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The market for Russian art stands at the intersection of two important trends: the global boom in commodities and the rapid expansion of the so-called emerging markets for art. Endowed with stunning reserves of natural resources, Russia is experiencing a periodof rapid capital formation which, in turn, is creating an unprecedented demand for Russian art. Sotheby's New York sale of Russian art has grown in scope and scale to satisfy the growing interest.

At Sotheby's, the Russian category grew by more than 25% in 2007 with new sales inaugurated in London in October and by hosting pre-sale exhibitions in Moscow. Christie's also held an auction of Russian works of art the same week as Sotheby's. Christie's 294-lot sale--notable for Ivan Shishkin's The Forest Clearing (1881) which went for $3.7 million, works by Nicholas Roerich and works of art--totaled nearly $17.6million. The Christie's sale was composed of $10.3 million in paintings and $7.3 million in works of art.

Sotheby's 539-lot sale totaled $46.4 million. Russian painting brought in $36.1 million at Sotheby's and works of art accounted for $10.3 million; only four years ago, the inaugural sale of Russian paintings brought in $8 million.

At Sotheby's, the market for non-conformist Soviet and Russian Contemporary art has grown substantially but remains an open field where collector's tastes and artists' reputations are still forming. However, there is an emphasis on quality across all of the fields. In the market for Russian painting, blue-chip names--like Kuindzhi,Aivazovsky and Bogoliubov--continue to attract strong prices. In  themarket for Russian works of art, educated and confident collectors are bidding up the best works far beyond the estimates. The field has anactive collector base where it is not uncommon to find a well-informed and ambitious connoisseur who is looking to create a meaningful collection in a short period of time.

The market for unofficial Soviet art and Contemporary painting also displays a marked preference for artists with established bodies of work and a pedigreeof previous sales strength.

Prominent Sales

Russian Paintings

The most valuable lots in the sale were Arkhip Kuindzhi's Birch Grove(1881) which confirms the importance of landscape painting in the canon of Russian art. Ivan Aivazovsky's work dominated the top five list of Russian paintings with two lots comprising three different maritime paintings. Vasily Polenov's The River Oyat (1883), one of his best known images, was purchased by a collector for a price well above the pre-sale high estimate. It was also one of the lots that attractedthe most interest from bidders. Alexei Bogoliubov's View of Venice, Customs House exceeded the high estimate for the work by a substantial margin.

Viewedfrom the perspective of market expectations, Nicholas Roerich's work deserves special attention. Roerich had three paintings among the top ten lots in Christie's New York sale. At Sotheby's, several Roerich paintings from his Himalayan series of paintings sold for consistently high prices. These were among four of the five works that exceeded their high estimates by the greatest margins. Ladakh was bought for $157,000 against a high estimate of $20,000, a margin of 685%. Georgy Lapchine's Vase of Flowers turned in a similar performance realizing $145,000 against a $35,000 high estimate or surpassing the expected price by 414%.

AlexandreAltmann, Lapchine, Aivazovsky, Polenov and Roerich were the artists whohad work that received the most interest from bidders.

Contemporary Art

All of the top lots in the Soviet nonconformist and Russian contemporaryart session are from the Soviet period reflecting the market's searchfor--and support of--the early important works of Russian contemporary art. Ilya Kabakov's album from the early 1970s displays his interest incombining words and pictures.

An slightly earlier example of unofficial art from the Soviet period is Oscar Rabin's City with Moon (Socialist City),a stunning example of work that the official regime considered an unacceptable commentary on Soviet life. Komar and Melamid's important triptych, Composition with Missiles from the mid-1980s, long after they had emigrated from Russia to the US, combines references to both Abstract Expressionism and elements of Russian art and life.

Another artist who was both influential in the creation of unofficial art and adept at combining the work of prominent American artists with the experience of Soviet life was Evgeny Rukhin. Though he died young, he was prolific. His work sold well to foreigners and was taken outside of Russia. As with many other works of art, the renewed buying power of Russian nationals allows them to repatriate Rukhin's work.

Finally, Oleg Vassiliev's By a Campfire pays homage to one of Russian art's more important figures, Erik Bulatov. Vassiliev's other work in the sale, the cover lot from catalogue for session two, attracted the most pre-sale interest from bidders and surpassed the high estimate by one of the highest margins for the sale. The the buyer paid $157,000 against a high estimate of $ 50,000.

Alexander Kharitonov, Evgeny Rukhin and Evgeny Gorokhovsky's work was the subject of determined bidding that produced prices three and four times the high pre-sale estimate. Semen Faibisovich, Ilya Kabakov and Boris Sveshnikov attracted the greatest pre-sale interest for their works.

Works of Art

With the exception of Matvei Chizhov's bronze sculpture, Frolicsome Girl( 1878), the Russian works of art session of the sale was dominated by strong prices for enamels, icons and other exotic items carrying the magical Fabergé name. One reason may simply be the exceptional quality of the particular works in this sale, for example, the Fabergé cup carved from quartz, lot 411, is a rare and incomparable item. Anothercause of this focus on icons and enamels could be the composition of collectors active during the sale. As mentioned earlier, the presenceof a few determined collectors can impact the results of a sale. Inprevious sales of Russian works of art, there was a strong interest inbronzes and porcelain driven by specific collectors. This season's sale may reflect the presence of a few collectors focused on icons and jeweled items.

