Europe, said: “We are thrilled to have been able to offer Miró’s Peinture (Étoile Bleue) in tonight’s auction. At a time of unprecedented demand for the best examples of 20th-Century art, this masterpiece by Miró not only shattered the previous record for the artist (set only four months ago at £16.8 million), but also made more than three times the price it achieved five years ago.”

Further Statistics:
• The average lot value of the works sold this evening was £2,275,843.
• 33% of the works sold realised prices above high estimate.
• 23 works sold for over $1 million
• 15 works sold for over £1 million.

Joan Miró’s Peinture (Étoile Bleue)
Identified by the artist as a work that was key to his oeuvre, Peinture (Étoile Bleue), executed in 1927, belongs to the seminal ‘dream paintings’ cycle - in which Miró pioneered a uniquely poetic form of abstraction - examples of which can be found in major international museums such as the Musée National d'Art Moderne in Paris, the Tate Gallery, London and The Metropolitan Museum of Art in New York. This landmark work was formerly in the collection of André Lefevre, a leading collector and connoisseur of early 20th century art. The price achieved at Sotheby’s this evening is three times the sum (£ 8.35 m / €11,586,520 / $16,673,650) achieved when the painting sold at auction in 2007. Demand for works by Miro is at an all-time high following a major international retrospective of the artist’s work in London, Washington and Barcelona.

Further highlights from this Evening's Sale
• Five bidders competed for Mother and Child with Apple, one of the most elegant and compelling of Henry Moore's interpretations of the theme, sold for ¢3,737,250 / $5,860,382 / £4,641,298 (est: ¢ 1.8 ¡V 2.8 million / US$ 2.9-4.4 million / £ 2.2-3.4 million), a record for an indoor sculpture by Moore, to bidder on the telephone. The work was owned by the same family since 1957, who bought it for ¢G650.

• Pablo Picasso's monumental late portrait Homme assis, executed in 1972, a year before his death, realised ¢6,201,250/ $9,724,180/ £7,701,345 (est: ¢ 6-9 million / US$ 9.50-14.2 million / £ 7.4-11 million).

• A remarkable and rare group of watercolours by Wassily Kandinsky from a Distinguished Private Collection made a combined total of ¢4,832,750 / $7,578,235 / £6,001,802 against a combined pre-sale estimate of ¢3.85 - 4.95 million. Perfectly exemplifying their respective periods, the works act as a survey of the artist's entire career.

• Pierre Bonnard's Nu Debout, a 1930 masterpiece from the collection of Mr and Mrs John D. Rockefeller 3rd sold for ¢4,521,250 /$7,089,772 /£5,614,950, a record for a nude by the artist ( est. ¢ 4.5-5.5 million / US$ 7.1-8.7 million / £ 5.5-6.8 million). Interest in Bonnard's nudes has been particularly strong in recent months following the landmark exhibition at the Fondation Beyeler.

3. ABU DHABI.- " Abu Dhabi Art has announced its galleries for 2012; including new highlight exhibitors and an 80% return rate from last year. Again held in the Saadiyat Cultural District, future home of Louvre Abu Dhabi, Zayed National Museum, and Guggenheim Abu Dhabi, it takes place from 7–10 November. Now in its fourth edition, it is organised by the new Abu Dhabi Tourism & Culture Authority* and sponsored by BVLGARI. "You can see from the calibre of galleries we have again this year, that it was a difficult decision to select a small number from the exceptional submissions, to fit with our boutique platform. We think the line-up reflects our goal—to show museum-quality work in an iconic setting," says Rita Aoun-Abdo, Executive Director. The 2012 edition includes 50 galleries, representing approximately 400 artists from 20 countries including 10 new galleries. Signature, the section presenting emerging artists"

4. DALLAS DALLAS (AP).- Hotel rooms are no longer just a place to shower, sleep or maybe indulge in a breakfast in bed. They're now also spots to pick up a souvenir — and no, we aren't talking about stealing the towels.

Like that painting over the bed? How about that drawing next to the TV? At hotels around the globe, guests now have the option to purchase the art work in their rooms.

For several years, hotels have invited local artists in to decorate hallways, lobbies and other public spaces. It's a way they can distinguish themselves from the cookie-cutter chains and offer guests a sense of their unique city or town. Now, they are taking that partnership one step further and turning bedrooms into mini-salesrooms.

The recently-opened Omni Dallas hotel features more than 6,500 original pieces of art from 150 local artists in guest rooms and public spaces. The art is one of the reasons the property doesn't feel like every other hotel stayed in on past vacations. It also gives guests the option of taking a bit of Texas culture home with them.

And the Omni Dallas is not the only one.

The Lancaster Arts Hotel, in Pennsylvania, sells art — and even some furniture — found in guest rooms, its own gallery and common spaces, all from local artists and craftsmen.

The Principe Forte Dei Marmi in Tuscany, Italy, actually hosts an artist in residence for several months. Guests meet and interact with the artist and then can custom order a piece of art. The guests can even handpick the materials to be used in sculptures.

Some chain hotels trying to distinguish themselves are getting into the art business.

At the Renaissance Arts Hotel in New Orleans, a Marriott property, don't expect to see price lists in the rooms. But guests who ask the staff can learn how to buy the various pieces of artwork, such as the glass sculptures in the bathroom that go for about $300. Each room features an original picture and the hotel is also able to refer guests to the artist or gallery if they are interested in other works.

Guests at the new Conrad New York can't take home the hotel's signature piece of art, Sol Lewitt's "Loopy Doopy (Blue and Purple)" which fills 13 stories of the lobby. However, each room has a tile representing part of the work. The gift shop sells the same tiles for $95.

Sherry Quinn, of Lisbon, Md., near Baltimore, recently purchased a painting, "Orange Moon over Lemmon Avenue," while attending a security-related convention at the Dallas Omni.

"It was the most unlikely place I would think I would purchase art," Quinn said. But the nighttime scene of the city just called to her. "I just felt like there was something magical about the painting."

Quinn had three days to debate buying the 32-inch by 32-inch painting. When she spoke to the gift shop staff — the hotel has a digital catalog of all its artwork there — she learned that the artist, Kelly Megert, actually worked there part-time. The next morning, she met Megert and spent $350 on the painting.

"I got to talk to her about she came about painting it," Quinn said. "I did love the painting itself, but the fact that it was a local artist kind of clinched the deal for me. It means something to me that an artist is painting about their city."

Ed Netzhammer, managing director of the Dallas Omni, notes that his hotel has "more art than a lot of the galleries and museums around the country."

"It makes it fun and interesting and adds a whole different level of energy to the hotel," Netzhammer said.

Bjorn Hanson, dean of New York University's hospitality school, said any savings hotels see from not having to furnish rooms is lost by the adding liability and staff needed to rotate the art.

The push for local art, he said, is coming from younger guests who don't want to see the same thing in a hotel in New York and San Francisco.

"This age group has a special appreciation for local sensitivity," Hanson said. "That would be things like helping local artists, helping local growers whether that's produce or bakeries or wine producers."

So leave a little extra room in that suitcase this summer — you never know what will be coming home with you from vacation.

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