The art market today:
prudence, pragmatism or ...

MOSCOW / LONDON. Price and value - in the art market it is especially difficult to determine any laws regarding these categories. How to understand the real value of a piece of art? In fact, this continues to be a secret not only for fans, but also for professionals.

For example, for some time now, prices for the works of Edward Munch (Edvard Munch, 1863-1944) began to fall. Art dealers have already noted that during major auctions of works by a Norwegian expressionist, buyers prefer to wait and purchase paintings at a price lower than the preliminary estimate. And it all started after three years ago, on May 2, 2012, one of the versions paintings "The Scream" (The Scream, 1895) was sold for 119.2 million US dollars.

Another case is even more revealing - with the work of the British artist Damien Hirst (Damien Hirst, 1965), who is considered the richest contemporary artist. At the end of 2012, Bloomberg Businessweek reported that works purchased during the most profitable period for Hurst from 2005 to 2008 were then sold almost 30% cheaper. According to experts, the fall in prices for the work of Damien Hirst occurred due to the glut of the market and their easy availability.

A slightly different situation with the work of Pablo Picasso (Pablo Picasso, 1881-1973), which also had a "high performance." For over ten years, the Spaniard has been in the top 3 of the best-selling artists in the world, it seems that his paintings are not afraid of any shock. It is unlikely that this is connected only with the opportunity to say with pathos: “I have Picasso!”

All these facts prove once again that the art market is too illogical a segment of the business world, and, for better or worse, the market situation can change dramatically even with a slight breeze. So the "Munch case" experts shyly explain the "high expectations of sellers."

In November, Sotheby’s and Christy’s auctions in New York, displaying works by the Impressionists, contemporary and contemporary art, outlined the trend that has developed in the global art market: prudence and pragmatism.

Although the former taxi driver, and today the billionaire Liu Yian (Liu Yiqian) and acquired the magnificent canvas “Reclining Nude” (Nu Couché, 1917-1918) Amadeo Modigliani (Amedeo Modigliani, 1884-1920) for $ 170.4 million, The Art forecast Newspaper that the art market will feel a marked decline in the pace of the Chinese economy is coming true. After Black Monday, August 24, when the Shanghai Composite index fell 8.5% and the US Dow Jones lost 1,000 points in a week (the sharpest decline since 2011), everyone realized the grim truth: global economic growth slowed down.

After the financial crisis at the end of 2007 and the subsequent recession in 2008, the “islands of hope” for the art market were opened in the BRIC countries (Brazil, Russia, India and China, and since 2010 - BRICS, with South Africa). The idyll lasted for a relatively long time, to a greater extent at the expense of Chinese collectors. It is no secret that some of them are “high-end” customers. In May this year, at an auction in New York, three Chinese connoisseurs bought for 116 million US dollars the work of Picasso, Claude Monet and Vincent van Gogh. The most prestigious galleries open their branches in Hong Kong, hoping to attract buyers from the mainland, recalls The Art Newspaper.

What is happening on the art market in the BRICS countries?

The economic boom is almost always accompanied by a growing interest in art, and after the financial crisis in the USA and Europe, the BRICS countries aroused increased interest among art dealers.

Brazil’s economic growth due to a radically changed political situation, as well as due to an increase in oil exports, began in 2003 and continued until 2013. Today, the South American country is the eighth largest economy in the world. This ten-year period has been skillfully used by art dealers who have relied on collaboration with local artists and a permanent presence at exhibitions in Sao Paulo and Rio de Janeiro. The Brazilian audience showed great interest in various aspects of art and museums in the country have become centers of attraction for millions of visitors. At present, however, the reality is different: a weak national currency, corruption scandals, high social tensions, an unfavorable tax situation… Of all spheres, art was most seriously affected. Many collectors and philanthropists no longer feel so calm and free, and financial problems forced many museums to refuse or postpone a number of major exhibitions, notes The Art Newspaper.

The newspaper recalls that until recently, many of the Russian oligarchs actively participated in major international auctions. In 2008, at Sotheby’s auction in New York, the Russian billionaire Roman Abramovich paid 86.3 million US dollars for Francis Bacon (1909-1992) Francis Bacon (Triptych, 1976). After 2014, when the issues around the Crimean peninsula became acute on the agenda, and sanctions were imposed against Russia, the situation in the art market became like a shipwreck. Russian collectors continue to participate in major tenders, but their enthusiasm is noticeably weakened. The same applies to Russian galleries and artists, who until recently were widely present at all major world exhibitions.

The art market in India is not growing at such a fast pace; its interests are mainly concentrated on the segment of contemporary art. But after 2008, when one of the driving mechanisms of the Indian economy, “outsourcing,” became seriously ill, many art organizations and foundations were simply closed. The art market has survived in this country, but its volumes are very small. Revenue from Christy’s in Mumbai barely exceeded $ 12.1 million. Nevertheless, in September, in the multimillion-dollar city, the office of the Sotheby’s auction house was opened, whose representatives expressed optimism. According to them, over the past five years, sales of contemporary artists have increased by 42%, jewelry and drawings are in demand.