A case in point is the Fabergé icon of Christ Pantocrator, lot 491, notable for it's use of gemstones on thesurface of the frame. A badge from the Imperial Order of the White Eagle, lot 414, one of only two known to exist despite evidence that 24 were created in the late 19th Century, also demonstrated the attraction of gemstones to collectors. The Fabergé smoky quartz cup, lot 411, displays the historical knowledge and wit of Fabergé. This piece refersto 16th and 17th Century shell cups in the collection of the Tsars that had been diplomatic gifts. Fabergé embellished on this theme with his own charming motifs.

An icon given to Tsar Nicholas II and his wife by the citizens of Tsarskoe Selo, lot 492, is particularly significant because it was given to the couple to commemorate the birth of their daughter Grand Duchess Olga Nicholaevna at the Alexander Palace in Tsarskoe Selo.

The bronze Frolicsome Girl also has the distinction of being one of the lots that most exceeded expectations. Selling for $385,000, it was originally estimated at upto $30,000. That represents a price nearly 13 times the pre-sale high estimate.

A russian icon of the Vladimir Mother of God, lot 495, both outperformed the other works and attracted the greatest amount of pre-sale interest. Estimated at $12,000 before the sale, the buyer paid $157,000 or 1308% of the high estimate.

Another icon of Christ Pantocrator, lot 513, was also among the items with the strongest pre-sale interest. And an enamel pictorial card box, lot 385,that was estimated at $20,000 achieved $253,000, no doubt a product of the substantial pre-sale interest.

Composition of Bidders

It will come as no surprise that the majority of buyers in the Russian art sales are Russian nationals. Many Russians maintain homes in other countries and may appear, in the context of an art auction, as residents of those countries. Nonetheless, we can see some interesting patterns emerge from the data on the nationalities of bidders and buyers of works in the Russian art sales.

Even while discounting the residence question, half of the bidders in the sale were most likely not Russian or Ukrainian. North Americans accounted for 42% of the bidders and 36% of the buyers by lot. Those buyers took home works that represented 18% of the total sales volume.

From the buying patterns, it would appear that North Americans bid more than they bought and bought lower priced works. Given the decline of the US dollar against other currencies, a reasonable conclusion would be that North American buyers are being outbid by residents of countries with stronger currencies like Switzerland.

The sale data presents some evidence to support this conclusion. Swiss were 4% of the bidders; accounted for 5% of the buyers by lot; but acquired works that made up 17% of the total sales volume. That would mean that the Swiss bidders acquired substantially higher value works.

A similar effect was seen among the Russian and Ukrainian buyers. Buyers with Russian domiciles were only 22% of the bidders but they purchased 31% of the lots which tracked well with the overall sale at 32% of the price volume. Ukrainians, like the Swiss, skewed toward the higher value lots. They bought 7% of the works which were worth 11% of the total sales volume even though Ukrainians were but 4% of the bidders.

Buyers from the UK also had a pronounced taste for the more expensive lots.They bought 5% of the lots. Those works, however, were worth 11% of the value of the sale.

Taken together, the Ukrainian, Swiss and UK buyers were over-represented in the higher value lots. One way to look at this buying pattern is to recognize that wealthy Russian nationals purchased works of art in proportion to their overall presence in the sale. But Ukrainian and, especially, Swiss and UK residents are the buyers willing to employ their capital to acquire the most expensive works. The weakness of the dollar gives a determined bidder from one of those countries an advantage in securing the works of art.

Market Trends

The sale for Russian works of art, "substantially exceeded our expectations for two reasons," observed Gerard Hill, Head of the Russian art department."We had a couple of private collections with very attractive estimates and there was an increased activity by new bidders driving up prices."

The continued influx of new buyers has had a positive effect on the market but it has also made the market more fluid on several levels. Quality, however, remains a touchstone for buyers whether they have been active in field for some time or recently entered the market. "These buyers are connoisseurs," Mr. Hill says of the new bidders. "They know what they're looking for; they recognize quality when they see it. They're not just buying indiscriminately."

Among the works of Soviet unofficial and contemporary art, there is still a wide range of artists and work establishing itself in the marketplace. "What Russian collectors like in terms of contemporary art," says Dr. Alla Rosenfeld, the expert who organized the Contemporary sale, "is different from what appeals international collectors of contemporary art. For example, it is not that easy to sell some conceptual art, installation or photo-based art in Russia. Buyers still prefer works by established artists of the 1960s generation"

This still fluid market place is one of the reasons for a broad and inclusive approach to auctioning art in this category.

Finally, the market for Russian paintings remains very strong. "It's been a crescendo for these artists," said Sonya Bekkerman, Director of Russian paintings.