The 2010 Art Market Review – artmarkeblog.com

The 2010 Art Market Review – artmarkeblog.com

2010 has been one of the most confusing, unpredictable and unexplainable years for me as an art market analyst. So many of the trends, events and fads that emerged during 2010 did not appear to be caused by the sort of conditions, have the same effects, or follow the same path of logic that one would expect they would given the way things have panned out in past years. This leaves me with no doubt that the art market is evolving at such a rapid pace that there is little point trying to justify or explain the events of today using logic that is based on the progression and events of previous years. In fact, more of the art market events that took place during 2010 appeared to defy logic than ever before. I do, however, strongly believe that one of the reasons that it has become even more difficult to determine what is going on with the art market is that the art market (auction houses in particular) has become adept at making the situation appear much better than it really is. Whether it be by skewing figures or manipulating the way results are perceived – galleries, fairs and auction houses have become the plastic surgeons of the art world.

What has also made 2010 such a hard year to analyse was the contraction, and slow regeneration, of the market for the work of trendy emerging artists and recent works by top contemporary artists – both of which are usually the most global, visible and publicised sectors of the market. As the market moves towards the work of artists with a proven track record, collectors and investors have shifted their focus from the usually dominant and globally relevant contemporary art market to the work of artists from a wide of variety of styles, mediums and movements that cannot appear to have very little in common. This has resulted in a situation where there is not one dominant global trend that art market analysts such as myself can focus on, but a number of smaller and disjointed trends that make reading the market particularly difficult.

A few months ago I wrote a series of posts on what I believed was a move towards a more sentimental art market, which appears to be exactly the direction that the market has headed. General disillusionment with the contemporary art market has sent many collectors and investors take a more sentimental approach to fine art that is characterised by a focus on the safety of more established artists and the familiarity of artists that they can relate to. When art collectors or investors seek safety and familiarity they are most likely to gravitate towards works by artists from the era and culture that they have the greatest connection to. This would explain the large number of seemingly unrelated trends that emerged during 2010 many of which involved previously unfashionable styles and movements that are distinctly associated with a particular era or culture.

There is no doubt that the art market has recovered far quicker than many people thought possible. Again, the unexpectedly rapid recovery has thrown a spanner in the works when it comes to analysing the art market and trying to make sense of what is going on. Some journalists and analysts have gone as far as to admit that they cannot explain how a market that seemed to be at breaking point could make such a rapid recovery. To give you an idea of how quickly the art market has recovered, in March of this year (2010) Walter Robinson, editor of Artnet Magazine, said that “Art Market Watch has been on something of a hiatus during the last few months. What with the recession, reporting on auction results just isn’t as compelling as it was during the boom years”. Six weeks later a painting by Picasso become the most expensive work of art ever sold at auction when it fetched a staggering $106.5 million. A week after that an Andy Warhol self portrait sold at Sotheby’s for $32.6 million (more than twice the estimate) setting a new record for a Warhol self portrait at auction. Compelling enough?

When it comes to rationalising art market events there is much to be gained from knowing who has money to spend and how much they have to spend. The top end of the market is fuelled by super wealthy collectors whose level of wealth would not have been affected enough by the financial crisis to deter them from buying art. Therefore at the high end of the art market things have been pretty solid as is evident from the number of record auction prices set in 2010. The lower end of the market is fuelled by collectors who focus on edgy and trendy contemporary art by emerging and newly established artists, and who will usually have a high level of interest in the cultural and artistic side of fine art. Collectors at the lower end of the market are a very determined group who are always going to be around even if they appear a little less active at times. Things at the lower end have improved but have done so at a less than rapid pace which makes it difficult to judge where this sector of the market is heading. Without a doubt the sector of the art market that has suffered for the longest period of time due to the effects of the global financial crisis and the art market downturn is the middle market. The middle market includes lesser works by big name artists, and the more expensive (less justifiable) works by the trendy contemporary artists, which makes the middle market a sort of currently un-necessary compromise for the super rich, and a stretch too far for the modestly well off. Middle market works are, however, perfect for the financial advisor and hedge fund manager types who are more interested in art as a status symbol than the quality or art historical importance of the works they are buying. With the pay packets of hedge fund managers and financial advisors taking a massive hit due to the financial crisis, there is little interest in the middle market works. The super rich are still rich enough to not have to compromise and settle for middle market works and the modestly well off continue to fuel the lower end of the market.
My next post will be the top ten art market 2010 so stay tuned……..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

The Most Revealing Art Auction Investigations – artmarketblog.com

The Most Revealing Art Auction Investigations – artmarketblog.com

Over the years many very interesting and revealing investigations into the inner workings of art auction houses have been conducted by journalists.  Having read most of the results of these investigations myself, I thought that it would be useful to provide a list of what I believe are the most informative and educational investigations to have been published in recent times.  If you are wondering at this point whether I hold some sort of grudge against art auction house then I can assure you that I don’t.  Most of the problems that have arisen with the art auction sector have originated from either one person or a small number of people who think that they are invincible and take things too far.

