Suspended animation A special report on the art market l November 28th 2009

ArtMarketSUR.indd 1 17/11/09 13:27:35 The Economist November 28th 2009 A special report on the art market 1

Suspended animation Also in this section The world’s biggest saleroom Auctions are moving online. Page 3

New or secondhand? The ins and outs of primary and secondary markets. Page 4

How to make art history Validation in the contemporary market. Page 6

The Pop master’s highs and lows Andy Warhol is the bellwether. Page 7

In‡atable investments The volatile art of Je Koons. Page 9

Treasures reclaimed The art market has su ered from the recession, but globalisation China is bringing home its works of art. should help it recover, say Fiammetta Rocco and Sarah Thornton Page 10 HE longest bull run in a century of art• world’s two biggest auction houses, Soth• Tmarket history ended on a dramatic eby’s and Christie’s, had to pay out nearly A whole new world note with a sale of 56 works by Damien $200m in guarantees to clients who had Art is becoming increasingly globalised. Hirst, ŒBeautiful Inside My Head Forever, placed works for sale with them. Page 13 at Sotheby’s in London on September 15th The current downturn in the art market 2008 (see picture). All but two pieces sold, is the worst since the Japanese stopped fetching more than £70m, a record for a buying Impressionists at the end of 1989, a sale by a single artist. It was a last hurrah. move that started the most serious contrac• As the auctioneer called out bids, in New tion in the market since the second world York one of the oldest banks on Wall Street, war. This time experts reckon that prices Lehman Brothers, †led for bankruptcy. are about 40% down on their peak on aver• The world art market had already been age, though some have been far more vola• losing momentum for a while after rising tile. But Edward Dolman, Christie’s chief vertiginously since 2003. At its peak in executive, says: ŒI’m pretty con†dent we’re 2007 it was worth some $65 billion, reck• at the bottom. ons Clare McAndrew, founder of Arts Eco• What makes this slump di erent from nomics, a research †rm‹double the †gure the last, he says, is that there are still buyers Acknowledgments †ve years earlier. Since then it may have in the market, whereas in the early 1990s, Sarah Thornton is the author of ŒSeven Days in the Art World (Norton, 2009). The authors would like to express come down to $50 billion. But the market when interest rates were high, there was their thanks to the many people who helped in the generates interest far beyond its size be• no demand even though many collectors preparation of this special report. A full list of cause it brings together great wealth, enor• wanted to sell. Christie’s revenues in the acknowledgments and sources is at mous egos, greed, passion and controversy †rst half of 2009 were still higher than in Economist.com/specialreports in a way matched by few other industries. the †rst half of 2006. Almost everyone In the weeks and months that followed who was interviewed for this special re• Pictures Mr Hirst’s sale, spending of any sort be• port said that the biggest problem at the Cover: Sam Taylor•Wood, ŒSelf•Portrait Suspended V, came deeply unfashionable, especially in moment is not a lack of demand but a lack 2004, C•print. Courtesy White Cube. D Andy Warhol, ŒEight Elvises, © The Andy Warhol New York, where the bail•out of the banks of good work to sell. The three s‹death, Foundation for the Visual Arts, Inc. coincided with the loss of thousands of debt and divorce‹still deliver works of art Shadi Ghadirian, ŒLike Everyday Yellow Glove, 2000•01. jobs and the †nancial demise of many art• to the market. But anyone who does not Courtesy Saatchi Gallery. buying investors. In the art world that have to sell is keeping away, waiting for meant collectors stayed away from galler• con†dence to return. An audio interview with the author is at ies and salerooms. Sales of contemporary The best that can be said about the mar• Economist.com/audiovideo art fell by two•thirds, and in the most over• ket at the moment is that it is holding its heated sector‹for Chinese contemporary breath. But this special report will argue More articles about the art market are at art‹they were down by nearly 90% in the that it will bounce back, and that the key to Economist.com/artview year to November 2008. Within weeks the its recovery lies in globalisation. The sup• 1 2 A special report on the art market The Economist November 28th 2009

