The market shows signs of flagging

On 7 November 2007, following an incredible 78.8% rise in three years, the New York art market seemed to show its first signs of running out of steam as the media-friendly “Impressionist and Modern Art” auction at Sotheby’s ran into a market correction, turning over just USD 269.7 million. Only two years ago, this would have seemed a fair result, but this year, given the expectations of the auctioneer, it smacks of disaster. The 76 lots on offer had been expected to fetch a staggering USD 355.6 million to USD 494.2 million, based on low and high estimates.

The story of the market seems to be summed up by one of its icons: Vincent Van Gogh. In 1990, he was the acknowledged star when his Portrait du Dr Gachet became the most expensive painting in the world, marking the high water mark of the speculative bubble ( Download Artrice Indices – xls file). This year, the media could well be talking about another Van Gogh, a landscape, but this time as evidence of the market’s overheating. The Fields was painted in 1890, two weeks before the artist killed himself, and put up at Sotheby’s for USD 28-35 million. It attracted not a single bid. A straw in the wind? In any event, the lack of a buyer for this historic work, offered as lot number 9 in the sale, was followed by a string of other no-sales. L’Echo, a Georges Braque canvas, lot number 32, estimated at USD 15-20 million was also bought in. Overall, 20 pieces failed to find a buyer. The top bid on 7 November was for Te Poipoi (Le Matin) by Paul Gauguin. It was knocked down at USD 35 million to Joseph Lau, but its original estimate had been USD 40-60 million.
Christie’s sale the previous evening had seemed reassuring, attracting a turnover of USD 395 million, USD 46 million higher than its total low estimate. The star lot was Henri Matisse’s L’Odalisque, harmonie bleue, 1937, which sold for USD 30 million and set a new record for the artist.

Looking beyond the figures, though, market-watchers were starting to worry about the risks being taken by both auction houses. Sotheby’s had guaranteed minimum prices to the sellers of the Van Gogh and Braque paintings. As these were not reached, the paintings now belong to the auction house. It must certainly now sell them to limit its losses.

With the price of a barrel of black gold hovering around USD 100, the stock market rocking at each new revelation from the subprime debacle and the shadow of economic recession looming over the USA, these mixed auction results could look like a correction and set the tone for the future market. The traditionally more speculative contemporary art sales of 12 and 13 November, featuring some monumental pieces by Jeff Koons among others, will tell us whether Van Gogh’s stumble was a one-off, or the start of something more serious. . >