1. Halsey Minor, an internet tycoon and art collector, recently contacted me regarding a post I wrote on the sins committed by art auction houses.  Minor contacted me to inform me that he had recently launched an appeal against the summary judgement ruling in favor of Sotheby’s in their breach of contract action against him.  As well as informing me of the appeal, Halsey also provided me with a copy of the now publically available appellate brief for this case which you can view here:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B8p8DAKg7zgqYjAyN2YwOGItNGY3My00YzNjLTkxMjEtZmI5NjdkMDQwYTBh&hl=en

You can also see the papers from the ruling in favour of Sotheby’s here:

http://www.scribd.com/doc/29409086/Sothebys-v-Minor-Judgment

Although I cannot comment on the appeal  as it is still being processed, I would urge everyone to read both sides of the case and make up their own mind.

2. In 2008 an Australian television program called Four Corners conducted an investigation into the actions of several major Australian auction houses.  Below is a link to a very interesting interview with Paul Sumner, the owner of Australian art auction house Mossgreen:

http://www.abc.net.au/4corners/content/2008/s2316296.htm

3. The biggest scandal to hit the art auction world was the commission fixing scandal involving Sotheby’s and Christie’s that surfaced in 2000.  See a particularly revealing investigation by the NY Times here:

http://www.nytimes.com/2000/10/08/us/secret-partners-unraveling-conspiracy-private-files-fuel-art-auction-inquiry.html?pagewanted=1

4. In 2004, Forbes magazine published an article titled ‘Dirty Secrets of the Auction Houses’ which is well worth taking a look at:

http://www.forbes.com/2004/07/09/cz_mr_0709soapbox.html

5. The Wall Street Journal published an interesting article in 2008 that looked into the way auction houses report their results:

http://online.wsj.com/article/SB122670620372529693.html

6. The Economist published a particularly insightful article in November that investigated several issues with the November 2010 Phillips De Pury ‘Carte Blanche’ sale:

http://www.economist.com/node/17551930

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

How to Avoid Dirty Art Auction Tricks – artmarketblog.com

How to Avoid Dirty Art Auction Tricks – artmarketblog.com

Having focused my last few posts on the issues surrounding the questionable practices of some art auction houses, I thought it important to let people know how they can avoid becoming a victim of dirty art auction tricks and tactics. The only real way to avoid becoming a victim of the art auction houses is to ask questions and to know which questions to ask.  Below is a list of questions, and the reasoning behind each question, that will ensure that you know exactly where you stand.

Seven questions every buyer should ask before bidding on a work of art:

1.       Does the auction house or anyone associated with the auction house have an ownership interest in the work of art I am thinking of purchasing?

(The reason you should ask this question is that if an auction house has an ownership interest in a work of art you should question whether this would have an effect on the way the auction house markets and presents the work of art in question – as well as the final price.  Auction houses are required to indicate in auction catalogues when they have an ownership interest in a work of art.)

2.       Is the auction house employee who is advising me on my purchases also representing the seller of the works they are advising me on?

(The reason you should ask this question is that it is not unknown for a specialist assigned to a particular client as an advisor to be representing the seller of the works they are advising the buyer to purchase.  If you are assigned an expert advisor by an auction house make sure they are not representing the seller of the particular works you are interested in.)

3.       Is there any doubt regarding the authenticity or provenance of the works of art I am interested in purchasing?

(The reason you need to ask this question is that auction houses are not always forthcoming with information regarding authenticity.  It is worth while making sure that you are getting what you are paying for.)

4.       Who has authenticated the works of art I am interested in purchasing, what qualifications do they have and what evidence was the authentication based on?

(The reason you need to ask this question is that auction houses have been known to justify the attribution they make using less than reliable information.)

5.       When were the works of art I am interested in purchasing last consigned to an auction and what was the result?

(The reason that you should ask this question is that auction houses are not always forthcoming with information regarding the consignment history of a work of art.  Auction houses have been known to sell the same work of art a number of times within a short period of time and not disclose this information to buyers.  It is important to know this information as it is likely there is reason that this has occurred.  It is also important to know this information because a work of art being passed in at auction can gain a stigma that can reduce the value.)

6.       Does the auction house allow the auctioneer to bid in his own sale?

(It should be obvious why one needs to ask this question, and yes, some auction houses to allow the auctioneer to bid on their own sale.)

7.       What is the condition of the works of art I am interested in purchasing and has a condition report been completed on each work?

(Auction houses are not always forthcoming with information regarding the condition of a work of art. It is generally expected that buyers will inspect a work of art themselves and will be aware of the condition of the work of art.  If you are not able to assess the condition of a work of art then hire an expert.)

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications



Halsey Minor Battles Sotheby’s Again – artmarketblog.com

Halsey Minor Battles Sotheby’s Again – artmarketblog.com

In my previous post I made reference to a court case involving CNet founder Halsey Minor who sued Sotheby’s in 2008 for allegedly failing to fully declare when they had an ownership stake in works that they sold him. Sotheby’s won the case and were awarded $6.64 million in outstanding debts. I mentioned that I was not aware of whether Minor had appealed the decision – well, just after publishing this post, I received an email from Halsey Minor to inform me that he had in fact made an appeal on the 24^th of November 2010.  Minor will be hoping for another positive outcome like the one he received when he sued Christie’s in December 2008 for waiting too long to return some of his art after failing to sell the works on his behalf, and not returning the works when they said they would.  Minor won the case against Christie’s and was awarded $8.5 million which was the calculated drop in value that the works in question experienced while in Christie’s possession. According to Minor in an email sent to myself: “in 8 hours a jury found Christie’s guilty of Fraud, Theft and Failure to Honor a Contract and awarded me $8.5 million”.

