Saturday, November 08, 2014

State of the Art Market Fall 2014

1. LONDON - If you didn’t make it to Frieze, Vernissage TV’s tour of the fair is good way to get a taste of what visitors saw. Although sales were reported, there wasn’t a sense of market frenzy. The same tone seemed to hover over the auctions in London where Italian art created all of the heat and chatter.
So we asked Karolina Prawdzik to put together an overview chart of the Contemporary art sales in London during Frieze week from 2005 to today. What we saw was interesting, especially when we looked beneath the headlines of the evening sale and isolated the Contemporary day sales. Below you’ll see two charts comparing the average price (blue line) with the total sales volume (bars) for the Frieze Contemporary sales overall including Evening and Day sales (first chart) and then just the Day sales (bottom chart.)
The point of isolating the Day sales is to look at the day-to-day business of demand for Contemporary art. As we all know, value congregates in a few pieces by a few artists. The day sales present a broader look at demand.
From these charts you can see that volume and average prices for Day sale material is only now matching or exceeding the peak of 2007. Though the overall market, helped by the high flying Evening sales regained that ground two years ago.
If the Day sale numbers are finally back at 2007 levels, the fever pitch of the market certainly isn’t. For those who want to believe that the art market has entered a new phase, strong numbers amid sober expectations is a good combination. more....

2. NEW YORK - Art Market Monitor - The art world “is like a guild meeting,” Jim Chanos, the founder of hedge-fund firm Kynikos Associates LP, said at a dinner he hosted for about 90 people at the Dorchester hotel. “Everyone gets together, they gossip and they pass judgment. It’s kind of silly and you have to take it with a grain of salt. You pick your spots,” said the investor, who’s known for betting against companies and markets.
Jim Chanos is no fan of art as an investment or even as an asset. The famed short-seller has tried to tie Sotheby’s stock to equity bubbles but even with recent market swoons, BID has collapsed without bringing down the broader equities market. That’s not to say that Chanos doesn’t have smart things to say about art consumption...
RUHLE: All right. Hedge funds make me think of the ultra 1 percent. You have been critical in the past of the art market, saying we are sitting on a bubble. Where do you stand now?
JIM CHANOS: Well I was in London last week and I spoke to a Bloomberg reporter Friday night about it. We’ve been short Sotheby’s. We were public on that. And I think that – that the art market is an interesting microcosm of all (inaudible).
RUHLE: The super rich?
JIM CHANOS: – about it in that – that it’s socially acceptable conspicuous consumption.
RUHLE: One more time?
JIM CHANOS: Socially acceptable conspicuous consumption. I think it’s a market that studies have shown correlates more with income inequality than general economic growth. And I think that’s an interesting part that a lot of people don’t realize about the art market, that the richer the rich get the better the art market does. The art market didn’t do so hot in the ‘60s and ‘70s when all incomes were going up. It did really well in the last10 years and in the late ‘80s, for example. So you have to be a little careful with art. I think art is wonderful. If you love a piece of art, buy it. Enjoy it. Put it up on your wall. But to use it as a financial investment or barometer I think is a little scary...more

3. NEW YORK - The Daily Beast - Are Over Half the Works on the Art Market Really Fakes?
A new study claims that over 70 percent of artworks for sale are either fakes or misattributions. If that’s true, are galleries and the art-loving very rich being taken for fools?
The late Bob Coe, a rich American who lived for a while on the Riviera, bought an important Picasso from a well-known Paris dealer in the 1930s. His house was near Pablo Picasso’s, so he got an introduction to him, and drove over with the picture in the back of his car.
Picasso, who was a remarkably mischievous person, flatly denied that he had ever painted the picture, and Coe then went off in a frightful state, and got hold of the dealer who had sold it to him. The dealer had
bought it directly from Picasso’s dealer—so there was no doubt the picture was genuine.
So back Coe went to Picasso, and confronted with the indisputable evidence of the authenticity of the work, all Picasso would say was “Souvent je peint des faux Picassos”— “I often paint false Picassos.”
And off poor Bob Coe—if you can call a man whose family were partners with the Rockefellers in Standard Oil “poor”—went again, no doubt scratching his head.
This little story—told to me by my father who had it from my grandfather, who was a friend of Bob Coe’s—gets, in its utterly absurd way, to the very heart of the never-ending debate about fake works of art.
The argument about whether a work is fake or really by the master can essentially be reduced to two words: Says who?... More

