The Art Newspaper

“Hot” categories cool rapidly as crisis bites

Auction houses and art fairs put on a brave face, but cannot hide a steep decline in sales growth after the recent boom years

By Melanie Gerlis | From issue 196, November 2008
Published online 5 Nov 08 (market)

Heading for a crash? Yue Minjun’s Immortal Cranes, 1997,(detail) which failed to sell at auction at Sotheby’s Hong Kong

LONDON. October seemed to be the month when the wheels began to come off the global art market in the wake of turmoil in the wider economy. This was particularly evident at auctions in the recently “hot” categories such as Chinese and Aboriginal art, high-end contemporary works, and in categories that have been supported by a relatively limited core of collectors, such as Islamic art which has been dependent on the purses of Qatar and Abu Dhabi in recent months.

“If the Damien Hirst sale [Sotheby’s, 15 September] had been two weeks later, it would have been a bloodbath,” said Michael Hue-Williams, director of Albion Gallery.

As if to illustrate his point, the season’s design auctions are worth comparing: at Phillips de Pury on 25 September, total auction sales were above estimate, and 78% of lots sold; while at Sotheby’s on 18 October, total sales were below estimate and just 50% of lots sold. In the intervening 23 days, the credit crisis hit the European financial services sector as groups including Dexia, Fortis and Hypo Real Estate were bailed out; Britain’s Bradford and Bingley was nationalised; Wachovia (the fourth largest US bank) was rescued by Citibank and the US House of Representatives unexpectedly rejected, and later passed, a $700bn rescue plan for its financial system.

The auction houses are putting on a brave face, using phrases in their press releases such as “given the economic backdrop” (Christie’s) and “the sale was assembled in a very different economic environment from that which prevailed today” (Sotheby’s). But they have been furiously changing their risk profiles, shoring up cash reserves, and minimising incentives such as guarantees.

Contemporary art fairs also had a tough time in October. Many dealers at Frieze in London spoke of a slowdown and, while the organisers no longer supply transparent statistics, their follow-up press release headlined that sales had “exceeded expectations” without saying what these expectations were (as a comparison, last year’s equivalent headline was that the fair had seen “strong sales”.) Sales were also patchy at the following week’s Fiac fair in Paris, with buyers biding their time despite the event’s popularity.

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