As the appeal against Sotheby’s is still being processed I cannot comment on the case, but I would like to revisit the case Minor won against Christie’s.   The reasoning behind Christie’s holding the paintings by Richard Prince that Minor had consigned to Christie’s, but had failed to sell, was that Minor owed Christie’s $12 million at the time for works that he had purchased through the auction house.  Christie’s essentially held the Prince paintings to ransom in the hope that they would be able to recoup some of the money that Minor owed them.  Unfortunately for Christie’s, this was not an ethical means of encouraging Minor to pay them what he owed, and was what essentially won the case for Minor.  Christie’s also had a $1.5 million breach of contract counterclaim for when Minor declined to pay for work that he had purchased at auction which Christie’s won.  Mind you, the win for Christie’s was no-where near as significant as Minor’s win.

At the end of the day one expects a reputable and highly respected business like a major auction house to act ethically, morally and legally at all times regardless of how their clients act.  Although I would never condone illegal or immoral action by a client of an auction house, considering the number of clients that the large auction houses deal with it is almost inevitable that some of them will not play by the rules.  A major auction house, on the other hand, should never be seen to conduct their business in a way that breaches ethical, moral or legal boundaries – yet there is plenty of evidence that they have.  What is even more disturbing is that the auction houses are so powerful that even the most discrediting mud seems not to stick.

To be continued……..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

The Art Auction House Sin Files – artmarketblog.com

The Art Auction House Sin Files – artmarketblog.com

Where does it all end? When will people realise that although the questionable practices exhibited by some auction houses are legal, they should not be tolerated? How far will art auction houses be able to go before someone steps in and says ENOUGH IS ENOUGH !! Let’s take a look at the history of sins committed, and those allegedly committed, by the big three art auction houses.

The most famous art auction house scandal took place in 2000 when Christie’s and Sotheby’s were dragged through the mud because of allegations that they had formed a “cartel” and were agreeing in advance to fix commission rates. The price-fixing scheme violated federal antitrust law by eliminating competitive choice and cost customers millions of dollars. Christie’s dobbed on Sotheby’s and were given immunity from prosecution for their information. Sotheby’s ended up taking most of the flak with several senior members getting the boot and two senior managers, A. Alfred Taubman and Dede Brooks, both getting jail sentences. Sotheby’s, Christie’s and their owners also paid a civil lawsuit settlement of $512 million.

In September of 2004, Forbes magazine reported that Christie’s were allegedly withholding information regarding the authenticity of objects from clients. These allegations were made by Canadian newspaper heiress Taylor Lynne Thomson who went on to sue Christie’s. According to Forbes magazine: “Thomson sued and British courts ruled in May that Christie’s had been too lax in its catalog description, leaving out qualifications to its classification of the urns as being “Louis XV.” The judge highlighted the auction specialists’ decision to remove the qualifying words “possibly Italian,” which would’ve raised the possibility of the urns being far less valuable 19th-century copies.”

Christie’s controversial purchase of the highly regarded gallery Haunch of Venison in 2007 caused a flurry of opinions, many of called the sale a conflict of interest and accused Christie’s of blurring the lines between what galleries and auction houses offer. Christie’s wasn’t the first auction house to purchase a gallery though as Sothebys also made a foray into the gallery world by purchasing Noortman Master Paintings in 2006.

In 2008, CNet founder Halsey Minor sued Sotheby’s for allegedly failing to fully declare when they had an ownership stake in works that they were selling. Sotheby’s won the case and were awarded $6.64 million in outstanding debts. Minor can appeal but, as far as I know, has yet to do so.

In February of this year Christie’s allegedly settled with a brother and sister who sued Christie’s for allegedly failing to identify a painting that they consigned to the auction house as being by Titian. The painting was sold for £8,000 by Christie’s in 1993 as a painting ‘from the school of Titian’. It was determined after the painting had been sold by Christie’s that it was in fact a genuine Titian which was worth in the region of 4 million pounds. The siblings claimed that Christie’s failed to competently research and advise on the painting’s value when it was sold in 1993.

In May of this year (2010), Jeanne Marchig, a Swiss animal philanthropist, launched a law suit against Christie’s for failing to identify a painting owned by Marchig, which was sold by Christie’s for $19,500 in 1998, as a painting by Leonardo worth upwards of 100 million pounds. Christie’s sold the painting as a mere ‘19th century German’ work for which Marchig is suing Christie’s for ‘wilful refusal and failure to investigate the plaintiff’s believed attribution, to comply with its fiduciary obligations, negligence, breach of warrant to attribute the drawing correctly, and making false statements in connection with the auction and sale’. Christie’s disagrees with the claims that the painting is a Leonardo. Reaching an outcome with this case is likely to take quite a while.

The most recent art auction scandal involves auction house Phillips de Pury and their ‘Carte Blanche’ sale which took place on November the 8th (2010). So many issues have been raised in relation to this auction that it would take a series of posts to explain them all so I will only mention the most serious allegations. To begin with, the so called “curator” of the auction, Philippe Ségalot, not only was directly responsible for negotiating and organising the consignment of works for the sale, but he also advised some of the buyers – a situation that could be seen as a serious conflict of interest. If this wasn’t enough of a conflict of interest, Segalot is reported to have bid on works himself presumably on behalf of his clients. There have also been several reports that the auctioneer on the night, Simon de Pury, failed to make it clear to the audience when works failed to sell, which auctioneers are legally required to do. By failing to announce the failure of a work to sell the auctioneer could be seen to be attempting to deceive the audience by inducing a false sense of success and excitement.

