News

The London Contemporary Art sales on July 1 and 2, 2008 gave credence to almost every view of the art market. Sotheby's held the most successful Evening sale with a total above the high estimate but Phillips de Pury failed to achieve a total equal to the low estimate. Some very prominent works did not find buyers and yet many artists achieved new records both at the high end of the price spectrum and towards the middle and low end.

These two auction houses and Christie's had a mix of very positive news—and disappointments. This counterpoint cautions against a reckless view of the market and suggests the market is functioning by balancing excitement for particular works against a healthy amount of skepticism.

The wide range of results also suggests that the Contemporary art market is reaching a point of stability after several years of rapid growth. The growth pace had been so high it began to cast a question over the market as a whole: could the market increase at such a rate without becoming a bubble or susceptible to a crash? Add credit problems in the United States and the threat of a worldwide recession. Taken together, they make a good recipe for worry.

That concern has been amply voiced in the press but the results from London seem to have confirmed in even the biggest doubters that the market has a firm foundation. That foundation comes from the presence of several blue-chip artists whose work can be counted on for market leadership and a base of collectors with the means to acquire these works. The top lots in the three evening sales were works by Francis Bacon, Jeff Koons, Lucien Freud, Jean-Michel Basquiat, Andy Warhol and Willem de Kooning. All six artists have strong auction histories and the success of their work—especially fine examples of their work—can be considered evidence of a flight to quality.

Overall, 179 works changed hands in the Evening Contemporary Art sales for $409 million (including the Buyer's Premium.) The average price for a work in the Evening sales was $2.28 million. But the most telling statistic was the sell-through rate. Overall 80% of the works on offer found buyers. For Sotheby's, that figure was a remarkable 95% and one of the reasons Sotheby's had the highest total of all three houses at $189 million.

Significant Sales

Works of art by Francis Bacon have led the Contemporary art market for more than a year. In 2007, $267 million in Bacon canvases were sold during Evening auctions. Half way through 2008 that number has already reached $200 million.

Sotheby's has played an important role in the Bacon market selling 9 of the top 15 Bacon lots, including 4 of the top 5 prices.

Sotheby's Study for Head of George Dyer sold for well above the expected $16 million for nearly $27.4 million. Christie's triptych self-portrait also outperformed its $20 million target by achieving a $34 million price. Those sales amply demonstrate the continuing depth and strength of the Bacon market, especially when there were other Bacon works on offer that did not perform as well.

Richard Prince's Overseas Nurse established a new record price for the artist. The nurse paintings began their auction cycle three years ago in London when Sotheby's sold Bachelor Nurse for $484,000. Since that time, an additional 16 nurse paintings have been offered at auction with prices steadily climbing to this season's $8.4 million record.

Yves Klein's price structure was substantially re-set in New York's May sales when two canvasses from the collection of Walter and Doris Lauff were sold for $23.5 million and more than $17 million. Those may have been exceptional works but the London sales confirmed the values achieved when three works by Klein were sold for prices well above their estimates. ANT 131 made almost $8.5 million; ANT 2 went for $4.5 million; and RE 3 sold for $6.3 million.

Other important sales at Sotheby's include the record price Bridget Riley's Chant 2 attracted. At $5.1 million, Riley's work moves into the top rank of artists and confirms her unique position as the leading example of a distinct vein of abstract art.

Marlene Dumas's The Visitor surprised the market by attracting $6.3 million, close to three times the high estimate, making her the living female artist with the highest auction price. But this was not the first time Dumas's work surprised the market or won her that title. In February of 2005, Acquavella Galleries bought The Teacher (sub a) for $3.34 million, a record then for a living woman artist. The sale of The Visitor far above the high estimate revives momentum in the Dumas market.

British artists also made important sales during the Sotheby's auction. Anthony Gormley's Angel of the North received a lot of press attention for achieving a $4.5 million price that was three times the high estimate. Frank Auerbach's Head of Helen Gillespie, which made $3.8 million and was also triple the high estimate, represents a record for the artist. Auerbach is an artist who has steadily gained value in recent years despite not having attracted much press attention.

The depth of Sotheby's sale was illustrated by the strong interest in other groups of artists. Italians Alighiero e Boetti and Piero Manzoni both had works that performed beyond expectations. Despite a number of records for Manzoni's Achrome works in recent sales, one sold in London for $3.88 million that had been estimated at less than half of that figure. Boetti's Tutto also doubled the high estimate to sell for $793,000.

Like the Italians, there were several Indian artists represented in the sale. Anish Kapoor's untitled sculpture sold for $3.88 million. Subodh Gupta had five works offered across three auction houses during the London Evening sales. All but one of those five sold for above the high estimate (the fifth sold within the estimated range.) Sotheby's untitled painting was the highest value lot of the five. It sold for $1.2 million which was double the high estimate.

Significant Buyers

The regional breakdown of buyers for the London Contemporary art sales confirms the importance of London as a growing center of the global art trade. Sotheby's will exclude their clients who wish to remain anonymous from the regional data but those clients account for fewer than 10% of the buyers in the Evening sale. Although the majority of lots were purchased by Europeans, North Americans acquired 32% of the lots. A substantial minority of the lots went to buyers from the rest of the world.

Market Trends

The growth of London in the global art market is a significant trend worth exploring in detail. Sotheby's Contemporary art Evening sale was remarkable for its 95% sell-through rate. But a closer examination of the three major Contemporary art sales held in London —in February, June and October—over the last three years shows that Sotheby's June sale has consistently sold 90% or more of the lots on offer. That level of consistency is rare in the art market, especially when Sotheby's other London Evening sales have only reached the 90% sell-through level in February of 2006, a period of market acceleration.

The total of London's Contemporary art Evening sales more than doubled from 2006 to 2007. In 2006, the combined Evening sales were $125 million and in 2007 the total was $302 million. Such a rapid increase would be hard to maintain—and probably not conducive to a stable market. When we look at relative sales by comparing the increases in the February sales, Year-to-Date (YTD) Sales for June and the Full Year totals, a consistent pattern emerges. The February sales have gone from $51 million to $189 million over three years while the YTD totals have gone from $106 million to $234 million to $378 million.

In 2006, the both the February Evening sale and the June Evening sale of Contemporary art were roughly equal at a little more than $50 million for each sale. In 2008, the two sales totals again reached parity at $189 million and $188 million respectively. But in 2007, a large disparity had emerged between the two sales. From 2006 to 2007, the February sale increased 75% in value but the June sale increased 160% in the same period. These data allow us to see the crucial moment of acceleration in the London market: the Spring of 2007.

What do all of these numbers mean? The London market has been growing but it has also been consolidating its position as an important sales center for the global art market. The June sales increased 31% from 2007 to 2008. That's impressive growth, though much more manageable than the growth rate of the year before.

More important, in terms of the state of the art market, sales growth in London has not come at the expense of growth in New York. Buyers will clearly participate wherever the work that interests them appears. Success in London has built upon sales success in New York. That's very meaningful because it confirms that the overall art market is still growing in dollar terms across all sale locations.

These numbers show that the art market continues to add to its base of collectors, an important factor for future stability; and that growth has not been a product of a bubble or a short-term shift in the market as many have suggested.