London Contemporary Art Sales: Crash? What Crash?

[NOTE: This is a guest post by Dan Bischoff.]
At Sotheby's Contemporary Art Evening Sale in London last February, just as the auctioneer was taking bids on Andy Warhol's "Nine Multicolored Marilyns" in the firm's Bond St. digs, protesters unfurled a banner reading "Orgy of the Rich" and flung photocopies of 50-pound notes in the air. They then paraded outside to join a much larger demonstration organized by Arts Against Cuts, a London group angered by the severe budgets passed by Britain's Tory-dominated government. It was the first time an international art auction had been disrupted since Cary Grant got himself arrested in North by Northwest.

One sign outside read, "1 Warhol = 1,222 Tuitions."

What a difference five months can make. This week, at the summer Contemporary Art Evening Sale at Sotheby's, there were no demos at all. Instead, the sale set records, earning $174 million in a single evening (over $100 million dollars more than the total for February). That was just a whisker below the $189 million the London Sotheby's earned at the top of the contemporary art market in 2008, right before the capitalist crash.

Art records are made to be broken
The sales at Sotheby's, Christie's, and Phillipe de Pury's this week set a number of records for individual artists and continued the streak of rising values in the wake of a severe market collapse in 2009, when art prices plunged almost to the level of the 1992 contemporary art collapse. In 2010, Christie's alone registered some $5 billion in sales, up 53% over the preceding year; Sotheby's posted $4.3 billion for the year, on a slightly smaller boost in volume.

The interesting thing about these statistics -- for those of us without millions of dollars to spend on paintings -- is that they suggest the collapse of the art market (and the capitalist collapse itself) was a mere hiccup, a pause with few stylistic or cultural consequences.

Pablo Picasso is still at the very top of the market, as he has been since the 1970s (his 1932 "Nude, Green Leaves, and Bust" set the record as the most expensive painting ever bought at auction last year at Christie's in New York, going for $106 million). Andy Warhol, universally recognized as the fastest appreciating artist in the world, was represented in London this week by a "Mao" portrait that went for $7 million, right between its high-low estimate of $6-8 million.

Can't blame the death tax, either
What's more, this summer's sales lay to rest a nagging doubt about last year's prices: In 2010, U.S. estate taxes fell to zero, an odd fluke created by Bush administration tax policy that handed a windfall to wealthy heirs for that year only (you could save as much as 44% on the overall value of any object sold in 2010). That may have brought particularly pricey objects to market, but this week proves that the rising price of international art is itself no hiccup.

Why? The underlying reasons are no doubt the same that have boosted all luxury markets -- the rich are doing just fine, thank you very much. And that brought out some sellers, like Kay Saatchi, the former wife of advertising mogul Charles, who put several pieces from the famous "Sensation" exhibit, like Ron Mueck's colossal, three-foot-tall "Big Baby" sculpture, up for auction (it set a record for the former Australian children's TV set dresser, earning $1.3 million).

In some luxury commodity markets we've seen even more marked price hikes -- fine European wines, for example, tripled over the past season, a fact ascribed to Chinese buyers. Art prices used to be considered a subset of the real estate market -- the 1992 art price drop was linked directly to the crash in Japanese real estate -- but this year's figures suggest that art has disassociated itself from the still-moribund international real estate market to come into its own as an inflation hedge and a globally fungible investment.

But the market isn't entirely back to the old go-go days yet. And the objects that sell really well are subtly different. Although Neo-Pop artists like Damien Hirst and Takashi Murakami registered gains after embarrassing slumps since 2008, the headliners this year were pieces like Francis Bacon's 1961 "Portrait Study," which went for $13.3 million, the highest price of the London sales.

Nobody has ever complained that Francis Bacon is too cheerfully Pop.

Dan Bischoff writes about art for The Star-Ledger in New Jersey; he was European editor for WorldBusiness and National Affairs Editor for The Village Voice.