These are only a few of the more serious scandals that have arisen as a result of some questionable tactics and practices adopted by the world’s top art auction houses. Are these the sort of businesses that you want to business with? Would you trust such a company to treat you fairly and honestly? I have made it my mission to make art collectors and investors more aware of what is happening in the art auction world and hopefully at the same time encourage the art auction houses to be more honest, ethical and transparent. Stay tuned, there is more to come………

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Fixing the Contemporary Art Auction Crisis Pt. 1 – artmarketblog.com

Fixing the Contemporary Art Auction Crisis Pt. 1 – artmarketblog.com

So, my last post on the issues surrounding the definition of contemporary art and the classification of works of art by auction houses created quite a storm – and rightly so. If you are still wondering why I have such an issue with the way some auctions houses categorise the works they are selling, then perhaps what I am about to show you will provide some enlightenment. The definition of contemporary art, in the context of the art market, has seemingly become redundant due to years of misuse and abuse. Although I acknowledge that the definition of contemporary art has remained open to interpretation to some extent, some auction houses appear to be taking liberties when it comes to categorising works for auction. Since the art market appears to function according to a corrupted definition of contemporary art, I decided to turn to cultural sector to see what the museum world had to say on the subject.

When it comes to making decisions regarding the classification and categorisation of works of art it is the cultural sector that generally has the final word, so I was hoping the cultural sector would provide something insightful. What I found was insightful indeed. To begin my search I went to the website of the Museum of Contemporary Art, which is located in my home town of Sydney, Australia, and is a favourite haunt of mine. The Sydney MCA website says: “Contemporary art can be defined in several ways: art which is of this time; art which is recent, new or existing now; or art which follows modern ideas or fashions in style and design. It can also refer to museum collections from 1970s onwards”. So, the Sydney MCA defines Contemporary art as both recent and as an era that began in the 1970’s. The next museum definition I found was provided by the Madison Museum of Contemporary Art whose website said: “Contemporary art had its beginnings in the early 1970s, resulting in part from a general challenge to the authority of state and cultural institutions dominated by men and exclusivist policies. Contemporary art, also identified with the term postmodernist art, has been in many ways a continuation of the ideals of modern art—its themes, styles, and, most importantly, the concept of the work of art as private expression”. Again, the MMOCA defines contemporary art as a sort of era that began in the 1970’s.

Now, before I continue on I want to make it clear that I am not agreeing with the above definitions of Contemporary art provided by the museums. I do, however, acknowledge that a museum devoted to contemporary art requires a relatively broad definition of contemporary art due to the fact that a museum’s collection needs to have a relatively long shelf life. If a contemporary art museum were to focus purely on current art, they would have to constantly update the collection, which would be an extremely expensive and time consuming task. At the present time I can understand the reasoning behind the decision by Contemporary art museums to begin what could be termed the “Contemporary era” in the 1970’s, as both Conceptual art and Digital art – both of which continue to have a strong influence on current artistic practice – came to prominence in the early 1970’s.

To be continued………….

image: ‘4 the Love of Go(l)d’ sculpture by Eugenio Merino

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

A New Sentimental Art Market Era Pt. 4 -artmarketblog.com

A New Sentimental Art Market Era Pt. 4 -artmarketblog.com

It has been said before that nostalgia prospers during recessionary times so, considering that the western world has just begun to recover from a major recessionary period, it would make sense that the art market is trending towards a focus on the nostalgic and sentimental.  The length of time that this era of sentimentality and nostalgia will last is anyone’s guess, but given that the boom lasted longer than most expected, the recovery time for the contemporary sector of the market could be just as long – except that it probably won’t be.  It would be nice to be able to report that the saying ‘Once Bitten, Twice Shy’ applies to the contemporary art market but, unfortunately, there are signs that the next puppets are already being groomed in preparation for the next inevitable contemporary cozenage.  The only question is how long it will take for the art market to once again become hypnotised by the glitz and glamour of the consumerist contemporary art regime.  In the mean time, it is great to see a level of intimacy, passion and involvement being brought back into the market that was conspicuously absent during the contemporary driven boom.

According to an article titled ‘Investors renew passion for modern masters’ ,which appeared in the Guardian newspaper, “When an alluring seated nude, La Belle Romaine, broke all records for a painting by the Italian artist Modigliani on Tuesday – selling for $69m (£42.7m) at auction in New York – the extraordinary price tag marked a historic moment in the art market. It shows that investors are turning back to the relative certainties of the modern masters and away from more risky contemporary art”.  This statement confirms that buyers are taking a much more cautious approach to the art market by buying works that they are more familiar with and have some sort of affinity with – a key characteristic of a sentimental art market era.  The care and thought that buyers are exhibiting when making purchases shows that they are seeking a much more intimate and passionate connection with the works of art that they are purchasing which is a trend that one would expect to see during a sentimental art market era.  Another key characteristic of this sentimental art market era is a sort of nationalistic sentimentalism that is likely to emerge as disillusioned collectors and investors who experienced the contemporary art market correction seek more genuine and justifiable reasons for purchasing works of art – reasons that provide a more fulfilling, intimate and involved art collecting experience as opposed to the cold and calculated commercialism that characterised the contemporary art market boom. Nationalistic sentimentalism can be defined as the purchase of works of art from one’s own country out of a sense of pride and sentimentality.

