Portraits as Art Market Currency Pt. 6 – artmarketblog.com

Portraits as Art Market Currency Pt. 6 – artmarketblog.com

As the final post in this series I want to summarise my findings, but before I do I want to reiterate the reason that I wrote this series of posts on Portraits as Art Market Currency. The catalyst for this series of posts was, and still is, the continuing saga relating to the supposed instability of some of the world’s most significant economies. Economists and journalists have been making predictions for quite some time regarding the supposedly impending crisis that range from “the extent of the crisis is being grossly exaggerated” to “it is only a matter of time before we experience a catastrophic global financial crisis”. Even though opinions relating to the extent of the crisis vary greatly, it seems that a majority of experts believe that there is at least a significant chance that there will be a series of negative events relating to the economic status of some countries in the near future. Although it is unlikely that a complete global financial meltdown will take place, hypothesising on the effects that such an event would have on value of the art market reveals extremely interesting information regarding the way fine art is valued, and the way we assign value to art objects. This information is extremely useful for investors in fine art as it highlights the importance of having a strategy, and provides indications of how that strategy should be structured.

The reason I made the comparison between portraits and currency is because the way we assign value to currency can tell us a lot about the way we assign value to fine art. For several decades there has been heated debate surrounding the way currency is valued – a debate that stems from the global change to a fiat money system from a Gold Standard. To recap , the Gold Standard “was a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold” (US Library of Economics and Liberty). The benefit of the gold standard is that currency essentially had intrinsic value because it was basically able to be exchanged for a certain amount of gold. According to gold expert Paul Nathan in an article on Kitco.com “The intrinsic theory of value holds that worth or value is contained within an object. It holds that economic goods possess value inherently, innately, despite the market, despite supply and demand, i.e., in spite of men’s values, choices, and actions”. The Fiat money system, on the other hand, is currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation’s paper currency, the money will no longer hold any value.

What I found particularly interesting when researching this topic is that the art market can essentially be divided into two different markets – one market that has similarities to the Gold Standard, and another market that has similarities to the fiat money system. Just like the fiat money system, the contemporary art market relies very much on faith in the artists whose work is being bought and sold. The value of the work of contemporary artists is dictated by the galleries who sell the work with buyers basically expected to have faith in the valuation set by the gallery. Just like with fiat currency, if people lose faith in a contemporary artist then their work is severely devalued, or even rendered worthless. The market for classical figurative works of art, on the other hand, resembles the gold standard because of the intrinsic value many of these works contain due to their physical characteristics and their status as historical documents. Regardless of what happens to the art market or to the reputation of the artist in question, such classical figurative works of art (portraits in particular) will always have significant technical, historical and documentary value; just as currency backed by gold will always have value regardless of what happens to the economy of the country whose currency is backed by the gold. When it comes to art investment and wealth preservation, the security and stability of the value placed on a work of art is extremely important. Although the glamorous world of contemporary art market speculation may seem to be the most popular and most viable method of profiting from the purchase and sale of art – fine art is, by the very nature of the art market, a long term investment. In fact, the benefits of investing in art can only really be taken advantage of when a long term approach is taken.

To finish with there are three important points that I want to emphasise:

1. the long term value of a work of art is linked to a certain degree to the extent to which one can disassociate the work of art from the artist, and the extent to which one can assign value to the actual characteristics of the art object as an independent entity.

2. the value that can be placed on portraits because of their status as historical documents is the sort of future proof intrinsic value that will always remain with the portrait and cannot be disassociated from the portrait. It is this sort of intrinsic value that makes the portrait a good candidate for use as currency.

3. when it comes to art investment and wealth preservation using fine art, it is possible to take a strategic and mathematical approach that virtually guarantees success over the long term. This sort of approach requires, however, require discipline, patience and objectivity.

Part 1:
http://artmarketblog.com/2010/08/10/portraits-as-art-market-currency-pt-1-artmarketblog-com/

Part 2:
http://artmarketblog.com/2010/08/19/portraits-as-art-market-currency-pt-2-%e2%80%93-artmarketblog-com/

Part 3:
http://artmarketblog.com/2010/08/31/portraits-as-art-market-currency-pt-3-2/

Part 4:
http://artmarketblog.com/2010/09/10/portraits-as-art-market-currency-pt-4-artmarketblog-com/

Part 5:
http://artmarketblog.com/2010/09/17/portraits-as-art-market-currency-pt-5-artmarketblog-com-2/

**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 Market Hedge Trends – artmarketblog.com

Art Market Hedge Trends – artmarketblog.com

Although investing in fine art is considered to be a hedge more mainstream investment markets, a new trend has emerged that has seen numerous attempts to launch projects that aim to introduce alternative methods of investing in art as a hedge against the traditional method of investing in art – purchasing a work of art and taking physical ownership. One such project is the collaboration between artist Tom Saunders and art collective Idefix Bloc which with an exhibition of Saunders’ work titled SHOP + OFFICE held at murmurART gallery East London. What makes the SHOP + OFFICE exhibition so unique is that Saunders was not offering his work for sale in the traditional sense. Instead of collectors and investors purchasing physical ownership of an art object that Saunders had produced, as would normally be the case, Saunders offered potential clients the opportunity to purchase the right to buy his art in 10 years’ time for £1 for an immediately payable fee of £2000 pounds, the price that Ferguson Solicitors, the UK law firm, believes is the correct price for an “option” contract, which is essentially what Saunders is offering. Basically, you can pay £2000 now for the right to purchase any piece of the artist’s work in 10 years time for only £1. The lure for investors is the potential to earn huge profits if Saunders becomes a highly successful artist whose work sells for large sums of money, or at least significantly more than the £2000 investment. Saunders’ work could, of course, turn out to be worth less than the £2000, but that is the risk investors take. There are, however, contract provisions that cover premature death or non-production.

