The New York miracle

The gloomy financial climate of the beginning of the year fuelled fears of a rapid deflation of the speculative bubble the art market has been enjoying over recent years. These fears seemed all the more justified as European art prices contracted by 7.5% in the first quarter of the year. With the dollar weak, it remained to be seen how the New York art market would react -particularly in the high-price segments. Not surprising therefore that the Impressionist & Modern Art sales at Christie’s and Sotheby’s of 6 and 7 May, followed, a week later by the Contemporary Art sales, were observed with much interest, particularly by investors who had watched Sotheby’s stock price reduce to less than 30 dollars at the start of the year.

However, the results of these four sales dissipated all fears about the health of the high-profile end of the market. From 212 lots over two weeks of sales the two art market giants, Christie’s and Sotheby’s, generated a record revenue figure of 1.2 billion dollars. Although the figure is nearly $100m less than the figure for November 2007, it is nevertheless three times the revenue generated by cumulative sales in May 2004. Underlying this latest 10 figure number… works of Contemporary Art negotiated at million-dollar prices. Indeed, Contemporary Art brought in 35% more than Impressionism and Modern Art for the two auction houses. Not only is the reservoir of Impressionist and Modern master-pieces diminishing, but at a time of strong speculation, Contemporary Art is always very attractive.

Generally speaking, apart from an additional crop of spectacular sales, the May sales in NY were marked by the presence of a powerful contingent of European buyers, attracted by the weak dollar, as well as a posse of new Russian HNWI’s. According to Christie’s, more than half the buyers at the Impressionist & Modern Art sale of 6 May were European, versus 32% resident Americans.

Once again Christie’s and Sotheby’s offered attractive million-dollar guarantees in their bid to host sales of the best pieces. At current market prices, they are managing to seduce some of the world’s major art collectors into selling some of their most important works. Thus quite apart from the rising value of certain artist’s works, the actual quality of the pieces offered has rarely been so good.

Christie’s managed to present a major work by Claude MONET and produced an independent catalogue for the painting: Le Pont du chemin de fer à Argenteuil. This vue of Argenteuil, a meeting point for French Impressionist painters at the end of the 19th century, is an emblematic subject and one of the rare Monet paintings still in private hands. With a winning bid of $37million, the work generated a new record for Monet and the highest bid of the three days of Impressionist & Modern Art sales in New York. Behind Monet was Fernand LÉGER whose Etude pour la femme en bleu fetched $35 million at Sotheby’s and set a new record for the artist, far outstripping his previous record of $20 million set at Christie’s in 2003 for La femme en rouge et vert. Among the other record setters on 6 May were Auguste RODIN whose bronze Eve, grand modèle-version sans rocher fetched $16.5 million; Joan MIRO whose La Caresse des étoiles (1938) sold for $15.2 million, and Alberto GIACOMETTI whose bronze Grande Femme debout II was acquired for $24.5 million by the Gagosian Gallery.
Quite clearly the star of the sales, Giacometti generated 11 multi-million dollar bids during the May sales, including his all-time record for a painting when Portrait de Caroline sold for $13 million at Sotheby’s. On 7 may at Sotheby’s another Giacometti painting and a another work by Munch both broke through the symbolic $10 million barrier. Edvard MUNCH’s new record now stands at $27.5 million for an exceptional work executed in 1902 entitled Girls on the bridge.

But these exceptionally high bids were dwarfed by the Post-war & Contemporary Art sales. On 14 May, Francis BACON’s Triptych, subject of much media attention, was presented with very high hopes. These hopes were indeed satisfied as the work went under the hammer for $77 million – a sum apparently disbursed by a private European collector! This is now – for the time being – the record for a work of Contemporary Art at auction. Among the big surprises of the evening there was also $21million for a monochrome gold leaf by Yves KLEIN and $13.5 million for a monumental sculpture by Takashi MURAKAMI, both bids that were significantly higher that the attributed estimates.The night before at Christie’s, another record was set by an exceptional Lucian FREUD painting which sold for $30 million and made the grandson of Sigmund Freud the most expensive living artist. In effect, he has overtaken Jeff Koons (born 1955) whose monumental Hanging Heart fetched $21 million in November 2007.

In total, after the 4 prestigious evening sales at Christie’s and Sotheby’s, 31 artists’ price records had been broken. In terms of total revenue, Sotheby’s came out on top with a record figure from its Contemporary Art Sales of $362 million.
The weakness of the dollar sharpened the appetite of European collectors who put in many of the high bids. Among the major works acquired by Europeans: Francis Bacon’s triptych for $77m, an abstract painting by Gerhard RICHTER (1990) for $13.5m, Jean-Michel BASQUIAT’s Untitled (Prophet I) for $8.5m. At the Impressionist & Modern Art sales of 6 and 7 May, European buyers represented 11% of bidders but generated 41% of total sales revenue. Among the list of trophies destined to return to Europe was Fernand Léger’s La Femme en bleu.

Taken as a whole, and over the entire range of works sold, the New York sales in May generated a price index (based on repeat sales) up 7% (corrected for seasonal variations) compared with May 2007, but down 6% compared with November 2007. This suggests that the success of the May sales had more to do with the quality of the works selected by the auctioneers that with natural price inflation.
It also suggests that, in the current context, the high end of the art market is resisting better than other segments of the market.