2 ply of the best works of art will always be Warhol’s giant faces of Chairman Mao was limited, but in the longer run demand is Planet art 1 $17.4m, paid by Joseph Lau, a Hong Kong bound to rise as wealth is spreading ever Sales of fine art at auction, by country, 2008 property developer. It was the †rst major more widely across the globe. Warhol to go to the Far East. A month later United States Britain The World Wealth Report, published by 35.7 34.5 the Qatar royal family bought a Hirst pill Capgemini and Merrill Lynch, charts the cabinet, entitled ŒLullaby Spring, for spending habits of the rich the world over. £9.7m, the †rst major Hirst bound for the % It includes art as one of a range of luxury Other China Middle East. Everyone wants an iconic items they like to buy. According to the re• 9.3 7.7 work, which helps explain the global de• France port, in 2007 there were over 10m people Switzerland 6.0 mand for artists such as Warhol, Je Koons with investible assets of $1m or more. Last 1.5 and Mr Hirst‹and the eye•watering prices year that number dropped to 8.6m and Germany Italy such work can command. many rich people scaled back their Œinvest• 2.5 2.8 Source: Arts Economics ments of passion‹yachts, jets, cars, jewel• Masters of the art universe lery and so on. But the proportion of all Straddling all areas of the art market is a luxury spending that went on art in• lectors and museums tend to hold on to handful of individuals who have emerged creased as investors looked for assets that what they have. Old Master paintings, for as the key †gures in the art world in recent would hold their value in the longer term. example, have stuck at around 5% of both years. Chief among them is François Pi• The regional spread of buyers also Sotheby’s and Christie’s sales for many nault, a luxury•goods billionaire who is changed signi†cantly as some parts of the years. By contrast, contemporary art, also a noted collector of contemporary art world became relatively richer. During the which in the early 1990s accounted for less and the owner of Christie’s. Philippe Séga• boom the number of wealthy people in than 10% of Sotheby’s revenues, grew to lot, his French•born adviser, was behind Russia, India, China and the Middle East nearly 30% of greatly increased revenues one of the biggest deals involving a single rose rapidly. In 2003 Sotheby’s biggest buy• by last year. Dealers and auction houses work of art, the private sale of Warhol’s ers‹those who purchased lots costing at now sell more post•war and contempo• 1963 painting, ŒEight Elvises, to an anony• least $500,000‹came from 36 countries. rary art than anything else. This report will mous buyer for over $100m. By 2007 they were spread over 58 coun• concentrate on that part of the market, Mr Ségalot is also believed to be advis• tries and their total number had tripled. which accounts for about half the world’s ing the royal family of Qatar, which in the That upward trend is still continuing, art trade and most of the excitement. past two years has spent large sums buying and many of the new buyers take a partic• Part of the extra demand has come from modern art at auction, including record• ular interest in the art of their own place a large increase in the number of muse• breaking works by Mark Rothko and Mr and time. Last year China overtook France ums. Over the past 25 years more than 100 Hirst. Steven Cohen, an American hedge• as the world’s third•biggest art market after have been built, not only in America and fund billionaire, also owns works by War• America and Britain (see chart 1), and some Europe but also in the sheikhdoms of the hol, Mr Hirst and Mr Koons. Mr Cohen 25% by value of the 100,000•plus works of Persian Gulf and the fast•growing cities in used to be a sizeable shareholder of Soth• art sold by Christie’s went to buyers from Asia; sometimes in partnership with West• eby’s and is still an important provider of Russia, Asia and the Middle East. ern institutions, such as the Guggenheim liquidity to art buyers. Auction records remain dominated by or the Louvre, sometimes on their own. The popularity of blockbuster art exhi• Impressionist and modern works (see ta• Many of these institutions have made bitions and the emergence of buyers with ble 2), but the biggest expansion in recent their mark by buying contemporary art. a di erent cultural history have helped years has been in contemporary art. Prices Over the same period the number of change tastes. Artists such as Edvard of older works keep going up as more peo• wealthy private collectors has also in• Munch and Vasily Kandinsky rose sharply ple have money to spend, but few such creased many times over, and so has their after solo shows in London and New York. works become available because both col• diversity. The record price for one of Andy Alexei von Jawlensky and Emil Nolde 1

What am I bid? 2 Top ten prices at auction 2008 $m 2009* $m Francis Bacon, Triptych , 1976 86.3 Henri Matisse, Les Couscous, Tapis Bleu et Rose, 1911 46.5 Claude Monet, Le Bassin aux Nymphéas , 1919 80.5 Andy Warhol, 200 One Dollar Bills, 1962 43.8 Kazimir Malevich, Suprematist Composition , 1916 60.0 Constantin Brancusi, Madame L.R. , 1914 -17 37.8 Francis Bacon, (Untitled) Triptych , 1974-77 51.7 Eileen Gray, Dragons Armchair , 1917-19 28.3 Mark Rothko, No. 15 , 1952 50.4 Piet Mondrian, Composition avec Bleu, Rouge, Jaune et Noir, 1922 27.9 Claude Monet, Le Pont du Chemin de Fer à Argenteuil , 1873 41.5 Alberto Giacometti, L’Homme qui Chavire , 1950 -51 19.3 Francis Bacon, Study of Nude with Figure in a Mirror , 1969 39.8 Edgar Degas, Petite Danseuse de Quatorze Ans , 1922 18.8 Fernand Léger, Étude pour ‘la Femme en Bleu’ , 1912-13 39.2 Piet Mondrian, Composition avec Grille 2 , 1918 & 1942 18.6 Edvard Munch, Vampire , 1893-94 38.2 Claude Monet, Dans la Prairie , 1876 16.2 Edgar Degas, Danseuse au Repos , 1879 37.0 Fernand Léger, La Tasse de Thé, 1921 14.9

