ARTnewsletter Archive

The Bubble Is Gone; Steep Drop at Fall Auctions, Collectors See Buying Opportunities

Volume plunged sharply as art buyers held back at the two-week fall series of sales of Impressionist, modern and Postwar and contemporary art at Sotheby’s, Christie’s and Phillips de Pury & Company in New York.

NEW YORK—Volume plunged sharply as art buyers held back at the two-week fall series of sales of Impressionist, modern and Postwar and contemporary art at Sotheby’s, Christie’s and Phillips de Pury & Company in New York. The sales, held Nov. 3–14, yielded a total of $803.3 million, a 49 percent drop from the $1.6 billion total for the spring auctions and less than half the $1.75 billion total of last fall.

After several seasons in which the art market rose to consecutive highs and appeared to defy predictions about the impact of the global financial crisis, the rate of unsold works in this fall’s auctions leapt considerably and the mood at auction houses and among collectors was decidedly more guarded. In stark contrast with previous seasons, speculative buying and frenzied competition for cutting-edge contemporary works appeared to have vanished from the market. Many works by Damien Hirst, Takashi Murakami, and Andy Warhol failed to find buyers. Experts said that, in general, the prices achieved at the auctions marked a return to the level of two or three years ago, and the combined sale volume at the three houses was also in line with the volume of the 2005–06 season.

On the other hand, a number of high-estimated masterpieces, including a $60 million painting by Kazimir Malevich and a $38 million painting by Edvard Munch, found buyers, and experienced collectors and dealers took advantage of the current market climate to snap up works they wanted at a wide range of prices. Los Angeles collector and philanthropist Eli Broad, for instance, was a frequent and highly visible buyer at Sotheby’s evening contemporary sale on Nov. 11.

“Ultimately this is a good thing,” private dealer and art adviser Neal Meltzer told ARTnewsletter. “True collectors returned to the market and the pricing bubble is gone.”

“As far as we’re concerned, it’s a good opportunity to buy, but you have to know what you’re doing,” Montreal dealer Robert Landau told ARTnewsletter. Landau was the winning bidder for Alberto Giacometti’s sculpture Trois hommes qui marchent I, which sold at Christie’s Impressionist and modern auction on Nov. 6 for $11.5 million with premium, well below its estimate of $14 million/18 million. Landau said that in total he acquired about a dozen works in New York—including works by Fernand Léger, René Magritte, Henry Moore and Marc Chagall—at the Impressionist auctions and from other sources.

Christie’s deputy chairman Laura Paulson said that in the weeks leading up to the sales, longtime collectors had expressed eagerness to pursue work at more reasonable prices—including one who had complained of intense competition in recent seasons and who correctly predicted that he would not suffer from “paddle elbow” in this round of sales.

Following its Impressionist and modern evening sale, Sotheby’s CEO Bill Ruprecht said the house had “planned for the worst and hoped for the best” given the current economic climate. All three auction houses went to great lengths to manage expectations and minimize risk by persuading consignors to lower their reserves—the undisclosed minimum price at which a work can sell—and by reducing the number of guarantees they extended to sellers.

The strategy produced mixed results: While some below-estimate prices helped jump-start the bidding, others had no discernible effect on demand. Buyers were clearly in charge throughout the series. Following Sotheby’s evening contemporary sale on Nov. 8, worldwide head of contemporary art Tobias Meyer remarked, “The market exists where the price was right. People did not sit on their hands; they bought with intelligence.”

Sotheby’s achieved sales of $411.6 million, the highest total of the two-week series, albeit down sharply from the $749.8 million total of last fall. Christie’s total was $374.5 million, little more than a third of the $937.5 million realized last fall. Phillips de Pury & Company, which does not hold auctions of Impressionist and modern art, took in $17.2 million in its contemporary sales, a precipitous drop from the $67 million total of last fall. Nearly half of Phillips’s total—or $7.6 million—was realized in its day sales, where 349 lots were on offer, compared with the $9.6 million total for its evening sale, which offered 51. Five lots, including works by John Currin and Richard Prince, were withdrawn shortly before the sale.

In recent years, sales of contemporary art have eclipsed those of Impressionist and modern, fueled by growing numbers of newly wealthy buyers. This time, however, Impressionist and modern art was well ahead of contemporary, with Sotheby’s and Christie’s reporting $472.4 million in evening and day sales, about $140 million more than the $330.9 million combined total for contemporary at all three houses. Of the 1,315 Postwar and contemporary works offered in the series, 755, or 57 percent, found buyers; in the Impressionist evening and day sales, 536, or 66 percent, of the 804 works on offer were sold. Landau described the auctions as a “buying opportunity for people who have cash and courage.”