September 2012: Summer Art Market Report

Los Carpinteros, "150 People" at Art Basel

LAST SPRING, RUSSIAN-BASED GALLERIES—Aidan, Marat Guelman, and XL closed their doors due to lack of funds. As told to Reuters, Aidan Salakhova of Aidan Gallery said she “made about half as much last year compared to sales in 2003.” Marat Guelman explained to The Financial Times: “The main clients of the gallery are leaving Russia. More and more rich people affiliated with the state, or they are its representatives such as state bureaucrats. These people are careful to hide their income, and collecting contemporary art is not one of their priorities.”

IN LATE MAY, SOTHEBY’S LONDON solely dedicated three sales to Russian art met with relative success. In total, the auction house grossed £16.4 Million. According to Art Media Agency, “62.5% of the lots found a buyer and 12% of the buyers were new clients to the auction house.”

SOTHEBY’S PARIS held two sales in modern and contemporary art which earned a collective total of €35 Million ($44 Million). Late artists Jean-Michel Basquiat, Salvador Dali, Pablo Picasso, and Man Ray were the top earners.

AS OF JUNE 1ST ARTPRICE—an online portal of art market stats and auction results—began standardizing its databases. Using freeware, the French site is amidst transferring millions of indices for public access. In its press release, Artprice founder Thierry Ehrmann stated that standardization will “accelerate the development of its fixed-price and auction-brokerage activities and ensure its position as an unavoidable global player in a deregulated art auction environment by becoming a standardised infrastructure allowing, as of 2012, the processing of online auction brokerage operations.”

Artprice announced its first quarter turnover went up by 1% from last year to €1.523 Million. The company plans of expanding its client base from 1.4 to 2 Million people by the end of 2012. Tradingsat.com asserts that a 2M client base would catapult Artprice’s worth to €450 Million ($566M).

IN EARLY JUNE, CHINA-BASED Poly Auction held a series of sales. The modern art evening sale totaled $22 Million—48 of 56 lots sold. That same night, its Chinese contemporary evening auction totaled $10.7M with 102 of 114 lots sold. According to Jing Daily, the major sales highlight was “a painting by the late artist Li Keran (李可染) (1907-1989) sold for a record-setting 293.25 million yuan (US$46 million)… purchased by a domestic entrepreneur who began buying art two years ago… As Beijing Poly Executive Director, Zhao Xu, said of the purchase, ‘The sale tonight shows a stable Chinese art market, which keeps attracting newcomers to auction houses. The high price of Li’s painting will definitely leverage the market of 20th-century Chinese painting.’”

BEIJING POLY INTERNATIONAL is China’s leading auction house. According to Art Media Agency, “in its short seven years of existence, [Poly] has already surpassed Guardian to become the leading auction house in China and number three in the world, rapidly catching up to the top two Western auction houses, which have two and a half centuries of a head-start (Sotheby’s being established in 1744 and Christie’s in 1766).      According to the last year’s annual report, Poly group earned €1.36 billion with only six organised auctions, averaging €227 million per auction.”

Backed by the State (more specifically the Chinese army), Poly also functions to “seek out, buy and bring back various Chinese antiquities scattered all over the world.” A prime example is the aforementioned Li Keran work that sold for $46M—it was sourced from overseas. Poly plans to open offices in Hong Kong and New York to continue its restitution efforts.

THIS YEAR’S CHINESE ART MARKET tallies point to an overall decline in strength. Sotheby's spring auctions held in Hong Kong totaled HK$2.47 Billion compared to HK$3.2B in 2011. Christie’s auction earned HK$2.71 Billion, down 30% from HK$3.73B last year. As of June, the Global Times China reports, “the total pieces auctioned reached only 137,600, half of last year's, with the overall transaction at 59,000 pieces and 11.55 billion yuan ($1.81 billion), 41 and 25 percent of last year's statistics respectively.”