Source: Christie’s and Sotheby’s *Year to date The Economist November 28th 2009 A special report on the art market 3

2 were regarded as specialist interests until tioneers, both at sales and privately. Bonhams, which is based in London but Russian collectors began seeking them out. Rising costs brought trouble to many has several oˆces abroad, and Doyle in Zhao Wuji used to be just another Chinese old•fashioned †ne•art dealer emporiums. New York. The other half is generated by painter•in•exile; now he is recognised as an In London Christopher Gibbs has sold his private dealers and galleries that are noto• Abstract Expressionist master in‡uenced stock and Partridge is in administration. In riously secretive. One of the biggest private by Paul Klee and praised by both Joan Miró Paris Galerie Segoura has closed, as has deals in recent years came to light only be• and Pablo Picasso. Salvatore Romano in Florence. Many deal• cause the details were disclosed in an ers now prefer to take art works on con• American court following the Bernard Ma• How to sell it signment, matching sellers to buyers for a do scandal. Last July ten paintings by One of the biggest changes since the mar• commission rather than investing in stocks Rothko and two sculptures by Alberto Gia• ket last peaked in 1989 has been the expan• of art. cometti were sold by a New York †nancier sion of the auction houses and the change About half the market’s business, reck• to help repay Mr Mado ’s investors. A in the nature of the dealer business. Twen• ons Ms McAndrew of Arts Economics, is mystery buyer spent $310m on the works. ty years ago auction houses sold to dealers, conducted at public auctions, with Chris• Two dealers earned $37.5m in fees. and dealers sold to private customers. To• tie’s and Sotheby’s taking the lion’s share. By comparison with that private world, day many collectors are advised by auc• Smaller houses include Drouot in Paris, Sotheby’s and Christie’s auction business 1

The world’s biggest saleroom Auctions are moving online

OR centuries raising your hand was the art. But in a recent sale of post•war Italian Fway you bid at auction, whether you classics directly after its contemporary were buying sheep or Meissen shepherd• sale, a small Giorgio de Chirico oil of a esses. In the 1960s auction houses across white horse by the seashore, dating from the world introduced bidding by tele• the 1940s, was sold to an online bidder for phone, but the take•up was slow. Most £43,250, including commission and fees. would•be buyers used the phone to leave Christie’s is con†dent that online bid• a bid with the auctioneer rather than to ding has huge potential that can be un• issue live instructions, round by round. locked at modest cost. ŒAll I can say, com• Now technology has opened up an• ments Andrew Foster, the president of other possibility: online bidding. The auc• Christie’s Asia, Œis that it has been an in• tion houses are divided. Matthew Girling, credibly worthwhile investment. It was Bonhams’s chief executive for Europe and pro†table within 12 months. the Middle East, is against it: ŒWe’re not Others are going the same way. ATG building an online business. Sotheby’s Media, a British company that already ser• has an elegant website that allows cus• line bidders were new to the auction vices 450 auctioneers worldwide, putting tomers to browse its catalogues, look at house. The majority of its online shop• their catalogues online and allowing buy• sales †gures going back all the way to 1998 pers are in America and Britain, followed ers to leave bids, is about to launch a new and get real•time auction results for sever• by France, Italy and the Netherlands. On• Chinese arm to its existing online venture. al sales at once. But it stops short of letting line bidding tends to be strongest for items This will be run in partnership with Qi Qi clients take part in auctions online, except that buyers can preview elsewhere, such Jiang, a young Shanghai entrepreneur for wine. as watches, jewellery, wine and photo• who combines developing her own busi• Christie’s, by contrast, has gone the graphic prints. The price for lots bought ness with studying for a doctorate in Ori• whole hog. At the start of every sale the online last year averaged $6,000, though ental art at Oxford University. Auction• auctioneer welcomes those in the room some people spend much more: in April eers in China will be charged an £800 and then takes a moment to look up at the 2008 a Stradivari violin, ŒThe Penny, was entry fee, in addition to the usual 3% of the camera and greet those who are following sold for $1.3m in New York to a previously hammer price‹much the same as in Brit• it online. Other auction houses dismiss unknown online bidder in Russia. ain, where they pay £770, even though this as a theatrical gesture, aimed at mak• The psychology of buying at auction there are extra training and other develop• ing bidders in the saleroom feel they are still tends to favour the bidder in the room. ment costs to be covered. The two biggest connected to the whole planet. But the †g• He or she is part of the audience and can Chinese auctioneers, Beijing Poly and ures tell their own story. judge more easily whether competing China Guardian, seem to think it worth• In 2008, Christie’s says, £57m was bid bidders are approaching their limit. That while: they have applied to join. or underbid using its online LIVE system, is one reason why Christie’s has been Telephone buying took 25 years to and just over a †fth of its lots were sold slow to introduce online bidding in its catch up with the saleroom. Online bid• that way. More than a quarter of the on• high•end evening sales of contemporary ding is likely to get there a lot faster. 4 A special report on the art market The Economist November 28th 2009

