And so it starts…

christies-unsold-bacon-portrait-of-henrietta-moraes-1969Bloomberg today reported the dramatic drop in prices achieved at all the major auction houses this weekend.

Sales by Sotheby’s, Christie’s International and Phillips de Pury & Co made a combined 59 million pounds ($102 million), against minimum estimates of 106.2 million pounds, according to Bloomberg calculations. They follow a five-day auction by Sotheby’s in Hong Kong this month that raised HK$1.1 billion ($141.7 million), also about half the presale estimate, as buyers shunned some top lots for being too expensive.

This is of course to be expected as much of the collector market focuses on wealth preservation rather than spending. And galleries in New York have noticed a softening for some time.  Interestingly, though, one normally expects an art market correction 6 to 9 months after stock market crashes.  The question now is whether this is the start of a rout in the contemporary art market or merely a short term, financial market correlated, “correction.”

It also, by the way, raises a question about the other major art story of last week about recent moves by two former senior US museum directors to the private sector. Robert Fitzpatrick moved from the Museum of Contemporary Art Chicago to Christie’s Haunch of Venison, and David Ross moved on from his days at the Whitney and the Museum of Modern Art in San Francisco to be a partner at Albion.  Whilst I fully understand the attractions of better salaries and less stifling boards, I wonder if their timing was all it could be?

Not everyone is worried though.  I have spoken to two collectors this weekend who said, in effect, “finally a correction: maybe prices will come down to a more reasonable level and we can start buying again.”

So what do you think: Short term correction or start of a rout? A good thing or a bad thing?

2 thoughts on “And so it starts…”

  1. So the market statistics are back to somewhere around 2004. The question is, will they get to 1991? Given that this was arguably the worst week to hold an auction since somewhere around 1929, things could have been worse. Stay tuned for more glass-half-full-or-half-empty commentary.

    Conventional wisdom does hold that the art market is a trailing indicator of the health of the financial markets. (The greatest heights of the 80s boom, as often remarked, followed the 1987 stock market crash.) However, that link in recent years has no longer been so obvious. Another unknown concerns the fallout from credit tightening. Financing is still a relatively new phenomenon in the art market, so past experience says little about what happens when it temporarily dries up. The price of oil is a third unpredictable variable. Oil wealth was to the current (or currently-ending) art boom what Japanese money was to the last one. The demand for trophy properties looks very different when oil is at $75 versus $150.

    A note about the gentlemen named in Ian’s note. Both are noted for their proven ability to flourish in the for-profit and non-profit worlds. Albion and Haunch are hybrids of these worlds. At a time when walls between public and private spheres of the economy are blending as never before, such hybridity may become less of an exception, and certainly more tolerated in the light of prevailing institutional norms.

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