Both these characteristics allude to a market that is seeking a more intimate and involved connection with the works of art they are collecting or investing in.  I would expect that this trend will continue to develop throughout 2011 as the global art market attempts to heal the wounds that the emerging contemporary art market bubble inflicted.  This will be the last post on this topic for the time being unless any further corroborating indicators come to light.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

A New Sentimental Art Market Era Pt. 2 – artmarketblog.com

A New Sentimental Art Market Era Pt. 2 – artmarketblog.com

The demise of the world famous Polaroid Company, and the subsequent sale of many iconic and nostalgic images from the Polaroid Company collection, is yet another example of an event that ties in with the onset of a new sentimental art market era that I began writing about in my previous post. A casualty of the digital age, the bankrupt Polaroid Company was forced to sell off 1200 photographs by artists such as Ansel Adams, Mr. Close, Mr. Wegman, Robert Rauschenberg, David Hockney, Robert Frank, Robert Mapplethorpe, Warhol and Lucas Samaras to pay off creditors. The June 2010 sale conducted by Sotheby’s attracted huge interested and managed to exceed expectations with a final total of $12.5 million – well above the high estimate – and a new auction record for Ansel Adams whose ‘Clearing Winter Storm, Yosemite National Park’ achieved the sale’s top price of $722,500. Along with the sale of the Lehman Brothers collection, the sale of the Polaroid collection is yet another art market event that evokes a sense of nostalgia; the sale of the Polaroid collection was a particularly sentimental occasion because it essentially represented the demise of an entire artistic medium. Together, these two events signalled the beginning of the end of an era that started with the art market losing its innocence with the Sotheby’s price fixing scandal that surfaced in 2000, and the world losing its innocence with the life changing events of 11th September 2001.

The art market era we are in the process of farewelling will be remembered for three things: the rise of emerging markets, conspicuous consumption and a voracious appetite for the work of daring young contemporary artists. As much as I am enjoying an art market far less obsessed with daring young artists and conspicuous consumption, I am sure that we have not seen the last of either of them. I do, however, believe that we have almost seen the last of the mania associated with emerging markets. The maturation of what were some of the last undeveloped art markets capable of playing on the world stage makes me think that the global art market of the future may be struggle to fill the void that these now rapidly developing markets have left. South East Asian countries such as Vietnam, Indonesia, Singapore, the Philippines and Malaysia have all experienced rapid rates of art market development that have thrust many artists from these countries onto the world stage. Also experiencing considerable development are markets in regions such as Latin-America and the Middle East. Even China is taking steps to develop a more mature and accountable art market with the development of an art trading organization that will set an example in helping to regulate the art market. The Beijing Imperial City Art Trading Center is, according to an article from Xinhuanet, a “two-story art-trading center covers 3,700 square meters and includes different sections for displaying, trading and education”.

Sentimentality is an unavoidable consequence of the maturation process that the few previously undeveloped art markets have undergone over the last few years. The hype that usually surrounds the “discovery” of an untapped, undeveloped art market has to be replaced by something when there are no longer any underdeveloped markets to discover. Those previously undeveloped markets also need to replace the momentum that an emerging, developing market experiences with a more long term and sustainable source of momentum. Emerging art markets are usually developed using fresh, emerging talent because it is easier to introduce unknown fresh talent into the contemporary art market than it is to introduce unknown (from a global perspective) established masters to the modern/classical art market. As one would expect, when the momentum associated with an emerging art market runs dry, that market will begin looking to the past for new sources of momentum and thus automatically develop a more sentimental and nostalgic market.

To be continued……………..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

A New Sentimental Art Market Era Pt. 1 – artmarketblog.com

A New Sentimental Art Market Era Pt. 1 – artmarketblog.com

As the tainted artistic fruits of the great Lehman Bros. deception begin new lives in the hands of far less unscrupulous owners, the art market continues along a path of reminiscence and reflection that I believe signals a new, yet perhaps to be short lived, era of sentimentality. The beginning of a series of much hyped fire sales of the Lehman Bros. art collection could be seen as the start of a symbolic cleansing – the moment that the unjustifiable excesses of a once heady contemporary driven art market were finally laid to rest (at least for now). Ironically, one of the most successful lots of the recent Sotheby’s auction of Lehman Bros. items was a Lehman Bros. sign from their UK office which fetched 34,000 pounds, more than 15 times the 2-3,000 pound estimate.

The Lehman Bros. sale revealed two types of sentimentalism driving the market. Firstly, there is the sentimentality being exhibited by those investors and collectors whose unpleasant experience of the contemporary art market correction has evoked a highly nostalgic response that seeks the safety and stability of the historically familiar. Secondly, there is the sentimentality being exhibited by more optimistic collectors and investors who see events such as the collapse of Lehman Bros. as historically significant events, albeit significant in a negative way, that offer the potentially profitable opportunity to acquire a souvenir of the event to be sold some time in the future. The successful sale of the Lehman Bros. signs, and the popularity of works from the Lehman Bros. collection that were by more established artists with proven track records, is evidence of both forms of sentimentalism.

Although the runaway train that was the contemporary art market has now well and truly been run off the rails, the wounds of the fall from grace that the contemporary art market experienced are only just beginning to heal. In the absence of the superficial and short lived pleasures that the contemporary art market provided, and with memories of the correction still fresh in their minds, collectors and investors appear to be seeking solace in the familiarity and safety of the past. It is important to note that not all contemporary artists have been completely abandoned; however, the focus has shifted from freshly created works by emerging talent to more classic and historically important works by the doyens of the contemporary art world – the classic contemporary if you like. In other words, when I refer to a focus on the past, I am referring to the recent past as well as the distant past.

