How much is Twombly today, or how to explain the price boom in the art market
The global art market is booming. This was once again confirmed by the records set at the May 2015 auctions at Sotheby’s
. At the start of the week,
Pablo Picasso’s Women of Algiers (
Version O) and Pointing Man by Alberto Giacometti became the most expensive canvas and sculpture
ever put up for auction. The former has been sold for almost $ 180 million,
for more than $ 141 million.
For ordinary people, these figures are so incomprehensible that they are not even impressive. And yet: is the current artworks price hike an insanity or a cold calculation?
Millions, tens of millions, billions
The post-war and contemporary art sale at Christie’s on the night of 14th of May, 2015 also brought several surprises.
The most expensive painting auctioned was the No. 10 painting by Mark Rothko, 1958. An undisclosed buyer paid almost $ 82 million for it.
Robert Ryman, The Bridge, 1980
Lucian Freud, Benefits Supervisor Resting, 1994
the Benefits Supervisor Resting painting by Lucian Freud
broke the record for the cost of this artist’s works (
more than $ 56 million with the estimate $ 30 to 50). Two Roberts also reached their peaks,
The Bridge was sold for $ 20.6 million against the estimated 10—15 million) and Rauschenberg (
the buyer of the Johanson’s Painting "knocked out" his rivals with $ 18.6 million at the estimate of 4—6 million).
Robert Rauschenberg, Johanson’s Painting, 1961. Photo: Christie’s
According to The Economist
, over the past week,
Christie’s sales surpassed the $ 1 billion mark. In general,
at all world art auctions,
sales over the past year reached their record of $ 68 billion,
which is almost twice as high as in 2009 and above the previous peak of $ 64 billion in 2007.
Inflation, consultation, speculation
In early February 2015,
an unknown buyer gave $ 300 million
for Paul Gauguin’s When Will You Marry? painting,
which is the highest price ever paid for a work of art. A few days later,
another record was broken: an American bought the Abstract Painting 1986
for $ 46.3 million,
which made Gerhard Richter the most expensive living European painter.
On average over the past year, prices for contemporary and post-war art have risen by 19%.
Paul Gauguin. When Will You Marry?
Gerhard Richter. Abstract Painting 1986
The money that circulates in this market has given birth to a new kind of consultants. They choose paintings for their clients, not according to their aesthetics, but potential profit. Philip Hoffman, a fund manager that invests in art on behalf of wealthy families, notes a steady shift from buying for pleasure to buying for investment.
The recent years' rise in prices has also attracted a lot of speculators: almost three quarters of the acquisitions were made for investment (in 2012 — half).
This Untitled painting by Cy Twombly was sold on 13 May 2015 at Christie’s for $ 42 million 725 thousand.
Art is considered security not only by cynical financiers, but also by entire organizations. Investor institutions willing to protect their finances from inflation first entered the art market in the 1970s. For example, British Rail’s pension fund has invested 40 million pounds (about 3% of its funds) in oils on canvas. Although the return was good, the company got rid of the last masterpiece from its collection in 2003.
What do they conceal from the tax authorities
Unlike many other real assets, such as land or houses, art is movable property, which is very convenient for buyers who do not plan to tell the tax authorities about them.
The fourth painting from The Scream series (1893—1910) by Edvard Munch was bought by the financier Leon Black in May 2012 for $ 119.9 million. It was the most expensive canvas in the world sold at an auction until November 2013, when Elaine Wynn, the ex-wife of a gambling magnate, paid $ 142.4 million for Francis Bacon’s Three Studies of Lucian Freud triptych.
The risks of investing in art are however high. Masterpieces are not interchangeable. "The market, especially its top segment, is driven by the passions and whims of a small group of collectors," says Christie’s employee Orlando Rock.
Beauty makes you risk it all... But the list top is in control
The most popular genres and the most expensive pieces distort the concept of art as an asset.
Last year, almost half of total auction sales accounted for only half a percent of transactions.
The cost of works valued at more than € 200,000 is growing five times faster than that of cheaper things. The rest of the situation is as follows: despite the fact that the art market experienced a successful year in general, prices for Old Masters remained unchanged, and prices for Chinese arts and crafts lowered.
The third painting by Paul Cézanne from his The Card Players series (1892—1893) was sold in 2011 for approximately $ 250 million, and now occupies the second line in the list of the most expensive paintings in the world, purchased in closed deals.
Another caveat about "art investment": transaction costs, sometimes greater than 4%, make art a particularly expensive commercial asset. As a result, those who buy for aesthetic reasons tend to make higher returns than those who buy only for financial gain, says Philip Hook of Sotheby’s auction house.
"People buy art when they are confident about the future of their wealth," says art economist Clare McAndrew. In her opinion, the current boom in this market is a part of the overall economic recovery after the crisis. But if another recession comes, unlucky investors who have invested millions in art works will at least admire beautiful things that they cannot profitably sell.