4. LONDON— Wall Street Journal - Christie’s bested rival  Sotheby’s  and boutique house Phillips during a round of evening auctions last week that tested the contemporary art market before New York’s major November sales.
All three houses logged solid results overall, but critical tests of deceased or older artists for whom the auction houses are trying to develop markets were mixed.
The auction market during Frieze Art Week, the European art world’s most frantic week of buying held each October, was further boosted by a sale of 43 museum-quality works from the collection of Karlheinz Essl, an Austrian owner of DIY stores whose failed expansion into Turkey and Eastern Europe triggered the sale.
Mr. Essl’s auctioned works last Monday totaled $75 million, between the $64 million and $96 million pre-sale estimate. It burnished Christie’sgrowing reputation as the leader in liquidating large single-owner collections, a reputation that first drove Mr. Essl’s interest in having them handle the “painful process,” he says.
German painter Gerhard Richter fetched the top price but also suffered the most awkward moment in that sale: his four-paneled painting “Clouds (Window)” sold for $10 million but “Net,” a major abstract painting expected to sell easily, failed to reach its $12 million low estimate, prompting a funereal moment of silence from the audience.
Mr. Richter, 82 years old, was the world’s most expensive living artist at auction before Jeff Koons’s “
Balloon Dog” sold last year for $58 million. Specialists expected demand for Richters to be boosted by his show at Marian Goodman’s new London gallery that opened last week with sold-out works priced between $76,000 and $4.4 million.
But buyers are establishing a pecking order for Mr. Richter’s older works, auction specialists and private dealers acknowledged after the auctions.
Though “Net” is an excellent example of Mr. Richter’s transition between blurring paint and using a squeegee, buyers shunned it because it wasn’t a “typical” Richter, says Christie’s specialist Francis Outred.
“The aesthetic wasn’t fashionable,” he said.
Mr. Richter’s drab camouflage-colored 1971 “Jungle Painting” stalled at Sotheby’s on Friday night under its $3 million low estimate.
The overall contemporary sale at Sotheby’s totaled $45 million, just above the pre-sale low estimate and below Christie’s’ $64 million total for its competing sale held on Thursday. Sotheby’s enjoyed a surprise hit in its side Italian sale on Friday when a private European collector paid $20 million for Piero Manzoni’s “Achrome,” a blindingly white 1958-1959 canvas...more

5. NEW YORK - EBay and Sotheby's To Launch Online Auctions For Fine Art And Antiques.. The traditional gavel is going, going, gone.
Ebay, the ecommerce giant beloved by bargain-hunters, today announced plans to broadcast live auctions of fine art and antiques in partnership with Sotheby’s, the elite auction house known for headline-worthy events like its $45 million sale of a Francis Bacon triptych.
The joint effort represents an attempt to woo the dollars that online shoppers are spending on luxury goods. According to eBay, more than 3,500 of its auctions close each day at a price point greater than $5,000. Sotheby’s, for its part, has seen a leap in buyers’ activity online over the last two years, with online bidders competing for nearly one in five lots in 2013. In April of this year, Sotheby’s sold John James Audubon’s elephant-folio The Birds of America for $3.5 million, a new record for the company.
“We are joining with eBay to make our sales more accessible to the broadest possible audience around the world.”
For eBay, the partnership further signals the company's shift away from online flea market to curated storefront of big-name brands. For Sotheby's, which has been looking to grow beyond its core, high-end audience, eBay offers both a channel for reaching 36 million collectibles shoppers, as well as a platform for selling a higher volume of lots at the mid-tier luxury price point most lucrative to its business. (Works like the Bacon triptych build an auction house's reputation, but the terms of the sale are typically more favorable to sellers than to the house.)
Competition in the category is heating up, with Christie’s hiring technical talent to build out its own online auction capabilities and galleries adding inventory to Artsy, a site that helps collectors discover and buy art that matches their tastes...more

