It all began with money, as everything usually does. The Russian oligarchs have had lots of it available to spend on houses and yachts in the past few years, and now they are trooping into the art auction houses to buy up not only their own artistic heritage, but also some serious Western art.
Sotheby’s, which opened an office in Moscow a few weeks ago, has notched up, in the first six months of this year, sales of just under £60 million. This is an enormous amount considering that the company’s sales of Russian art for the whole of 2000 reached just £4 million.
The Russians have been buying all sorts of things, says Sotheby’s UK Chairman, Lord Poltimore. “Traditional works of art such as Fabergé eggs, porcelain and silver have been doing extremely well, but also Russian paintings from the 1850s up until the revolution. In fact, pretty well anything Russian is very hot at the moment and the buyers are 99 per cent Russians.”
Poltimore recalls a British woman who recently decided to sell a Russian painting given to her by her Russian grandmother. “She was amazed at the estimate of £100,000 which we put on it, and even more amazed when it sold for £250,000. It’s an extraordinary market and even Russian contemporary art from the 1970s is making colossal sums. The buyers are mainly oligarch-type people who have been buying houses all over the world and now want some art to put in them.”
The auction houses are also pleased to report that the Russians are not only buying Russian art. In New York earlier this year, a mystery middle-aged man, reportedly Russian, spent £51.5 million at a Sotheby’s auction on Picasso’s portrait of his mistress, Dora Maar with Cat. They are buying Old Masters, jewellery, furniture and rugs as well.
This is art as investment, art as status, art as another toy in the game of he-who-has-the-most-toys wins. In buying serious art, these Russian billionaires are acquiring social cachet and a tangible manifestation of their power. Just like the American industrialists of the early 20th century, the Fricks and the Carnegies and the Mellons, who bought only well-known names as investments, they are consciously acquiring status when they buy art. After all, great and memorable art has always been traded and appreciated as much for the power it symbolises as for its aesthetic qualities. Good art speaks of wealth, sophistication and power. As a commodity it can be useful.
But Russian activity is just one part of an overall art auction business that has been booming for the past couple of years. Never in living memory has there been so much interest in buying art as there is now. Across the categories, from Old Masters, to Impressionists to photographs, the international appetite has been steadily building into a major art market bull run.
Both Christie’s and Sotheby’s have recorded dramatically increased record sales for the first half of this year. A combination of high-quality consignments, a heady auction atmosphere and an increasing range and number of extremely wealthy buyers has boosted prices dramatically.
Auctioneers are consistently being taken by surprise at the frequency and degree to which records are being broken. Prices for popular blue-chip names such as Mark Rothko, Willem de Kooning, Roy Lichtenstein and Andy Warhol seem to rise and rise. The record price for a Lichtenstein, for example, has risen from $7 million (£3.7 million) to more than $16 million in the past three years, and prices for works by Rothko have ballooned too, rising from $11 million to $22.4 million in five years.
“Unlike previous periods of peak prices,” points out Lisa King, international managing director of Christie’s, “this boom is not fuelled by one particular category. In the late 1980s and early 1990s, for example, the high prices were largely in the Impressionists category and were being pushed up mainly by Japanese corporate buyers. This time the spread is much wider and more even. All categories are doing well, and the geographical spread of buyers is much wider than before. We are also seeing good sales not only at the top end of the market but in the middle levels too. So because of this broad spread of strength, we’re confident that markets will remain strong.”
Christie’s has recently opened an office in Dubai to tap a new market of buyers in the Middle East and the Indian subcontinent. “Our first sale this year since opening our office there raised $8.5 million for sales of Indian and Middle Eastern art,” says King. The company has also opened an office in Bombay. “There is a great depth of wealth in these emerging markets,” says King. In spite of the worsening political situation in the Middle East, Christie’s is confident of business growth in the region and is planning another Dubai sale in January of Indian, Middle Eastern and Western contemporary art and jewellery.
While these new markets are showing great promise for the auction houses, their traditional buyers in the United States and Europe are still active too. The most consistent of these are individuals, aged between 35 and 50, who have made huge amounts of money in the financial services industry. Steve Cohen, the Wall Street hedge fund manager is typical of such collectors, buying only at the top end of the market. He has bought Damien Hirst’s shark in formaldehyde and spent $32 million on Warhol’s Superman. He also owns Impressionist paintings and Old Masters and has a team of art experts paid to advise him.
Fuelling a heady auction atmosphere is also part of the secret to boosting sales, and Christie’s has just set up Christie’s Live website, which allows a wider audience to log on at home, watch an auction taking place and, of course, place bids. It is expecting heavy internet bidding on Christie’s Live for its New York sale in October of Star Trek memorabilia.
But how long can it last? “The business is without doubt cyclical,” says Poltimore. “But there are new markets, such as Russia, out there which we have only just begun to tap. The Chinese contemporary art market is going through the roof. These areas will grow for some time, and in the traditional markets the top end will always do well.”
A good indicator will come in November when Christie’s New York sells Andrew Lloyd Webber’s blue period Picasso; Christie’s is looking for a Russian, Chinese or Indian billionaire buyer.
The market most susceptible to a crash, says Cristina Ruiz, editor of The Art Newspaper, is the contemporary market. “The market calls it a ‘correction’ and it will happen — I would think in the next five years — because the market for contemporary art is full of speculators at the moment. There are buyers and dealers in it just to make money, hedge fund guys who like the risk attached. They tend to buy the next big thing straight out of art school, an untested name, at a vastly inflated price. Cecily Brown, who is a good artist, was being sold up till a couple of years ago for a few thousands pounds. Last year, in New York, one of her paintings sold for £1 million.”
Ruiz says that the boom in contemporary art is unsustainable: “Eventually the speculators will desert the market. The new galleries which have flourished in the East End will close. The really young dealers will crash. It happened in the early Nineties and it will happen again.”