The recent major auctions of Asian art at Sotheby’s and Christie’s are a good example of the focus on classic antiquarian objects as well as the classic contemporary with buyers paying well above the odds for works considered to be historically significant and museum worthy. With regards to the wider Asian art market, there has been a noticeable process of maturation that has been taking place over the last year or so. This maturation has seen collectors and investors develop a more considered and connoisseurial approach to the art market. According to a spokesperson from Sotheby’s regarding the recent Asia week sales “The market is getting mature and we can see the results. Collectors want important historical works from big artists”. Another Sotheby’s expert, Kevin Ching (Sotheby’s CEO in Asia), mentioned in a press release that “Along with Asia’s growing wealth is a hunger for collecting and owning great art that is broader and deeper than ever before. There is also a healthy and growing awareness that the experience of collecting requires an investment of passion that can pay great aesthetic dividends”

To be continued…………..

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Portraits as Art Market Currency Pt. 2 – artmarketblog.com

Welcome to part 2 of my series on the concept of portraits as an art market currency.  Before I continue, I would like to explain exactly what I mean by an art market currency for those that are perhaps slightly perplexed by the concept. Obviously, fine art is never going to replace paper money as the dominant form of currency.   My research focuses less on the actual use of currency as a medium of exchange, and more on the concept of currency as an indicator and a benchmark.  It is important to understand that my concept of an art market currency is merely a theoretical concept – the analysis of which I believe can provide valuable information and knowledge for investors and collectors.

In the currency world, the US dollar is used as a benchmark (world reserve currency) for all other currencies because of the political and military strength of the US, as well as the very strong gold reserves that the US held when the Bretton Woods system was introduced after World War II. Although the art market doesn’t have an official genre, period or style that acts as a benchmark for the rest of the market, the popularity and visibility of the contemporary art market means that it tends to be used as a de-facto barometer for the state of the art market.  Unfortunately, the contemporary sector of the art market would have to be the worst sector to use as an indicator for the health of the entire art market.  As we all know, the contemporary sector of the art market is a highly volatile and unstable market that is constantly at the mercy of cultural and social trends – and is often assigned a value that has very little to do with the actual art object.  So, if the contemporary art market is not a suitable indicator of the status of the art market, is there a category of art that is?  This is just one of the questions that I hope to answer with this series of posts.

Let me throw a scenario your way that will hopefully help make the reasoning behind the concept of portraits as an art market currency much clearer.  If I were to give someone who knew nothing about art 100 works of art consisting of: 20 cubist paintings, 20 conceptual  works, 20 figurative landscape paintings, 20 religious icons and 20 figurative portrait paintings – and asked that person to look at each category separately and rank the works in each category according to how much they thought each work was worth based purely on the physical characteristics of the art object (without knowing anything about who the artist is, when they were painted, who the portraits are of, the location of the landscapes etc.) – which category do you think they would find the easiest to rank?  I think that conceptual art would be the hardest, because with conceptual art the main component of the work is the concept, not the art object.   Because abstract art is so nonrepresentational, it is extremely difficult to assess unless the purpose or motivation of the artist is known, which rules out the cubist paintings as the easiest to rank.   Religious icons could be compared to portraits – however, the symbolic nature of religious icons means that their value is closely tied to the cultural, religious, social and art historical context in which they were created, which makes valuing such works difficult for experts, and virtually impossible for anyone who does not have a thorough knowledge of the genre.  Figurative landscape paintings would seem like a good candidate for the most easy to rank because of the representational nature of such works, the general familiarity people have with the way nature should be depicted, and also because the skill and talent of the artist are so easy to determine from the way the picture is presented.  What lets the figurative landscape paintings down is the lack of consistency in terms of setting, location, season, angle etc. which means making a comparison between two landscape paintings is likely to be very difficult.  Finally, we come to portraiture.  There are several factors that make the physical characteristics of portraits so easy to compare and rank, including:

– the consistency of the subject (human face)

– the universal nature of the face

– the common goal of figurative portrait painters (to accurately depict the human face)

– the ease with which virtually anyone can determine how skilled or talented the artist is at accurately depicting the human face

In my opinion the physical characteristics of figurative portraiture are the most comparable and easily ranked of all the genres and types of fine art.  I cannot think of another genre or type of fine art that has such consistent characteristics and is so universally decipherable.  The fact that the physical characteristics of figurative portraits are so comparable across the whole genre, and so easy to rank, means that they are also easier to value when compared to other genres.  It is the characteristics of figurative portraiture that I have discussed above which give figurative portraiture an edge over other genres when it comes to the concept of fine art as currency.

Stay tuned for part 3……….

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

2010 Art Market Status Report – 2nd half – artmarketblog.com

2010 Art Market Status Report – 2nd half – artmarketblog.com

The art market has found its self in a rather interesting predicament.  On the one hand, confidence in the art market has increased considerably since the beginning of the year.  On the other hand, the ever increasing likelihood of a major financial crisis has seen more cautious and selective buying.  Adding to the drama is the increasingly obvious lack of top quality paintings by the Old Masters, which the market is currently showing a very healthy appetite for.