Despite the amazing growth of the art market in China, in fact, everything is a bit different than it seems. According to The Art Newspaper, official data in the country is often overstated, information transparency is in question. Over the years, China has been plagued by another problem - the lack of payment for the lots won. For this reason, in 2007, in particular, for auctions in Hong Kong, Sotheby’s introduced a pre-payment system, when auction participants had to pre-notify of interest in a particular lot and make a corresponding deposit. And if these problems can be somehow solved, then the real concern is the situation on the country’s stock market. "Black Monday" in August undermined the position of thousands of representatives of the Chinese middle class and the likelihood that they will ever return to the art market is negligible.

Price and value

How to determine the price of a work of art? To this key question for each participant of the art market, a direct and unambiguous answer can hardly be obtained.

Consider the 5 most expensive jobs to date

"Reclining Nude" Amadeo Modigliani , 170.4 million US dollars.

Fifth place in the ranking. Just a hundred years ago, the work of an Italian artist caused more indignation than admiration. In 1917, the police closed the “obscene” exhibition of Modigliani in Paris, which resulted in the poor financial situation of the artist.

"Algerian Women" (Les Femmes d’Alger. Version O, 1955) Pablo Picasso (Pablo Picasso, 1881-1973), 179.4 million US dollars.

The most expensive painting sold at a public auction. Picasso was inspired by the canvas "Algerian Women in Their Chambers" (Femmes d’Alger dans leur appartement, 1834) Eugene Delacroix (Eugène Delacroix, 1798-1863) and the work of his friend Henri Matisse (1869-1954) who often painted odalisque. After his death, Picasso joked: “Matisse left me his odalisque inheritance.” In June 1956, Victor and Sally Ganz (Victor and Sally Ganz) bought several “Algeria” for the Paris gallery at once - 10 paintings and drawings for $ 212,500. In 1997, “Version O” was sold for $ 31.9 million. Why in 2015 the price of the same picture became five times higher, art dealers can not explain.

“No. 6, Purple, Green, and Red” (No. 6, Violet, green, red, 1951) by Mark Rothko (Mark Rothko, 1903-1970), $ 186 million.

Art historians define the work of Mark Rothko as "abstract expressionism", but the artist himself said: "I do not define my paintings as abstract." He compared his work with children’s drawings and used large colored fields to express "his inner feeling, not the interference of the mind." In 2014, the painting "No. 6" was bought by Russian businessman Dmitry Rybolovlev, who a year later sued the Swiss art dealer Yves Bouvier. Bouvier bought the painting for $ 146 million, and then resold it to Rybolovlev for $ 186 million, with a margin of $ 40 million! The scandal shocked the market and caused massive checks in the Duty Free Zone (Freeport) near Geneva, which houses billions of dollars worth of art. According to the founder of Artprice, Thierry Ehrmann, quoted by the ArtGuide.com platform, “if the collapse occurs in Freeport, in Geneva, this could lead to the collapse of the entire world art market.”

"Card Players" (Les joueurs de carte, 1895) Paul Cézanne (1839-1906), $ 250 million.

Four of the five paintings in the Card Players series are in the collections of the Metropolitan Museum of Art in New York, the d’Orsay Museum in Paris, the Barnes Foundation in Philadelphia and the Curto Institute of Art in London. Since February 2012, the fifth work of the great French artist belongs to the royal family of Qatar. The series "Card Players" is rightfully considered a masterpiece of post-impressionism. When the previous owner of the painting, the Greek billionaire George Embiricos (1920-2011), was going to sell it, he had several buyers and among them one of the most famous gallery owners Larry Gagosian, who was ready to pay 220 million US dollars.

"When will you get married?" (Nafea Faa Ipoipo, When Will You Marry? 1892) Paul Gauguin (Paul Gauguin, 1848-1903), 300 million US dollars.

When Gauguin fled from France to Tahiti, he did not find the Garden of Eden there, as he expected, but spent these years very productively, writing about 80 paintings. Despite this, he ended his life at the age of 54 and in complete poverty.

Together, these five paintings cost 1,085.8 million US dollars. It is logical to ask the question again: “Why?”

Experts from the leading analytical agency in the art world, ArtPrice, have their own opinions on this matter. They believe that the reason for the high prices for top lots in recent years is that art is becoming the most stable and reliable investment, which is much more resistant to financial "turbulence" than stock markets. However, if we analyze more deeply, it becomes clear that there is another reality hidden from the majority. This is undoubtedly a topic for wider discussion.

Anna Sidorova © Gallerix.ru