Georgina Adam
Art market history was made in New York last week when Christie’s
racked up the highest amount ever made for an auction. In just two
frenetic hours the firm raised over $691m, and set a new record for
any work of art ever to come under the hammer when an eye-popping
$142.2m was given for a portrait of Lucian Freud by Francis Bacon.
The same sale also saw Jeff Koons crowned as the world’s most
expensive living artist, when an unidentified bidder paid $58.4m for a
10-foot-high polished steel sculpture of a balloon dog in a vivid
orange. And the following night collectors and dealers demonstrated
the same appetite for classic blue-chip art, spending another $380.6m
at Sotheby’s and setting new records for seven artists including Andy
Warhol. His silver silk-screen of a grisly car crash shattered
expectations of $60m to make $105.4m. When the dust had settled and
everything totted up, over $1.1 billion had been splurged on
contemporary art – in just two evenings.
Such astonishing figures show that a clutch of big-name artists, both
dead and alive, are currently the hottest property in the market: Andy
Warhol, Francis Bacon, Lucian Freud, Willem de Kooning, Roy
Lichtenstein, Jean-Michel Basquiat, Jackson Pollock, Cy Twombly. Their
paintings are icons of their age. And living artists, such as Jeff
Koons, Christopher Wool and Gerhard Richter can also fetch
eye-watering prices
Billionaires’ playground
Driving their prices higher and higher are a group of ultra-wealthy
buyers, who are indulging in a form of gladiatorial combat to win the
most glittering trophies. Owning a major Bacon, Freud, Basquiat or
Koons immediately sets them apart from other billionaires, giving
bragging power as no other possession can. Displaying such a prize in
their penthouses, luxury yachts or private museums is the equivalent
of hanging a cheque on the wall, asserting that they can afford these
multi-million-dollar baubles.
The pool of these mega-wealthy buyers is growing; they come from Asia,
the Middle East, Latin America and India, and have entered the fray
alongside the more established American and European collector base.
The market is now so global that taste has become homogenised:
billionaires across the world know who are the top artists and want
the same recognisable things – pushing up prices even further. Two
Asian bidders, for example, went after the Bacon at Christie’s, one
pushing it right up to its final price.
And unlike in the market for impressionist and modern works – the
Picassos, the Cézannes, the Monets and so on – there is better supply
in the market for more contemporary pieces. Most of the top
impressionist paintings are in museums, with only the prolific Picasso
still in good supply. But with post-war and contemporary art, the
market is more liquid. The owners of these works, seeing the
astronomical prices, are encouraged to send them back for sale
quickly. The beleaguered Steve Cohen, whose SAC Capital hedge fund has
just paid a whopping $1.2 bn fine for insider trading, resold a
Gerhard Richter for $26.5m at Sotheby’s this month; he had bought it
only last year at Art Basel for about $20m. As for Richter, Koons,
Wool and other living artists – well, they’re still producing, so
supply is assured.
Safe bets
There is no doubt that investment – and speculation – is also driving
this market. With stock exchanges unpredictable and interest rates
pathetic, the blue-chip artists are seen as a safe place to park
money. As the prices rise, so does the incentive to buy more – and
bidding up works by a name already in your collection increases their
value even more, which might be really useful if you want to use it as
collateral for a loan one day.
Is there financial manipulation going on as well? A small group of
dealers and collectors are certainly encouraging this inflation, by
giving so-called guarantees on works sent for sale. Under this system,
they promise to buy a work of art at a secret price, so ensuring it
will sell. If it goes over their bid, then they share in the extra
money generated. So the work is sold even before it hits the auction
block. The system has become a fearsome weapon in the auction houses’
armoury when they are fighting for consignments: many blame it also
for inflating prices. Christie’s sale this month was underpinned by no
less than 22 guarantees, some given by outside investors, others by
the firm itself.
So at the upper reaches of the market, buying the top names is also a
pretty safe bet. Today, the world’s richest people are worth multiple
billions, so putting even a sliver of their fortune into art will
hardly dent their bank balances – and buying art is a sure-fire entry
ticket to what has become a very exclusive, billionaires’ playground.
– BBC Culture