2 looks like a model of transparency. Al• mains bigger there than its rival. Christie’s, er Christie’s bought Haunch of Venison, though buyers and sellers are rarely which has long been especially strong in another high•pro†le dealer set up in 2002, named, the auction price is public. Yet the Far East, has put a lot of e ort into Chi• whose founders included a former direc• even here there are dark corners. The lead• na. Foreigners are not allowed to own auc• tor of Christie’s contemporary•art depart• ing auctioneers o er inducements such as tion houses there, but Christie’s has got ment. Noortman gave Sotheby’s an entry guaranteed prices to persuade sellers to around that by signing a licensing agree• into the Maastricht Art Fair, the pre•emi• part with their treasures, and generous ment with a leading Chinese auctioneer. nent dealers’ fest, and Haunch of Venison terms of payment for buyers. Both houses have their eye on the Middle helped make Christie’s Mr Pinault the big• One thing that di erentiates the two East. Christie’s holds regular auctions in gest art trader in the market. Both galleries auction houses is their ownership struc• Dubai, of which its art and jewellery sales operate independently of the auction ture. Sotheby’s is a quoted company are the most successful. Sotheby’s has houses, but the relationships are close. whereas Christie’s, once listed, was taken opened an oˆce in Qatar which is impor• private in 1999 by its current owner, Mr Pi• tant for its relationship with the Qatar roy• All things to all men nault. Christie’s business has since ex• al family, one of its biggest clients. Both auction houses have also put a lot of panded hugely, partly thanks to Mr Pi• The response of both auction houses to e ort into advising buyers on how to im• nault’s pivotal position in the inter• the current slump has been broadly simi• prove their collections. As Jussi Pylkkanen, national art world. Even though the lar: sta cuts, unpaid leave, a squeeze on Christie’s European president, says, ŒWe’re company can pick and choose what infor• salaries, slashed marketing and travel bud• much more than an auction house now. mation it wants to reveal, it has in fact be• gets, and an edict that the glossy auction The recession has made many collectors come more open over the past ten years. catalogues, which in the boom cost each of nervous about o ering their treasures at Sotheby’s, for its part, is still smarting them £25m a year to produce, were no lon• auction, so they are selling them privately. from the public beating it received in ger to be handed out like chocolate drops. In 2007 Christie’s chalked up private sales America nearly a decade ago when its With a hugely expanded international of $542m and Sotheby’s of $730m, which chairman, Alfred Taubman, and its chief client base, it was only a matter of time be• means the two auction houses are now executive, Diana Brooks, were found guilty fore both auctioneers started to muscle in among the world’s biggest private dealers. of conspiring with Christie’s to †x com• on areas that had previously been the pre• Both often get calls like the one Sotheby’s missions. Mr Taubman served ten months serve of private dealers, matching buyers recently took from a Moscow collector of a one•year prison sentence; Mrs Brooks and sellers and selling new art rather than with $2m to spend on an Œoptimistic Cha• was given six months’ house arrest, a items that had already been in the market. gall oil, Œnot too feminine and no more $350,000 †ne and 1,000 hours of commu• Sotheby’s proved to be much the more than a metre in height. ŒWe put out the nity service. No one was charged at Chris• ruthless of the two. All the lots in Mr Hirst’s word and immediately received several of• tie’s, which had blown the whistle on the September 2008 sale, for example, had fers from our oˆces in London, Geneva commission•†xing. Sotheby’s lives in fear been consigned to Sotheby’s directly from and New York, says Mikhail Kamensky, of the regulators and discloses only as the artist’s workshop, which shocked deal• the †rm’s head of CIS business. much †nancial information as it has to. ers who had not previously thought of the In 2007 private deals accounted for 8.7% In the decade since the scandal both auction houses as direct competitors. of Christie’s business. Mr Pylkkanen ex• auction houses have concentrated on ex• In 2006 Sotheby’s paid $56.5m for pects that †gure to go up to 20% of its rev• pansion. Sotheby’s was the †rst auctioneer Noortman Master Paintings, a leading enue within three years. That should put to become interested in Russia and re• dealer in Old Masters. Less than a year lat• the wind up private dealers. 7 New or secondhand?