6.  LONDON - A Shift in the Antiques Market -  “Hundred pounds? It’s no money at all. Eighty, then?”
The refrain — uttered by an auctioneer in Dorset, in the west of England — and others like it are being repeated in different accents, languages and currencies in any number of salesrooms around the world currently struggling to find a market for everyday antique furniture.
The lot in question, offered by the Dorchester auctioneer Duke’s on Sept. 25, was an English 18th-century oak lowboy — a deep-fronted side table with three drawers — estimated to fetch as much as 250 pounds, or about $405. Eventually a couple of bidders pitched in and this handsome, but not so fashionable piece was knocked down for a hammer price of £130, plus 22 percent in fees, to a woman in the sparsely attended salesroom.
“Fifteen years ago, antique furniture used to be about half our business. Now it’s less than 20 percent,” said Guy Schwinge, a partner at Duke’s, one of Britain’s most prominent regional salesrooms. “There’s been a shift in taste. People furnish homes in a more minimal way and they don’t do period schemes. Our lifestyles have changed.”
Mr. Schwinge pointed out that few people now had formal dining rooms, and this has affected the prices of period furniture. A set of seven Regency rosewood dining chairs sold for £317 with fees at Duke’s. People don’t read as many printed books as they used to, and they certainly don’t write many letters — hence the paltry £366 that went to an 18th-century mahogany bureau bookcase.
So the question on many collectors’ minds now is just how low can the price of period English furniture go? The British-based Antique Collectors’ Club’s Annual Furniture Index (AFI), based on a mix of auction and retail prices of 1,400 typical items, fell by 6 percent to 2,238 in 2013. The index has been on a slide for more than a decade after reaching a peak of 3,575 in 2002.
“For nice furnishing things, prices are as low as I can remember,” said Paul Beedham, an early oak specialist dealer in Derbyshire. “The professional classes who used to buy just don’t have the money any more. They’
re struggling to pay their mortgages and car loans.”
But while prices for middle- and lower-range antique furniture might be at an all-time nadir, exceptional collector pieces can still sell for substantial sums. Mr. Beedham sold a 16th-century turned oak armchair associated with Queen Elizabeth I’s lord chief justice, Sir John Popham, to an American collector for between £40,000 and £50,000 at the LAPADA Art & Antiques Fair in London’s Berkeley Square, which closed on Sept. 28.
On Sept. 18, the Zurich auctioneers Koller sold a freshly discovered circa 1720 “bureau plat,” or writing desk, by the French cabinet maker André-Charles Boulle for 3 million Swiss francs with fees, or about $3.1 million, to a private collector based in London. The elaborately inlaid desk with gilt-bronze satyr-head mounts is similar to an example in the J. Paul Getty Museum in California, and had been kept in a Swiss castle for many generations. The price was the highest ever paid for a piece of furniture at an auction in Switzerland.
“The market went down after 9/11, and it’s really crashed for medium and lower level items,” said Philippe Perrin, director of the Paris-based furniture and art dealers Perrin Antiquaires, who had been hoping to... more

7. NEW YORK  - Can the Art Market Thrive as the Business of Selling Art Suffers?
 It’s the quiet season in the art market. Time for reflection on what’s happened and what’s to come. Surprisingly, the word in the air seems to be one of moderation and retreat. Scott Reyburn channels some of that in his International New York Times column. He points to Sotheby’s weak stock price as a signal that the booming art market isn’t necessarily a boon to auction houses:
“Auction houses aren’t scalable businesses. They can’t expand by multiples like dealerships,” said Michael Hutter, a cultural economist who is director of the Cultural Sources of Newness research unit at the WZB Berlin Social Science Center in Germany. “Profits are crumbling at the top of the market. They can’t charge 50 percent, which is partly why they’re turning to online sales.”
Evidence of that auction houses have bumped into a ceiling, Reyburn says, can be seen in Sotheby’s stock price having slid from $55 to $40 in recent months.
“There’s a feeling among financial analysts that the valuations of art-related companies are peaking,” said Fabian Bocart, the director of quantitative research at the Brussels-based art investment advisers Tutela Capital. “These valuations are based on expected volumes at auction. Very expensive items have almost no impact.”
In other words, the headline sales don’t translate into operating margin for the auction houses and their growth prospects are limited by the seeming lack of a middle market:
“There are definitely fewer art buyers than there were in 2008,” said Mr. Bocart, the research director. “The cards have been redistributed by the financial crisis. Fewer people have more money, and they do spend more, but the base has been diminished. Art needs to be refreshed. We’re waiting for something to happen.”
Meanwhile, something is happening with Sotheby’s stock which has sharply recovered the crucial $40 threshold. Let’s see if it can hold above that price.
Scratches in the Art Market Gilding  (

8. NEW YORK - Sotheby’s Private Sales Hit Hard in 2014 Even as Transactions Increased - What Sotheby’s Doesn’t Want You To Know About Its Private Sales  (artnet News)
Philip Boroff knows his way around an SEC filing. He went through Sotheby’s recent earnings to come up with these interesting numbers on the short-term drop in Sotheby’s private sales business which CEO Ruprecht reminds us is a “chunky” business. The most interesting piece of news isn’t the big drop itself, nearly half the value of the previous period, but the fact that transactions increased but were obviously at a much lower value:
Long a focus of company executives, private sales tumbled 48 percent in the first half of the year, according to an August 8 Securities and Exchange Commission filing. The value of private transactions, in which Sotheby’s discretely brokers art and other collectibles to one prospective purchaser at a time, dived to $294 million in the first half of 2014 from $561 million a year earlier. It was the lowest private sales total since 2010. The drop contributed to a 15 percent decline in quarterly earnings and an 8 percent drop in Sotheby’s stock on Friday.
In the first half of this year, private sales accounted for 8 percent of Sotheby’s overall sales. Private sales commissions for 2014's first half were $30 million, down by a quarter from a year earlier.
Besides accentuating the positive, Sotheby’s hasn’t offered many explanations about the setback. In an August 8 press release summarizing its results for the year’s first half, it highlighted a 41 percent jump in the number of private transactions while ignoring the dollar value slump.

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