News

The November sales of Impressionist and Modern Art and Contemporary Art presented a major test of the market since the beginning of the worldwide financial crisis. The New York sales differ from the other auctions held within the new financial climate in both scale and scope. The combined result for the two weeks of sales at Sotheby's and Christie's was $775,747,825.

There are two ways to interpret that very substantial number. From the perspective of the press—who have grown accustomed during the art boom to seeing ever higher sale values and a constant stream of works selling for prices in excess of the high pre-sale estimates—the sale totals were evidence of a collapse in the art market. Numerous stories worked through this theme.

Collectors and dealers, as well as art managers and auction house experts, all viewed the below estimate results as encouraging, much to the surprise of the journalists. Why the disparity in these two views?

It is understandable that the press would follow standard industry practice by focusing on the information provided in the form of pre-sale estimates, and would then compare the performance of the sales against those numbers. But since those estimates were created before the substantial fall in asset prices for real estate, commodities, equities and a host of more exotic financial instruments and institutions, the art world views them in the same context—as prices that must be discounted in conjunction with the decline of the financial markets.

Art world participants find encouragement from the fact that even in a narrower financial universe, a substantial number of buyers stepped forward and spent nearly $776 million on art. As a comparison, many of the art world professionals who remember the art market crash of the early 1990s were impressed to see a level of market activity far greater than during the nadir of that era.

In the 1990s, the art market lacked layers of buyers. Today, there is a rotation of buyers in the New York sales from newer participants to old market hands; and despite a retreat by many global collectors, significant participation from around the world continues. There is no guarantee that these buying patterns will persist, but in the short run, art market professionals found themselves  however pleasantly surprised at the differences between this market shock and the one in the early 1990s.

More important, the various markets for individual artists and genres of art covered by the Impressionist & Modern and Contemporary categories behaved in different ways, presenting evidence of informed buying activity based on a fundamental sense of value within the category. The Impressionist and Modern sales gravitated toward rare and spectacular works that were still able to command extraordinary prices. Some of the biggest lots at both Sotheby's and Christie's had multiple and persistent bidders at the eight-figure level.

The Contemporary sales displayed target buying for exceptional works that had returned to a price level commensurate with 2006; and aggressive bidding on the works of specific artists whose reputations—and markets—are still developing. The latter tendency could be seen both during the Evening sales and especially during the Day sales.

Impressionist and Modern Art

Sotheby's Impressionist and Modern Art Evening sale totaled nearly $224 million with 64% of the lots sold. The average price for a lot in the Evening sale was the third highest in Sotheby's history, and the sale total was the fifth largest ever for the category. At almost $5 million, the average lot price for the Evening sale was only a fraction below the average price of May 2007, a robust sale by every measure.

For this year, the May and November sale totals at Sotheby's are within a consistent range. Indeed, November's sale total represents only a 4% drop from May despite the market dislocation.

At Christie's, the average price in the Evening sale dropped from $6.3 million in May to $2.2 million in November when one combines the Impressionist and Modern Art Evening sale with the single-owner Evening sales that preceded them. At Sotheby's, average prices in the Evening sale have stayed within a fairly close range from May 2007 to the recent November sale.

The average price, no doubt, reflects the success of the three most important paintings in Sotheby's sale: Kazimir Malevich's Suprematist Composition ($60m); Edgar Degas's Danseuse en Repos ($37m); and Edvard Munch's Vampire ($38m). Each of these three paintings sold for more than $35 million. (All three set record prices for their artists; the Malevich was a record for a Russian artist; the Degas, for a work on paper by any artist.)

At every price point, the experts who deal closely with clients found that exceptional works found buyers at the right price, secondary works were sold at consistent prices, and works of lesser quality were passed over. In an environment of financial stress, it only makes sense that buyers devoted their resources to the kinds of works that presented real opportunities to collectors. Juan Gris's Guitare made $6.6 million at Sotheby's. (The strength of Gris's market was confirmed later in the week when a still life—Livre, pipe et verres—made a record price of $20.8 million at Christie's.) Bal Masqué by Henri de Toulouse-Lautrec held a strong price at just below $4.6 million. Henri Matisse's Jeune Femme Assise en Robe Grise aux Bandes Violettes, a work that did not fare well at an earlier sale during the market's boom, made a solid price of more than $4.2 million.

Some of the most significant lots in the Evening sale were the works by Boris Grigoriev, including the Shepherd of the Hills which made a record price of $3.7 million.

Contemporary Art

Although the Contemporary art sales exhibited strengths that reassured collectors about the viability of the Contemporary art market, they followed a strikingly different pattern from the Impressionist and Modern auctions. Of the top lots sold at all three houses, only Yves Klein's RE 11 Archisponge, which was bought for $21.4 million, fits into the pattern of a high price paid for an exceptional work. The Klein sale follows several important record-setting sales of the artist's work at Sotheby's.

The $14.8 million success of Gerhard Richter's Abstraktes Bild (710), which was one of the few marquee works that achieved a price above its estimate, gave Christie's its top lot. But the most significant sales were Sotheby's bidding war over John Currin's Nice 'N Easy, which went for almost $5.5 million; and Christie's back-and-forth over Yayoi Kusama's No. 2. These two works showed that collectors were doing more than hunting for bargains. In each case, determined bidders were willing to push beyond the estimates created during the bullish days of summer. Alighiero Boetti's Map of the World, which sold for $866,000 and Richard Serra's $722,000 Folded/Unfolded, also had collectors driving the price to the high end of the estimate range.

The real strength of the Contemporary art sales was the interest among buyers in picking up works at reduced prices. Several well-known collectors and dealers, as well as at least two anonymous buyers, acquired multiple works at both Sotheby's and Christie's.

These actions display confidence in an eventual return to the longer-term trend of rising prices. Many collectors expressed the feeling that works were available for a discount and that this would be a special, one-time-only opportunity.

During Sotheby's Day sale, however, a very different dynamic was at work. The majority of works in the Day sale were purchased at prices well within the pre-crisis estimate range. In other words, Day sale buyers were not seeking a discount. In this financial climate, it would be an odd strategy to acquire work at pre-crisis estimates if the buyers were short-term speculators. Therefore, we can view this market activity as evidence of a committed community of Contemporary art buyers.

Market Trends

Average lot value is one statistic that bears out the art market professionals' positive view of the auction results against the pessimism of the press. The New York Evening sales for both Impressionist and Modern Art as well as Contemporary Art, finished with average prices above the 2006 level.