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State of the art
It looks like the art market has finally succumbed to global turmoil. But has the bubble completely burst or just lost much of its bouyancy?
UNSOLD: despite high hopes at Christie's, no one brought home the Bacon
The anything-goes orgy of frantic art buying is certainly over, yet even in the grip of financial chaos, many dealers at London's high-profile October Frieze art fair did well - even spectacularly so considering the highly uncertain climate.
Sales in the $200,000-1000,000 bracket were steady, and though down in number compared to previous years, certainly prove that buyers are still willing to part with substantial sums for the right kind of work.
On the other hand, auctions held in the same week recorded results ranging from weak to best-forgotten. Sotheby's, while achieving a respectable $38 million overall, failed to meet its low-end total sales estimate. Christie's also struggled to find buyers for high-ticket items, and major lots at both auction houses either went unsold, or left the stand for well beneath low-estimates.
Auction flop for Phillips
But it was an already beleaguered Phillips that turned in by far the worst performance of the week, fetching just $8.6 million with fees for a 70-lot sale against a lower estimate of $32.2 million. Compounding an increasingly poor sales record, a massive forty-six percent of lots failed to find buyers in what one London dealer described as the worst-performing auction he'd seen since 1991.
Yet it's important to keep a sense of perspective. While the bull had clearly bolted from the auction market, sales of works such as a Lucio Fontana for $15.6 million dollars, Freud at $9.4 million, a Warhol skulls series for $7.5 million, Marlene Dumas at $960,000 and a $4.8 million Gerhard Richter aren't exactly to be sneezed at in the face of the worst economic downturn since the Great Depression.
It does seem increasingly clear, however, that it's the big-name galleries who are best equipped to weather the next year or so; the highly uneven auction sales indicate that, unless outlooks brighten substantially, record-breaking, headline-making hammer prices are already a thing of the past.
Ditched by the mega-rich?
Such prices were, of course, fueled by a new breed of mega-rich. Their willingness to spend lavishly at auction - and curious reluctance, in many cases, to purchase first-hand from galleries - accounted directly for a situation in which secondary sales consistently spiraled well above primary gallery prices. And it's this disparity that now looks threatened.
The continued patronage of supremely wealthy buyers is essential if auction houses are to achieve anything like the successes to which they've become accustomed, and right at this moment, they're conspicuous only by their absence. At Sotheby's sale, for example, cash-ready Russians accounted for just a tiny percentage of bidders.
Of course, as many commentators have pointed out, a large proportion of the world's super-wealthy have recently suffered huge losses in volatile markets - although others maintain that, while enough to cause temporary jitters, the disappearance of a few million is fairly negligible in the context of unimaginable wealth.
The key, probably, as to whether super-collectors continue to spend is the nature of their interest in the art they've been acquiring. With a surge of speculative or 'trophy' buying in recent years, the notion of 'art appreciation' has become truly ambivalent.
If the desire to own a Bacon is based largely on oneupmanship or quick profit potential, the appeal may wear very thin now that times are really tough.
The re-emergence of the connoisseur collector?
With notable exceptions (such as Christies' director Francois Pinault) scores of well-established collectors long ago abandoned the auction rooms to newly insatiable buyers.
Unwilling to pay over-inflated hammer prices, they bought instead directly from galleries themselves - and as favored patrons were first in line for top-notch art.
The 'queueing' system operated by leading dealers is based on a wide range of factors, but chief among its priorities are client pedigree and a degree of control over subsequent re-sale.
Many buyers, including hugely wealthy US art institutions, conform easily to such pre-requisites, and more importantly, are not going to stop buying in times of turbulence. Options to re-sell work directly back to dealers also mean that crisis in the auction system can effectively be side-stepped altogether.
What many see as an opaque and privileged distribution of art is, according to gallerists, a system that simply protects artists' stature as well as their markets. And in the current climate it leaves them well positioned to continue trading with the dedicated clientele they've taken huge efforts to develop.
In fact, it's extraordinarily ironic that a system so recently challenged by Damien Hirst's one-man Sotheby's sale will now, almost certainly, keep the top end of the primary market ticking over nicely.
As for Hirst, having just effectively flooded his market at the worst possible moment, it's reasonable to assume his sales will suffer as a consequence.
Courtesy the artist and Metro Pictures gallery
SOLD: Cindy Sherman's 'Untitled' (2007/2008). Several prints from the series went for $175,000 apiece at Frieze
Bouyed up by bonuses
So while top dealers will almost certainly continue to sell - a scenario we've already witnessed at Frieze - the auction houses and, indeed, many lesser galleries have yet another factor to fear: the erosion of Wall Street's mind-boggling bonuses.
Media attention has focused on dizzying results for top-rank art, yet middle markets for works of up to a million dollars have also flourished, underpinned by cash stemming at least in part from financial sector salaries.
As we've seen, major galleries are unlikely to supply top artworks to speculative newcomers, so prospectors turned directly to auctions for the art they required. Increasingly, poor results in day sales indicate they're now turning away in droves.
Even if the super-rich return to the very top of the market, a substantial swathe of auction profits could temporarily run dry as the City crowd lose jobs, money, and their former enthusiasm for art.
There is, however, another possibility - and one which, considering the comparitive strength of the Frieze art fair sales, doesn't seem unlikely. As prices at auction adjust, the dedicated collectors who had seen themselves priced out will return, spending on what may well become relative bargains.
Update: this does in fact look to be the case - at least for the moment. At Sotheby's Fall evening sale in New York, veteran American collectors including Eli Broad and Peter Brant were taking advantage of lower prices - Broad alone purchased a Ruscha, Rauschenberg, Judd and a Koons.
An end to art as investment?
The days of fast selling for major profits are over for some time to come, and it's even likely that art bought in the last few years - particularly at auction and in the middle and lower market range - will fail to recoup purchase price in the short-term.
But collectors with a broad and informed knowledge of art will not stop purchasing. For such buyers, investment is often a secondary concern, and they're savvy enough to know that, in any case, the right kind of work will steadily gain in value as a long-term investment, whether or not prices plummet one year, only to soar another.
As always, the emphasis remains on quality - not just in terms of the work, but the artists themselves. And even if buying power is limited to prints, multiples and small works, the right kind of choices will mean these, too, see eventual gain.
'Dilettanti' buyers with less interest in art than potential profits will certainly desert the market at many levels and force a long overdue price correction. But that's good news for anyone wanting to establish or grow a carefully chosen collection.
In fact, if you've got the cash to spare, value-for-money good times look like they're just beginning. Make no mistake, though - the art market will recover lost ground, and faster, probably, than many currently think.
New scene for the art-scene
The art-scene itself has enjoyed a particular vibrancy over the last couple of decades, not least due to the optimism the robust art market inspired. A new reluctance to spend, or less buying power in general, will clearly have a knock-on effect, and whether short-term or long-term, the party, while not exactly over, is going to seem far more subdued.
Perhaps most obviously, depending on the length of the down-turn, the incredible explosion in new galleries will shudder temporarily to a halt, while existing smaller galleries will need to source tip-top work in order to attract fewer buyers - and, indeed, survive.
A reduced number of venues and more rigorous selection also means that artists' opportunities to show will be affected. Price tags in the thousands for artists straight from college will become a thing of the past for all but the very best. Which is bad news for artists themselves, of course, but for collectors, a recessionary period is the perfect time to buy work by emerging artists - especially since, for the short term at least, many buyers will take refuge in well-established names, driving down prices for newcomers even further.
Stand-out work by all artists will continue to sell, but there'll be heavier criteria imposed; fewer speculative buys, and evidence required of a solid, sustainable practice.
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