On the 13^th of July an impression of Edvard Munch’s controversial work Madonna sold for an amazing £1,252,000 at Bonhams – twice its lower estimate of £500,000. This makes it the most expensive print ever sold in the UK and the second most expensive print in the world. At Bonham’s 19th Century Paintings sale held on the 22nd Apr 2010, ‘Female figure study’ , a drawing on paper by John Constable with a hidden history, sold for four times it pre-sale estimate to make £24,000. Also achieving success was an interesting  ‘Portrait of a Gentleman’ by George Dawe (British 1781-1829) which was the subject of fiercely competitive bidding and finally sold for £43,200 against a pre-sale estimate of £4,000-6,000.

At Christie’s Victorian & British Impressionist Pictures Including Drawings & Watercolours sale on the 16^th of June,  Sir George Clausen’s ‘Head of a young girl (Rose Grimsdale)’ made £505,250 against an estimate of 250,000 – 350,000 setting a new world auction record for a work on paper by the artist. The same sale also saw a new record for Archibald Thorburn with yet another work on paper titled ‘Grouse in flight’ which made £217,250 against an estimate of 60,000 – 80,000

At Christie’s 23 June 2010 auction of Impressionist and Modern Art the top price was achieved by ‘Portrait of Angel Fernández de Soto’, 1903, a Blue Period masterpiece by Pablo Picasso (1881-1973), which sold for £34,761,250 against an estimate of 30,000,000 – 40,000,000.  Another portrait titled ‘Frauenbildnis (Portrait of Ria Munk III)’, one of the last great female portraits painted by Gustav Klimt (1862-1918), sold for £18,801,250 against an estimate of £14 million to £18 million.

Yet more portraits achieved high prices at Christie’s Old Masters & 19th Century Art sale held on the 9^th of July at their South Kensington saleroom. Margaret Sarah Carpenter’s ‘Portrait of a young girl’, who is thought to be Henrietta Carpenter, reached £32,450 against an estimate of 7,000-10,000 and achieved a new world record price for the artist at auction. A work from the Studio of Sir Peter Lely titled ‘Portrait of King Charles II’ also fetched £32,450 against an estimate of 6,000-8,000.

Over at Sotheby’s the ‘An Exceptional Eye: A Private British Collection’ sale held on the 14^th of July saw a watercolour over pencil by John Robert Cozens titled ‘The Lake of Albano and Castel Gandolfo’ reach £2,393,250 against an estimate of 500,000 ‐ 700,000 –  the top price of the sale and a new record for the artist at auction.  The portrait miniatures performed particularly well with the Sotheby’s press release stating that “a very high price achieved for an early work by John Smart (lot 17, £56,450), and a record for a work by Bernard Lens (lot 10, Portrait of King Charles I, sold for £58,850)”

At Sotheby’s Impressionist & Modern Art Evening Sale held on the 22^nd of June, the top price paid was again for a portrait.  Edouard Manet’s ‘Portrait de Manet par lui-même, en buste (Manet à la palette)’ fetched £22,441,250 against an estimate of £20,000,000-30,000,000 –  a record for the artist at auction. The top-selling lot of the June Russian Paintings Day Sale was Boris Grigoriev’s oil on canvas Portrait of the artist’s son, Kirill, which sold for the sum of £253,250, above its high estimate of £200,000.  Another portrait, Alexander Evgenievich Yakovlev’s ‘Titi and Naranghe, Daughters of Chief Eki Bondo’, took top spot at the 7 June Important Russian Art Sale selling for £2,505,250 – more than triple the £700,000 – 900,000 estimate .  Sotheby’s sale of the long-lost art trove of Ambroise Vollard saw more records set for works on paper held in Paris on the 29^th of June. According to the Sotheby’s press release from the sale: “Key works among the highlights of the group were an extremely fine impression of Picasso’s celebrated 1904 etching ‘Le Repas frugal’ (another portrait), which more than doubled its high estimate of €300,000 to bring €720,750 (£584,078), the highest price of the sale. A monotype by Edgar Degas, ‘La Fête de la patronne’, circa 1878-79 soared past pre-sale estimates (€200,000-300,000) to bring €516,750. Paul Gauguin’s ‘Trois Têtes Tahitiennes ‘sold for €312,750 (£253,445) well above the estimate of €100,000 to €150,000 and a record was set for a print by Pierre-Auguste Renoir when ‘Le Chapeau Epinglé, Deuxième Planche’ more than tripled its high estimate of €80,000 to bring €252,750 (£204,822). Man Ray’s ‘Autoportrait solarié’ fetched €168,750 ($206,138)”

On the 2^nd of June at Sotheby’s in London, in the sale of 19th Century European Paintings, one of the finest figure paintings by Jean-Baptiste-Camille Corot ever to have appeared on the market was purchased by the Musée d’Art et d’Histoire in Geneva for £1,609,250, exceeding its pre-sale high estimate of £1.2 million.  According to Sotheby’s “‘Jeune femme à la fontaine’ enjoyed an exceptional early provenance before it was requisitioned during the Nazi period, and was recently restituted to the heirs of its erstwhile owners.”