THE 43RD EDITION OF ART BASEL ran June 14–17. The UBS-sponsored event featured 300 galleries from 36 countries, and attracted 65,000 visitors. In total, the 4-day fair grossed an impressive $2 Billion in sales. The most expensive item purchased—a Gerhard Richter painting priced at $20–$25 Million—was sold by Pace Gallery on behalf of an undisclosed collector. Genocchio at Artinfo described the scene and sales highlights: “Things sold extremely quickly. It took less than two hours for Marian Goodman to sell Gerhard Richter’s ‘Strip (922-1)’ (2011) for an undisclosed sum. Nearby, L&M Arts had a fabulous Frank Stella painting from 1967 that went for around $2 million. Karsten Greve sold a Twombly, a Fontana, and a Chamberlain all before lunch… It goes without saying Gagosian was mobbed from the first minute, with the bulk of his elegant stock of Picassos, Hirsts, and Warhols ‘not for sale,’ according to one of a flotilla of salespeople floating around the booth.” On a side note, Gagosian Gallery brought 12.5% of the total of value in art to the fair. Other Art Basel highlights included: Acquavella Galleries sale of Andy Warhol’s “Joseph Beuys” for close to its $10 Million asking price, as well as Wayne Thiebaud’s “Girl in White” for approximately $1.5M; Hauser & Wirth sold a piece by Philip Guston for $6M, a Louise Bourgeois for $2M, and a Paul McCarthy for $1.8M; Galerie Gmurzynska sold a work by Wilfredo Lam for approximately $3M and a Fernand Leger for $600,000; L&M Arts sold an Alexander Calder mobile for $2.5M; Waddington Custot Gallery sold a gouache by Jean Dubuffet for $2.4M; Blum & Poe sold Takashi Murakami’s “Shangri-La Blue/Shangri-La Pink” for approximately $1.5 Million and Mark Grotjahn’s “Untitled (Orange Butterfly Blue MG03) #1” for an estimated million; and, Luhring Augustine sold a Christopher Wool for $950,000.

IN TERMS OF ART BASEL’S PUBLIC PROGRAMMING, the Salon and Conversations series took their usual form, incrementally scheduled throughout the fair. This year, Josh Baer of Baer Faxt and Jeffrey Deitch, Director of MOCA LA launched the series with a talk titled “Art Market Talk: Blurring Lines Between Culture and Commerce”. They discussed the pros and cons of museums versus galleries in embracing technology and using innovative strategies to progress their respective programs. Other Salon and Conversations topics included: “Public/Private | Inventing the Museum”; “Art and Politics: The Arab Spring and Its Impact on Artists”; and, “The Global Artworld: Focus on Turkey.”

THE 5TH ART & FINANCE CONFERENCE coincided with Art Basel on June 15. Organized by Deloitte Luxembourg, the now annual event addressed a number of art market-related issues. Program topics included: art investment, art funds, online sites, private banking, and the Chinese art market.

LONDON’S SPRINGTIME CONTEMPORARY auctions commenced June 26. Starting with Sotheby’s, its contemporary evening sale totaled £69.3 Million ($108 Million), within its pre-sale estimate range of £57-82M ($89-128M). The top lot, Jean-Michel Basquiat’s “Warrior”, fetched £5.6M ($8.7M). Basquiat was also the top earner at Phillips de Pury’s equivocal sale, which grossed a total of £23.4 Million.

ON JUNE 27TH, CHRISTIE’S REACHED record highs. Judd Tully of Art+Auction wrote: “The art market received a big shot of adrenaline [during the] Postwar and Contemporary art sale, delivering £132,819,400 ($207,331,083), the highest total of its kind ever achieved in Europe… Converted to dollars, 30 lots made over a million, two went over 20 million, and nine exceeded five million dollars… More importantly, or so it seems, Christie’s evening crushed arch-rival Sotheby’s £69.3-million ($108-million) tally by a huge margin. Simply put, Christie’s had significantly better blue chip, market-desirable material.” Such desirable material included artworks by Francis Bacon, Jean-Michel Basquiat, Alexander Calder, Mark Grotjahn, Yves Klein, Gerhard Richter, and Cy Twombly.