Over in India, another innovative art investment project has been started by an Indian entrepreneur. Indian investor Arun Rangachari, chairman of venture capital firm DAR Capital, has purchased the rights to the entire life’s work of a reclusive Italian artist by the name of Montanari, who has lived in seclusion for the past 18 years. Rangachari is building up an art collection, of which the work of Montanari will play a significant part, with the intention of setting up an art fund in the future. Before selling any of the paintings, Rangachari plans to increase the value of Montanari’s work by holding exhibitions and building a foundation dedicated to the artist’s work. According to artnewspaper.com ‘His (Rangachari’s) first art investment consists of 40 paintings by the Italian artist Americo Montanari, with the option to buy many more……..When asked why his art fund would succeed when other ventures, including Indian-based funds, had recently failed he said: “Our entry level will be affordable, we’ll be focusing on artists who have not yet built a reputation and we will have no hidden costs, everything will be up front, so we’ll be quite different from everyone else.”’

The Chinese are also getting in on the act with Chinese financial corporation Shenzhen Artvip Cultural Corporation recently going public with China’s first openly traded art portfolio. The portfolio, which comprises of 12 paintings by contemporary artist Yang Peijing, is being traded on the Shenzhen Cultural Assets and Equity Exchange (SZCAEE) in the form of 1000 shares. All 1000 shares sold out on the first day of trading for a total of US$354480 with profits from trading the works of art to be dispersed by Artvip as the works are traded. According to artinfo.com: ‘Established in 2009 by the Chinese government, SZCAEE functions as an alternative platform for the trading of a wide range of cultural assets — including artworks, luxury goods, and films — as part of the Chinese government’s attempt to commercialize, diversify, and regulate the public exchange of such cultural properties. SZCAEE plans to offer a second 1000-share portfolio, featuring 40 works by Yang Peijiang, sometime in the future.’

Interestingly, each of the above projects are focused entirely on the work of a single living artist, which is comparable to investing in a single business. The benefit of focusing on the work of a single living artist is that the future output of the artist can be controlled by a certain degree by those with a vested interest. There is also the potential for a much larger return from the work of a living artist as a result of the progression of the artist’s career. In terms of downsides, the most obvious downside of investing in the future of a living artist is the uncertainty. Whether the rewards are worth the risk is yet to be seen……..

**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 13th 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 16th 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 9th 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 14th 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 22nd 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 29th 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 2nd 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

Art Investment: The Cold Hard Truth pt. 1 – artmarketblog.com

Art Investment: The Cold Hard Truth pt. 1 – artmarketblog.com

I have read and heard so much incorrect information regarding art investment of late that I think it is about time that the cold hard truth about art investment is made available.  So, here it goes.

Should I invest in art?

The answer to this question depends on how much money you have to invest. Only a very small percentage of the works of art in existence will experience an increase in value that is rapid enough and sufficient enough to provide the investor with a worthwhile return on their investment. Those works of art that can provide a good return are inevitably going to cost significant sums of money due to the fact that the characteristics that make a work of art a good investment are really only found in highly valued works of art. There is really no inexpensive way of successfully investing in art. Another option is to invest in a fine art fund, which essentially allows investors to purchase a share in a managed portfolio of carefully selected works of art. Once again, however, the minimum investment for such funds is quite high at around the US$250,000 mark, which is more than the average person is likely to be able to afford. The other problem with fine art funds is that the investors do not get to experience any of the pleasures of owning the works of art which, quite frankly, is one of the very few benefits of art investment. It is fair to say that people who want to buy art generally want to see it and enjoy it. That is, unless one has enough money to be able to invest in a fine art fund and purchase art for their own pleasure. Investors in fine art funds should expect to get a 10-15% a year return on their investment according to Philip Hoffman, manager of an art fund called The Fine Art Fund. Proper art investment, ie. using fine art to generate a worthwhile return on your investment, is really only a pursuit for the wealthy as success really is relative to the amount of money one can invest. For those that do have the money, however, the returns can be quite high and the risk quite minimal.

Can I successfully invest in contemporary art?

