Art of making money despite market turmoil

09/05/2008 

SOME parts of the economy, it is fair to say, are suffering at the moment. Not so much the art market. Earlier this week, auctions in New York saw some record sales. The 58 works sold by Sotheby’s on Wednesday raised $277.3m.

Among the highlights were Etude Pour La Femme En Bleu by Fernand Leger (pictured above), setting a record for the artist at $39.2m. Girls On A Bridge by Edvard Munch fetched a record $30.8m, beating the $28m high estimate and the record for the artist, which was $11m.

The total raised from Christie’s 52-lot auction on Tuesday was $235.3m (£118m). Monet’s Le Pont Du Chemin De Fer A Argenteuil (pictured below) went for $41.4m, a record for the lily-loving French Impressionist.

Records were also set for French sculptor Auguste Rodin, and Swiss painter and sculptor Alberto Giacometti, whose Portrait De Caroline (pictured below, last) fetched £7m.

TOUGH TIMES

It would be easy to overstate the rosy health of the art market — 24 per cent of the works at the Christie’s auction went unsold, and the total sales for the night were $287m, just below the low estimate set by the auction house.

Still, in these tough times, what is driving people to fork out such huge sums on art? In part, it is a result of the weak dollar, and Europeans grabbing the chance to pick up a bargain — 52 per cent of the bidders at Christie’s were European. There is also a section of people who have been untouched by the credit crunch and its resultant problems, such as Asian buyers, who are still feeling flush.

And many of the sorts of people who can afford to spend tens of millions of dollars on art are generally left untouched by any economic blips. Auction house Bonhams is certainly not tightening its belt. It has just opened up a much-expanded office in New York and is generally positive.

One of the biggest growth areas is Russian art, a boom which is being driven by the rise of the super-wealthy from that country. “A number of Russians have been repatriating works, if you like, buying ones that have been in private hands for decades in some cases,” a Christie’s spokesman says. To reflect the increasing interest in Russian art, Bonhams will hold an auction on 9 June. The star lot will be The Sailboat by Natalia Goncharova, which is expected to fetch £1.5m to £2m.

STAR LOT

A series of other works are expected to fetch £400,000-600,000, including Young Girl Blowing Bubbles by Alexei Harlamoff, which has been owned by a Scottish family for more than 100 years. As well as art, jewellery is a growth area. This is partly because of the increasing value of diamonds and partly because Asian buyers, who tend to be less interested in old masters, go for jewels. “We sold a single-stone diamond ring, whose guide price was £60,000-£80,000, for £264,000, a couple of weeks ago,” says the Bonhams spokesman.

While the big auction houses always say that they would never recommend that a buyer purchase a painting for economic reasons, it is surely impossible not to think about the business angle when spending millions on a canvas.

For the megabucks buyer, there are certain qualities which can increase a work’s value, such as the condition and — less obviously — the ownership history. If a piece has been in the collection of a famous or distinguished person, then that can increase the value.

RUSSIA, CHINA AND INDIA

Bonhams does give some hints, and says: “The best performing areas at the moment are Greek, South African and Russian art.” Contemporary Iranian and Islamic art are also booming.

Generally, for investment purposes, it is obvious that the best works to invest in are the ones favoured by people in the countries with the fastest-growing economies — Russia, China and India — and that means works from those countries, and contemporary American works.

If you buy into those now, you stand to make a bomb. If you can ever bear to sell your investments, of course.

By Jeremy Hazlehurst