“What happens if it’s no longer cool to own expensive art?” — The New York Times
International Arts
Rumblings in the Auction World
A
year or two ago, in less unsettled times, it was relatively easy for
the wealthy to enhance their social status, and maybe make some money,
by collecting art. Auction houses courted sellers with lavish
guarantees; buyers, even at the top of the market, could be reasonably
certain that quality works by blue-chip names would hold their value.
Things are rather more complicated now. Christie’s reported that sales of art and collectibles had fallen
by 29 percent in the first half of this year compared with 2015, to 2.1
billion pounds, about $3 billion. The company said the decrease was
“mainly due to the impact of a drop in supply of works of art above £20
million at auction.”
Comparative figures at Sotheby’s, where last month the Taikang life insurance company in China became its largest shareholder, are to be released on Monday and are also expected to show a decline in sales.
“It’s
all about supply,” said Wendy Goldsmith, an art adviser in London. “If
you don’t offer $100 million guarantees, you’re not going to get the
best things.” She added that demand had also become highly selective:
“Things either stagnate, or they sell like hot cakes. There isn’t any
middle ground any more.”
In
May 2015, for example, Christie’s guaranteed a low estimate of at least
$130 million to the seller of the 1955 Picasso “Les Femmes d’Alger
(Version ‘O’)” It sold for $179.4 million as the centerpiece of the company’s “Looking Forward to the Past” auction, which took in $705.9 million.
A
year later, with Christie’s less willing to buy market share by
guaranteeing headline prices — and risk having to own unsold works — the
equivalent auction, titled “Bound to Fail,” grossed just $78.1 million.
Lower guarantees aside, other events over the past six months have made art a more thought-provoking investment.
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In April, the leak of 11.5 million files from the Panamanian law firm Mossack Fonseca — the so-called Panama Papers — showed
how collectors like the Russian billionaire Dmitry E. Rybolovlev and
dealers like David Nahmad used offshore shell companies and Swiss
“freeports” to shield their assets.
Soon after the revelations, the Swiss authorities seized a Modigliani portrait
valued at up to $25 million that had been the subject of a long legal
battle. The painting had been stored in the Geneva Freeport by the
International Art Center, an entity registered in Panama that, the
leaked papers showed, since 2014 has been solely owned by Mr. Nahmad,
the patriarch of the family of dealers.
In a separate case last month, Swiss officials, working with the United States authorities, seized works
by van Gogh and Monet that had been bought by the Malaysian financier
Jho Low, who is alleged to have paid for the works with money stolen
from a Malaysian government investment fund.
The
Panama Papers and the investigations that followed threaten the very
opacity that for some wealthy individuals has been one of the main
attractions of the art market.
The
Financial Conduct Authority “rules are now clear about full disclosure
of beneficial owners in all transactions,” said Paul Ress, the chief
executive of Right Capital, a company in London that provides loans
secured against art. (He was referring to the independent British
regulatory body.) “We will simply not do business with opaque company or
trust structures without full disclosure of the underlying
beneficiaries and controlling parties.”
Other
issues have added to the general sense of uncertainty: the Brexit vote
in Britain, the American presidential election, the terror attacks in
Europe and a new law in Germany that will restrict the export outside
the European Union of certain artworks.
To
be sure, new players continue to enter the market, and there is still
plenty of money available for big-name trophies. In June in London, at
Christie’s 250th anniversary sale
of British art a telephone bidder bought all three of the most
expensive works, topped by a monumental Henry Moore bronze, “Reclining
Figure: Festival,” which sold for £24.7 million, an auction high for the
artist.
Adding
to the pressure on the status quo, collectors’ tastes appear to be
shifting away from high-concept “wall power” paintings that appear to be
about nothing much more than painting.
In
May in New York, two large-scale trademark word paintings by the
auction favorite Christopher Wool sold near the low end of their
estimates, with the 1990 “Chameleon” selling for $13.9 million at
Sotheby’s and the 1992 “And If You” for $13.6 million at Christie’s.
Both were far below the $29.9 million that a similar work, the 1990
“Riot,” brought at Sotheby’s in May 2015.
Even
the acclaimed abstracts of Gerhard Richter can now struggle to attract
buyers. A 1994 “Abstraktes Bild” estimated at $19 million at Christie’s
in London in June was withdrawn just before the auction.
America’s
hottest artist right now is arguably Njideka Akunyili Crosby, 33, a
Nigerian-born figurative painter in Los Angeles whose meticulous
portraits currently are not available to private collectors.
Her latest work, “Super Blue Omo,” was snapped up at the Art Basel fair in June for a five-figure sum by one of the 18 or so public museums waiting to buy her paintings.
Lisa
Schiff, an art adviser in New York, and others pointed out that the
softening of demand for what has been regarded as blue-chip art might be
about more than overambitious estimates or shifting fashions.
“Some
of my clients are fatigued,” Ms. Schiff said. “Buying art for a private
museum or foundation is no longer the most exciting thing.”
She
said that people were increasingly valuing the experience of art over
acquisition. That has prompted her and the curator Lauri Firstenberg to
start an advisory company called there-there (the quirky title is
inspired by a Gertrude Stein line) that aims to “develop programming and
produce projects in collaboration with artists, foundations,
corporations and institutions.”
Art
as an experience, rather than an investment, is gaining traction
elsewhere in the market. Hauser & Wirth’s gallery, bar, restaurant
and garden complex in rural Somerset has attracted around 273,000
visitors since it opened in July 2014, almost double the 149,000 the
company’s London gallery has attracted over the same period.
And
Joseph Nahmad, the younger brother of the London dealer Helly Nahmad,
opened his new Nahmad Projects space in Cork Street in June not with an
exhibition of collector-friendly paintings, but with a series of
performances by 30 artists.
Billionaire megacollectors such as Stephen S. Cohen, Kenneth C. Griffin
and Eli Broad will, of course, continue to spend spectacular sums of
money on spectacular works of art. But the culture of ownership that
underpins these purchases — and indeed the entire art market — may not
have the same appeal for the next generation.
“Consumers
worldwide are seeking out experiences,” said Sarah Quinlan, a senior
vice president at Mastercard who analyzes luxury spending. “Even the 1
percent is changing,” she added. “It’s not displaying its wealth so
obviously.”
This
behavioral shift, which Ms. Quinlan compared to patterns of consumer
spending after the 1929 Wall Street crash, could potentially be a far
more serious threat to the cult of art as an investment than the mere
vagaries of collecting taste or the global economy.
What happens if it’s no longer cool to own expensive art?
Correction: August 8, 2016
An earlier version of this article misstated the title of a Christie’s themed sale in London in May 2015. It was “Looking Forward to the Past,” not “Looking Forward to Tomorrow.”
An earlier version of this article misstated the title of a Christie’s themed sale in London in May 2015. It was “Looking Forward to the Past,” not “Looking Forward to Tomorrow.”
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