Since contemporary art appears to be relatively cheap compared to the work of, say, the old masters, it is often presumed that buying contemporary art is an easy and Large profits can be made from investing in contemporary art, but investing in contemporary art is a very risky business. Successful investment in contemporary art usually requires a “flipping” approach that involves buying and selling works in relatively quick succession to take advantage of short term trends. This approach is very, very risky and requires that the investor have large sums of money to invest that he/she is willing and able to lose. Not only does one need lots of money and bravery to be a successful “flipper”, one also needs to have the right knowledge and contacts at hand, which very few people do. With the right advisor it is possible to profit from investing in contemporary art over the long term but the risks are still high. What it comes down to is that there are plenty of way better investment vehicles for those investors who are wanting high risk with the potential for high returns. In other words, contemporary art is not a good investment.

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

Danger of Careless Art Market Talk – artmarketblog.com

Danger of Careless Art Market Talk – artmarketblog.com

A Sotheby’s auction here in Australia on the 26th of August did not go as well as was anticipated with just less than half of the works selling and a final sales figure of AUD$5.77 million without buyers premium against an estimate of $9-$12 million. According to an article in the Australian newspaper, Georgina Pemberton, Sotheby’s head of paintings, described last night’s result as “a reflection of our economic climate and we are now going through a correction in the art market” After making this comment to the Australian newspaper, Georgina then went on to make the following comment regarding the auction to Bloomberg news “Some of the collectors are becoming more conservative, but overall the art market is still very strong”. Hmmm, seems like someone doesn’t know whether they are coming or going.

Other than the fact that these two statements contradict themselves, stating that the market is currently experiencing a correction that is seemingly based on this one sale is rather silly. A market correction is generally understood to mean a drop of between 10% and 20% in a financial market over a short period of time which would require a general market downward trend. Taking into consideration that there has been very little indication that the market is losing strength other than the Sotheby’s auction and that there are no figures relating to the definition of a market correction to back this statement up, to state that the market is experiencing a correction is very premature and at this point, incorrect.

Further evidence that the market is not in a correction came from an auction that took place the next evening by Bonhams and Goodman which experienced a far different result to Sothebys. According to the Bonhams and Goodman website “Record numbers had inspected the paintings at viewings in Sydney and Melbourne, with over 1500 people attending the auction venues, 30% up on the numbers for April. On auction night 250 people packed the Prahran saleroom to see Masterpieces of Australian Art from The Julian & Miriam Sterling Collection sell for $1,976,000 (including buyer’s premium), well over the lower estimate published in the catalogue. The sale of the Australian Fine Art catalogue contributed another $3 million to the result. ” Geoffrey Smith, Director & National Head of Art at Bonhams and Goodman went on to comment that “It was our most successful sale ever.” In total $4.9 million of art was sold against a lower estimate of $3.6 million although interestingly, only 49% of works sold which was the same percentage of works that sold at the Sotheby’s auction. What these results do show is that people are paying more money for the best works and that, although the sale rates may give the appearance of a correction, an proper analysis of the whole market points to more of a market transformation (ie. a change in buying trends and habits as opposed to a down-turn)

Another telling indication that the problem may be with Sotheby’s and not the market is the fact that only around 150 reportedly turned up at the Sotheby’s auction compared with 250 at the Bonhams and Goodman auction. With several more important art auction scheduled in Australia over the coming weeks it will be interesting to see what the results will be.

**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

Damien Hirst Screws Himself – artmarketblog.com

Damien Hirst Screws Himself – artmarketblog.com

On the 15th and 16th of September a total of 223 previously unsold works by Damien Hirst will go under the hammer at Sotheby’s. The collection consists mainly of different versions of Hirst’s most iconic concepts including versions of his spot paintings, spin paintings, butterfly paintings, medicine cabinets, formaldehyde works and photo realist paintings.

In continuation from my previous post on this auction I have conducted some further research on Damien Hirst and the market for his work which resulted in some rather interesting results. The online art auction result database Artprice.com lists a total of 1013 Damien Hirst works sold at auction since 1992, 169 of which were auctioned in 2007 which means that the Sotheby’s auction of 223 Damien Hirst works will account for more than a years worth of auction results. Comparatively, Jeff Koons, who is 10 years Damien’s senior, only has 524 auction recorded auction results since 1991.

The fact that Hirst has made the decision to sell at auction partly because the commission rates charged by an auction house are lower than those charged by most galleries suggests that his motivation is mostly, if not purely, financial. Although the demand for Hirst’s work is very high there are already plenty of works on the market due to the huge number of works that Hirst produces. This makes me wonder how many people will be buying from this auction purely because of the nature of the sale as opposed to the quality, price or attraction of the work on offer. I would say probably lots. If there are lots of people buying purely as a result of the nature of the sale then this could result in people buying works from this auction at inflated prices created by a false perception of scarcity and immediacy created by Sothebys when in fact there are already plenty of Hirst works available for sale elsewhere.

There are basically two different outcomes for this auction both of which I perceive as being potentially detrimental to Hirst’s career. Firstly, a successful sale where a majority of the works are sold for above estimate will result in a glut of Damien Hirst works being thrust onto the market which could well result in the demand and desirability Hirst’s work to drop due to the availability of works increasing dramatically. The effect that the sale of these works will have on the market for Hirst’s work depends on how many people are purchasing with the intention of on-selling within a short period of time. Scenario number two is that the sale goes terribly which would of course result in Hirst’s reputation and value dropping.

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