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Editorial: When will the bubble burst?
by:
Elspeth Moncrieff
THE SUMMER SEASON has seen an unprecedented buying frenzy in the contemporary art market. Calculating the sales at Sothebys and Christies in New York and London in May and June, the estimated US$500 million of sales the organisers of Art Basel predicted before the show opened (actual figures were never disclosed), throw in a bit for the major exhibitions of contemporary art launched by dealers throughout Europe in those months, the figure is well in excess of US$1,230 million.
The prices in the salerooms were both unpredictable and unbelievable. In New York in May a painting by Mark Rothko made $72.8 million, a Francis Bacon portrait Study from Innocent X $52.6 million and Andy Warhols Green Car Crash $71.72 million. In London in June, a portrait of Bruce Bernard by Lucien Freud sold for ﾣ7.86 million, while Damien Hirsts Lullaby Spring made ﾣ9.65 million. The contemporary art world has never seen anything like it. Dealers and auctioneers have smiles broader and more permanent than the Cheshire cat. When works of art reappear on the market within a year, selling again for far more, this heralds a warning that the market has become highly speculative. Investors should take note of the ringing alarm bells.
For years now many banks have been providing art advisory consultants for potential investors. These art advisors have multiplied, serving as conduits between dealers, auction houses and collectors. Their clients are seduced into thinking art is a safe investment. On the other side of the fence, auctioneers provide guarantees, this stimulates the market which in turn produces more goods for sale. They also bend over backwards to assist clients, offering buyers secret conditions and financial arrangements. Art is big. Large corporate business and the current contemporary art market are fuelled by speculation and hype, not by connoisseurship or real taste and passion. It is a collectors market where money, rather than knowledge or taste, is king and as such, it is a house built upon shifting sands.
This is not a new scenario, reference the collapse of the Japanese economy in the mid-1990s. In the late 1980s early 90s, Japanese buying concentrated on the Impressionists and the School of Paris. Many of the buyers had little knowledge of Western art and their taste was unformed. Indifferent works by Monet, Renoir and many minor artists sold for absurd prices. When it all went wrong, much of this art was literally stockpiled in warehouses and years later is still trickling onto the market in dribs and drabs.
Like all markets, the art market is cyclical and totally unpredictable. Dealers are only too aware of thisthey must ride out the bad times and make hay while the sun shines. What is driving the contemporary market now is the new emerging super rich economies wanting to draw a line under their past and identify themselves with a set of up to the minute western values and ideologies, which for over half a century, have been denied to them.
Who could have known that China would emerge as a capitalist country with a new class of super wealthy buyers with an affinity for Western art. For thousands of years they have looked inwards, collecting their own culture. It is rumoured a Chinese collector bought Warhols Green Car Crash and underbid several other works at the New York sale. At the height of the Cold War, who could have imagined that a new Russian Government would sell off its national assets so forming a select class of billionaires anxious to settle in Western Europe with a developing taste for contemporary western art? Coupled with these new emerging economies is an immensely strong European market with fund managers and bankers making million dollar bonuses.
These recent bubble prices need to be examined in perspective. There are whole areas of the art market that have scarcely moved in the last decade. These include eighteenth and nineteenth-century British painting, the early Italian schools and much of nineteenth-century European painting. One of Turners undisputed watercolour masterpieces, the Blue Rigi, was recently acquired by the British nation after it sold for ﾣ5.8 million at auction for less than a Freud portrait. Titians portrait of a young man belonging to Lord Halifax which for years has been on loan to Londons National Gallery is currently on the market for ﾣ50 million, the same price as Damien Hirsts platinum, diamond encrusted scull.
Then there is Dumfries House in Scotland, a gem of an Adam House with an incomparable collection of Adam furnishing and decoration still intact and a 2,000 acre estate. It was recently rescued for the nation at the eleventh hour for ﾣ45 million by a charitable foundation set up by Prince Charles. In the long term which will endureI suspect our great grandchildren will still be visiting Dumfries House and marvelling at its treasures, while they read in their art history books that in the great art market crash of 2010 overnight Hirst's skull became worth less than the ﾣ12 million the artist paid for the diamonds themselves. |
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