Last Tuesday, Sotheby’s London began its summer auction season with a rough start at its Impressionist and Modern Art Evening Sale. While market fluctuations are inevitable, the lackluster results of the auction came as somewhat of a surprise, namely because of the high market values that the Imp-Mod category has accrued over the years.
At one point in time, it seemed that the monetary value of works by artists like Picasso, Monet, and the like had no limit. In the 1980s, works in this category garnered record highs at auction, causing their values to skyrocket. But by the looks of the recent sale, the values of these works seem to have plateaued.
To give you some of the specifics: of the 36 lots listed at Sotheby's last week––including works by major players including Picasso, Chagall, Monet, and Giacometti––only 26 were sold, 14 of which were secured by guaranteed buyers beforehand (making up a staggering 75% of the overall profits). Picasso's painting of Marie-Thérèse Walter, expected to demand $45 million, sold far lower on a single bid of £27.3 million ($36 million); and Giacometti's Le Chat sculpture, last sold for $21 million, went for just £12.6 million ($16.7 million). Of the 26 works sold, 10 went for a price below the estimated range, bringing in a low sum of just £87.5 million (about $116 million). Now that may seem like a lot of money to any normal person, but put in perspective it’s not a great outcome––considering the overall sum of sales was estimated to gross between £99.7 million to £124.6 million.
Alberto Giacometti's Le Chat, sold for £12.6 million, Image via Sotheby's
Christie's fared a bit better on Wednesday evening, with a few standout sales including Franz Marc's Drei Pferde, which sold for £15.4 million ($20.3 million)––over four times its expected value. While Christie's did produce better results––which might be attributed to the fact that only two of the lots were third-party guaranteed, a known bidding inhibitor––the trends of the Imp-Mod market have, as a whole, exhibited a period of stagnation. Both houses struggle to provide rare works that haven't been seen before. Anthony Brown, a partner at London's Connaught Brown, told The New York Times that "it's difficult to find fresh material... the collectors get phoned up all the time about works, and there are so many sales that it stops them getting excited and concentration on one. There's auction fatigue."
Now, before we begin to unpack what this might indicate for the future of the art market, first, let's take a moment to address the market as a whole (without all of the numbers). The monetary value of art can be one of the most baffling, seemingly arbitrary concepts of our modern world. Like many things too absurd to fathom, sometimes the best way we can attempt understand the art market is through comedy. One of the most apt explications of the art market I've seen to date comes from It's Always Sunny in Philadelphia, in the episode "Dee Makes a Smut Film." There's a lot to unpack here, but I'm specifically thinking of the role of Frank (Danny Devito), who, dressed like Andy Warhol and going by the name "Ongo Gablogian," convinces an art dealer that he is a big time collector. After calling every work in her gallery "bullshit" and ranting about the profound significance and value of a floor-standing air conditioner (he thinks it's art; it's not), he becomes entranced by one particular painting allegedly painted by a Holocaust survivor, and purchases it. When he later attempts to sell it back to the dealer, she says something along the lines of "the value is only what I'm willing to pay for it, which is nothing."
The point is that ultimately the art market is just that––a market. Values rise and fall over time, and are determined by a number of factors. The value of an artwork doesn't really have to do with the artwork itself as much as what someone is willing to pay for it.
We spoke with specialist Marion Maneker, of the blog Art Market Monitor, about how buyers can gage the fluctuations of the art market. She explained, "Art values are determined by future buyers, not past sales. Since art has no fundamental value, meaning you cannot apply the kinds of financial metrics that are applied to the cash flows of equities or bonds, future values remain a mystery."
Says Maneker, this mystery is "one reason we have art auctions." Art auctions allow us to gage the market value of a work, and to "match those sales against whatever chatter there is in the private market." She points out that the “art market has had a long, uninterrupted run of rising prices over the last eight years. At the same time, macro-economic forces (interest rates and global growth) have given sellers few reasons to offer up their works.” Because of this, she says, one of the most common trends she's seen is that “collectors have gone looking for artists and art works that seem to be undervalued and might gain in price from a rise in their art historical reputations.”
The fact is, there aren't too many surprises to come out of the Imp-Mod category, because, to put it frankly, all of the artists are dead. It's not every day that someone finds a rare Picasso print at a thrift store. On paper there may seem to be a lull in the market, however Maneker argues otherwise. "I don't think there is a lack of interest in Impressionist and Modern works," she states. "The most valuable works of art sold publicly or privately (to the extent we know of the sales) are predominantly within the Impressionist and Modern category. The all-time high for Giacometti, Picasso, Gauguin, Cézanne, and Modigliani have been achieved in the last few years. It takes a great deal of time to establish lasting value in art works. It doesn't always last either. Nonetheless, even though the top of the Imp-Mod market dominates the top of the art market as a whole, that doesn't mean all Impressionist and Modern art will remain valuable or track the value of the top works." Ultimately, she says, "there is less 'overlooked' material in the Impressionist and Modern category. That's one reason you are not seeing the same dynamic in that market."
Maneker makes a fair point. It's unlikely that the works of Picasso and Monet will ever not be highly valued and coveted. But it does seem that there is a shift happening in the art market––marked by a growing interest in collecting contemporary works. Maneker attributes this to collector's desire to acquire a lesser-known work by a known artist of the late 20th century in the hopes that the work will increase in value.
Judging by Tuesday night's Contemporary Auction at Sotheby's, this seems to be the case. The auction proved highly profitable, with highlights including Cecily Brown's The Skin of Our Teeth, which sold for three times its estimate, reaching £3 million; and Lucian Freud's Portrait on a White Cover, which was sold for a record-breaking £22.5 million after a reportedly "lively bidding battle on the phones and in the saleroom on its auction debut." The total profit of the auction came in at £110,239,550. While the artists sold are all established names (others included Hockney, Basquiat, and Peter Doig), this shift towards collecting late 20th century to present-day works could also mark an increased interest in contemporary, living artists. The question is, could the market shift so much that more living artists begin to earn a living during their lifetime and earlier in their careers? We'd certainly like to think so.
Aside from these major auctions, art collecting is actually at an all-time high. Art consultant and cofounder of London's Subject Matter Art, Kitty Dinshaw, says that "art collecting is definitely going in a more 'conscious' direction. People want to have art in their homes, they want to enjoy it every day." Working primarily with contemporary art sales, Subject Matter Art upholds the belief that living artists should be supported, and that this can be accomplished by a wider interest in art collecting. Says Dinshaw, "artists will make a sustainable living from their work if people buy it––it’s as simple as that."
Dinshaw and her cofounder, Liezel, were frustrated with the market, and with the fact that many artists were not being fairly compensated. "The art consultants we speak to are those who believe in encouraging their clients to build relationships with artists, a modern form of patronage in a way," says Dinshaw. "It’s no longer just about expensive pieces at art fairs and auctions." If more collectors buy based on what they like, rather than how much money it can earn them, we could be heading in an exciting direction where living artists can earn a living wage.
The true appeal of buying contemporary art is that oftentimes, it actually does have to do with the art, rather than really, really expensive trading cards. Says Dinshaw, "I personally think it is impossible to say which work or artist will prove to be a good investment and you should always buy what you like, so that if it goes up in value, it is only a bonus!"