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The effects of this economic surplus have been seen in the art market for the last few years. Russian collectors have made significant acquisitions in Modern and Contemporary art markets. But they have also had a profound effect on the Russian painting and works of art market. A wide range of Russian painters from the 19th and 20th centuries have thus seen rapid price appreciation.

The round of Russian art sales held in London in June 2008 presented another inflection point in the growth of the Russian art market. The volume of the sales continued to increase along with the over all value but these London auctions showed a maturing market where connoisseurship and quality won out over momentum.

Buyers resisted aggressive estimates and chose better quality objects from the sea of lots—nearly 1000—on offer. "There is so much choice now," said Lord Poltimore, Chairman of Sotheby's Russia. "The market could absorb all of this material, in terms of price and quantity of lots, but the taste level is maturing very rapidly and we can see the middle of the market is getting softer."

Significant Sales

The most striking development in the June sales was the excitement around decorations, especially the two lots connected to the Order of St. Andrew. Coming from the same high-quality collection, these two lots exceeded their high estimates by more than four and seven times. Indeed, the diamond-set badge of the Order of St. Andrew was the highest priced lot of week.

A still life by Natalia Goncharova was the second highest lot. But the Goncharova market has been moving rapidly over the last two years and that painting, as well as another that made the list of Sotheby's Top Ten works, sold well within Sotheby's estimates. Though two the artist's lower-priced still lives greatly exceeded estimates, Goncharova also stumbled when a prominent work at Christie's failed to find a buyer.

Overall, the Russian paintings market showed strength in blue chip names as buyers gravitated toward quality. "We can see the market becoming more selective," said Jo Vickery, Sotheby's Head of the Russian Paintings department. And, in fact, the names among the top lots—Shishkin, Konchalovsky, Aivazovsky and Korovin—were some of the best-known in Russian art.

Still there were surprises. From the Day Sale, a romantic group portrait of military men by Count Mihaly von Zichy sold for almost $640,000 when the high estimate for the watercolor was less than a mere $60,000.

Zinaida Serebriakova's Reclining Nude had been owned by the same family since the 1930s. Nonetheless, the stunning $2.1 million price was five times expectations. Even painters like Boris Kustodiev, whose work, The Flower Harvest, estimated above $1 million, were able to best the high estimate by a significant margin.

Kustodiev was, of course, among the lots that attracted the most bidders. Though the other lots on that list tended to be both lower-priced examples of much sought after painters like Aivazovsky, Goncharova and Yakovlev, the final prices ranged from $26,000 to $2.1 million. Clearly there was a great deal of interest at all price points and across genres.

Significant Buyers

That the vast majority of buyers of Russian art and Works of Art in a London sale are Europeans will surprise no one. Europeans represented 79% of the buyers, bought 84% of the lots that accounted for 92% of the total sale value. The next largest group of buyers was North Americans who composed 12% of the buyers and took home 8% of the lots. But the value of the US dollar against may have hampered their purchasing power because they grabbed only 4% of the sale value. That means North Americans were over-represented in the lower-priced lots. The same observation holds for Middle Easterners who were among 4% of the buyers but 1% of the value.

Perhaps most interesting in the data is the fact that Central American residents made up 4% of the buyers and 4% of the value. They took home lots at a ratio of 4:1, meaning there were approximately four lots bought for every Central American buyer at the sale.

Market Trends

Any discussion of market trends provoked by the June 2008 sales in London will immediately center around the strong showing made by the Russian Works of Art sale. The huge jump in price volume from November of 2007 to June of 2008—from approximately $7 million to $18 million—is only partially explained by the $5.7 million that comes from the two Order of St. Andrew lots. Even without those two pieces, the June 2008 sale would have exceeded June 2007's $9.8 million total.

More important, there was a substantial decrease in the number of lots offered in both November 2007 and June 2008. Yet across all three sales, there has been a consistency of the percentage of lots sold. These numbers would suggest that Sotheby's has been actively constraining the number of lots it brings to market in recent sales and receiving better prices for those lots. The fact that average prices for Works of Art remained steady in the face of a decreased number of lots confirms that the market is more attracted to quality and discerning.

With a smaller number of lots offered, we might have expected to see a rise in the percentage of lots sold as buyers accepted whatever was on offer; or, the average price would have dropped as the absolute number of lots sold fell.

The Works of Art category is somewhat distinctly Russian field. Few other cultures had the craftsmen or the tradition of appreciating such exquisitely wrought versions of everyday objects as well as the show-piece items and religious icons. It is also distinctive to the Russian national character whether the person resided in Russia or abroad to store value in such objects. The acceleration of this market in tandem with the increase in Russia's domestic prosperity suggests the habit has not been broken by any means.

For all of the growth in Russian Works of Art, the painting market continues to appreciate in value too. Given the very large number of paintings on offer in this recent sale—more than 400 lots—it isn't surprising to see the total value of the paintings rise year-over-year for each of the seasons when a Russian painting sale takes place.

For the Autumn sale, the total value of the Russian paintings sold nearly doubled from 2006 to 2007. And for the Spring sale, the same doubling effect was seen from 2007 to 2008.