ARTNET AG (ART) SHARES have fallen dramatically on the Frankfurt Stock Exchange since Spring. In late June the company suddenly shut down its online magazine—an abrupt decision that left its editors stunned and its investors confused. Six weeks later, Artnet founder Hans Neuendorf and his son, CEO Jacob Pabst prevented a major takeover bid by Luxembourg-based Redline Capital Management SA together with Weng Fine Art AG (Neuendorf and Pabst control 26% of Artnet, whereas Redline and Weng own 9.07%). Though the buyout attempt failed, Artnet remains extremely vulnerable to new ownership on the verge of bankruptcy.

JULY 3RD MARKED THE LAUNCH of Old Masters evening sales in London. Beginning with Christie’s, the Old Masters and British Paintingsauction grossed a staggering £85 Million ($133 Million)—84% of lots sold, 96% by value. Highlights included: John Constable's "The Lock”, which reached a record price of £22.4 Million ($35.2M), followed by Rembrandt van Rijn’s “A man in a gorget and cap”, which fetched £8.4 Million ($13.2M).

THE FOLLOWING EVENING SOTHEBY’S held its Old Masters sale that totaled £32.3 Million. The top lot was Willem van de Velde the Younger’s “The surrender of the Royal Prince during The Four Days’ Battle, 1st–4TH JUNE 1666", WHICH FETCHED £5.3 Million ($8.3M ). Pieter Brueghel the Younger’s "The Battle between Carnival and Lent" followed suit and fetched £4.5 Million ($7M ).

IN MID-AUGUST, Sotheby’s held an “Important Australian and International Art” auction in Melbourne that grossed $6.3 Million. The top lot was Arthur Boyd’s “Bride Running Away”, which reached the low end of its pre-sale estimate at $1.4M. Other highlights included works by Sidney Nolan, Brett Whiteley and John Brack, all selling within the low-mid range of their respective pre-sale estimates.

IN LATE AUGUST, SOTHEBY’S WORLDWIDE revealed its first half of 2012 figures. The auction house grossed $2.99 Billion, down 12.7% from 2011. Of the $2.99 Billion, $2.47B derived from auctions sales, $513.64M from private dealings. Furthermore, Sotheby’s second quarter income indicates a 33% drop from 2011 (and 42% dip in net income). On the other hand, Christie’s recently revealed that its sales went up by 11% to $3.5 Billion during the same period. Of the $3.5B, $2.8B derived from auction sales, $661.5M from privately dealings (up 50% from 2011).

THE MAJORITY OF THE WORLD’S ART is housed in duty-free storage facilities known as ‘free ports’. An estimated $10 Billion worth of art is being held in giant warehouses—the majority of which are located in Switzerland with its lax tax laws. Moreover, Swiss-based Euroasia Investment SA is building a $100 million duty-free facility beside Beijing Capital International Airport to accommodate the Chinese market. According to Swissinfo: “The deep changes occurring in the art world are however transforming the original purpose of free ports, which was to defer formalities until such a time as the art reached its final destination. The fiscal limbo of free ports is a great springboard for an investment market that has no need for the physical presence of goods… It follows that secure storage, preferably outside the fiscal legislation of any given country, is in great demand as art works weave their way in and out of financial transactions while remaining in warehouses.” In other words, the rise in art funds requires that groupings of artwork be stored safely to appreciate over time (usually a minimum of ten years). Free ports provide the most suitable tax-free options—humidity controlled, air conditioned et al.

IN TERMS OF THE GLOBAL ART MARKET, sales tallies and trends indicate that the Chinese market is losing steam, while emergent markets are gaining momentum. According to ArtTactic’s Global Art Market Outlook released in mid-July, “After becoming the largest art market in the world in 2011, recent auction results from Hong Kong and Mainland China depict a market that is slowing down… Despite a drop in overall volume, demand for art in Hong Kong and Mainland China remains strong. As steam is coming off several of the Asian art markets, the more established Latin American art market is increasingly garnering international attention. Fuelled by economic growth and wealth creation, coupled with a well-developed art market infrastructure and broad collector base, we expect the Latin American art market to be the one to watch.”