The results that I have highlighted above give a good indication of the current market sentiment and the market trends that are likely to define the market for the near future.  To start with, the popularity of portraits is a major indication that buyers are seeking the safety of the academic and the scholarly.  With portraits in particular, the level of skill and talent of the artist is pretty much immediately obvious to even the most untrained eye. When it comes to fine art, and portraits in particular, I do not think that people use the term craftsmanship to describe the work carried out by some artists.  To accurately portray the physical attributes and the personality of the sitter is, in my opinion, a craft that requires skill, training and a healthy dose of talent.  When one adds the historical value and importance of portraiture, the appeal of a famous (or not so famous) face from history to an investor becomes even more apparent.

I have spoken about the concept of fine art as a form of currency in previous posts.  If ever there was a type of art that was more suited to being used as a form of currency, it would have to be portraiture.   The number of common features that most portraits share, combined with the ease with which one can judge and value a portrait based on intrinsic and extrinsic characteristics, makes the portrait a prime candidate for an art world currency.  As I have said before, scholarship is the key to successful art investment, and successful wealth preservation using art for that matter.  Portraits are usually afforded the honour of in depth scrutiny and attention by scholars and academics because of the information that portraits can provide about various branches of history.  For this reason, among others, portraits are given the sort of long term continued attention that constantly adds value.

The second trend that I have alluded to is a greater interest in works on paper – in particular original drawings and watercolours.  I personally of the opinion that the increased popularity of watercolour paintings, particularly those by British artists, is due to the greater interest in the art of the Victorian era which was the golden age of British watercolour painting. Although original works on paper, such as drawings and watercolours, are often looked upon as the less valuable mediums in the scheme of things, the tide can change very quickly as it has recently.  As well as the revival of interest in Victorian art, a shortage of major works by the Old Masters and the Impressionists has driven buyers to seek the qualities that they are looking for in other mediums and periods. An article titled ‘Young masters in an old game’ from The Guardian newspaper written by John Windsor in November 2009 sums up the situation surrounding works on paper perfectly with the following statement: “Taste is shifting from new, ill-conceived conceptual art of the Brit-pack variety – costing thousands but faltering at auction, towards old, traditional skill-based art……. but you do need to develop an eye for quality – the easy, confident line of a master draughtsman, the luminosity of a watercolourist’s washes.” It is a shame that the watercolour painting is considered the poorer cousin of the oil painting because there are so many amazing watercolours by some of the world’s greatest artists that do not receive the exposure that they deserve.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

Art Investment: The Cold Hard Truth pt. 2 (Time Will Tell) – artmarketblog.com

Art Investment: The Cold Hard Truth pt. 2 (Time Will Tell) – artmarketblog.com

Is art a long term investment?

Yes, art is definitely a long term investment.  In fact, art is really only a good investment if it is able to be held for long periods of time. As an indication of how long an investment in fine art should be held, most fine art funds require a ten year commitment  – the same length of time that I would recommend anyone investing in art should be prepared to hold on to their investment for.   Although it is quite old, a study completed in 1985 by Michael F. Bryan on behalf of the Federal Reserve Bank of Cleveland titled ‘Beauty and the Bulls: The Investment Characteristics of Paintings’ provides a good insight into the characteristics of the art market.  According to Bryan:  ‘Over the 15-year period (1970-1984), the rate of appreciation in paintings typically outpaced the rate of increase in the general price index (consumer price index). However, within short intervals (1973-1977and 1980-1982), painting’s price appreciation did not keep pace with inflation. During one year of inflationary pressure (1980-1981) paintings actually depreciated in value. In short, while the rate of appreciation in paintings is positively related to the general price level, and moreover has outpaced inflation over the full period of analysis, its year-to-year performance has been considerably volatile.’

Dr Rachel Campbell, an Assistant Professor of Finance at the University of Maastricht , came to a similar conclusion as Bryan in her paper ‘The Art of Portfolio Diversification’.  According to Campbell:  ‘High volatility stems from the whimsical nature of the Art market to current trends and fads in society’s taste for Art. The nature of Art shall always be subject to such trends and as such results in a higher volatility portrayed in the prices and returns found in the Art market. A more prudent investor can alleviate the peaks and troughs from the returns on the Art market by focussing on the longer-term investment. Moreover, the high transaction costs involved with investing in Art result in the benefits tending to be reaped on the longer term.’

What the two studies above show is that although the average yearly return is quite high over a long period of time, those paintings that did increase in value often did not do so in a linear fashion.  In fact, the year to year change in value can be considerably volatile.  What the two studies also show is that just because you hold your investment in art for a long period of time, you are by means guaranteed to end up with a painting worth more than when you purchased it.  Due to the changing tastes and fashions of the art world, as well as the various economic factors that play a role in what people are willing to pay for fine art, the rate of return over the short term can undergo major and rapid changes.

The key to successful art investment is being able to know when the best time to sell is which may mean utilising the services of an advisor or consultant.  It is also extremely important to know how much you need to sell your art investment for to cover the selling costs, and to make a percentage profit that you are happy with.  Because of the nature of the art market it is important not only expect to have to hold your art investment for a long period of time, but also to expect to have to sell your investment at any time if the opportunity comes along to make a considerable profit.  A particular event or occurrence could potentially have an extremely positive effect on the value of your art investment which would be too good to ignore, but could also eventuate at any time with short notice.  Therefore, I cannot stress enough how important it is to know how much you need to sell your art investment for to cover the selling costs, and to make a percentage profit that you are happy with, so that if an opportunity comes up to sell your investment you are able to make an informed and quick decision.  In short, be prepared to hold your art investment for a long period of time, and also be prepared to sell at any time.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications