Rich investors take refuge in contemporary art

Contemporary art. Photo / Thinkstock

The market in contemporary art surged by 35 per cent in this year's auctions as an influx of wealthy buyers sought refuge from financial turmoil.

Sotheby's (BID) and Christie's International raised US$1.7 billion ($22 billion) from evening sales, according to calculations by Bloomberg. Collectors sought proven artists for investment, led by Germany's Gerhard Richter, 79.

While some prices are still below the highs of September 2008, when Lehman Brothers Holdings collapsed, buyers from the United States and Russia, Asia and other emerging economies have been investing in contemporary art.

"The art market is a place for new people these days," said Christophe Van de Weghe, a New York dealer. "There are Americans nobody has seen before who are excited by this world and who want an alternative to shares. And then there are buyers coming in from places like India and China. The collectors who bought 15 years ago aren't prepared to pay today's higher prices."

Sotheby's and Christie's made their combined total with fees from 12 high-value contemporary art sales in New York and London this year. Last year, the equivalent evening auctions made US$1.2 billion, an increase from $482.3 million in 2009. The sales reached a record US$2.4 billion in 2007, fuelled by speculative bidding for fashionable names such as Damien Hirst, Jeff Koons and Richard Prince.

"The market is hungry for great works at 'masterpiece' level," said New York art adviser Mary Hoeveler. "There is tremendous wealth to buy them. New buyers are also migrating to the contemporary market from other more traditional art collecting fields. Demand for contemporary art has increased exponentially."

Sotheby's raised US$844.1 million from its evening auctions this year and Christie's took US$834.3 million. Equivalent auctions in New York and London held by Phillips de Pury & Co, which has a reputation for offering pieces by emerging artists, totalled US$208.3 million, an increase of US$7 million on last year.

Classic contemporary works from long-established collections attracted intense demand. Sotheby's sale of 34 paintings by Georg Baselitz, Sigmar Polke and other German artists belonging to Christian Graf Duerckheim-Ketelhodt, chairman of the Cologne pharmaceutical company Axiogenesis AG, raised £60.4 million ($121.3 million) in London on June 29. The total with fees almost doubled the low estimateof £31.8 million, based on hammer prices.

On November 9 in New York, Sotheby's offered the Clyfford Still abstract 1949-A-No 1, valued at US$25 million to US$35 million. One of four works by the abstract expressionist that were consigned by the City of Denver, it was bought by a telephone bidder for a record US$61.7 million.

The previous evening at Christie's, a 1961 Roy Lichtenstein painting from the collection of Courtney Ross, the widow of former Time Warner chief executive officer Steven J. Ross, fetched a record US$43.2 million. I Can See the Whole Room! ... and There's Nobody in It! had been bought at auction for US$2.1 million in 1988.

Asian collectors bought an unprecedented 14 per cent of the lots at Christie's £38.1 million sale of contemporary art during London's "Frieze Week" on October 14.

Among living artists, Richter was the star, setting records at Christie's in October and at Sotheby's New York in November. A private collector entered eight abstracts by the German artist in the latter sale and all sold above the high estimate.

A 1997 Abstraktes Bild in purple, red and blue was the most expensive, at a record US$20.8 million. Dealers said the buyer was Bernard Arnault, chairman of LVMH Moet Hennessy Louis Vuitton SA.

Buyers were also keen to spot the Richters of the future.

A silver minimalist abstract by New York painter Jacob Kassay, 26, sold for US$290,500 at Phillips de Pury & Co in New York in May.

The estimate had been US$60,000 to US$80,000.

"Overall the market is more balanced and focused than it was in the last boom," said London art adviser Wendy Goldsmith.