The ins and outs of primary and secondary markets

ONTEMPORARY art is bought in two the recent work of living artists was rarely sian Gallery added new showrooms in C main ways that appeal to quite di er• resold, but for the past decade contempo• Rome and Athens to its existing ones in ent kinds of temperament. The primary rary art has accounted for a growing pro• New York, London and Los Angeles. market o ers the work that emerges from portion of the auction houses’ sales vol• Primary•market collectors often like to artists’ studios and is often displayed in ume. In 2007, at the height of the boom, meet the artists as well as look at their carefully curated gallery shows. The sec• total auction sales of post•war and con• work. For them, studio visits or post•ver• ondary market involves the resale of art temporary art exceeded those of Impres• nissage Œartist’s dinners (a well•known objects, either through private dealers or sionist and modern. art•world ritual) are not only part of the via auction houses. Except for charity auc• Over the same period the number of pleasure of collecting, they are an essential tions and the one•o Damien Hirst ŒBeau• primary dealers also rose rapidly. Many aspect of researching and developing their tiful Inside My Head Forever sale, which galleries greatly expanded their exhibition collections. featured paintings and sculptures straight space and took to running several solo In the primary market the collector out of the artist’s studio, primary auctions shows side by side. Some galleries opened who o ers the most money is not neces• are almost unheard of. Twenty years ago up in foreign cities. For example, the Gago• sarily the one who wins the work. Galle•1 The Economist November 28th 2009 A special report on the art market 5

cession. Collectors who may have stopped A cooler climate 3 making regular gallery rounds still like to Hot tickets 4 Prices for 50 leading contemporary artists at go to the fairs for an update on the latest Contemporary-art prices at auction auction, Q1 2003=100 work and, having taken the trouble to at• Selected artists, 1988=100 500 tend, do not want to return empty•handed. 4,000 Collectors who buy most of their art on Jeff Koons 3,500 Francis Bacon 400 the secondary market are di erent beasts. 3,000 Andy Warhol They tend to see the primary market as 2,500 300 murky, time•consuming and hierarchical. Damien Hirst 2,000 200 They prefer the Œdemocracy of the auc• tion and the buzz of being in the sale• 1,500 100 room‹or perhaps the convenience of bid• 1,000 500 ding on the phone from the comfort of 100 0 home. They feel reassured by the auction 0 2003 04 05 06 07 08 09 houses’ sophisticated marketing, global 1988 90 95 2000 05 09 Source: artnet Source: artnet networks and glossy catalogues, and by the presence of an underbidder who is 2 rists will have a circle of collectors to willing to pay a similar price. to achieve the highest price possible. If a re• whom they extend special privileges. This Artists often resent the huge pro†ts that cord price turns out to be a ‡uke or if the was more important during the boom, collectors can make by reselling their work work fails to sell‹both of which can dam• when many collectors might be chasing a at auction. Outsiders watching art being age the perception of an artist’s worth‹ single painting by a coveted artist, but in auctioned o for a lot of money tend to as• they move on to promoting someone else. general it still holds true. sume that the artists bene†t, but in many Increasingly dealers are working in When primary collectors Œbuy in countries, including America, they get both markets, either by developing a sec• depth, meaning that they acquire a lot of nothing at all when their work is resold, ondary•market practice in the backrooms work by a single artist, they can become in• and in Europe they receive only a tiny of their galleries or by establishing a rela• tegral to an artist’s career. The gallerist will Œdroit de suite. Nor is the relationship be• tionship with a living artist that gives them often give such supporters †rst pick of new tween secondary and primary prices access to work fresh from the studio. These pieces or even let them reserve works well straightforward. For example, an artist dealers are particularly active in the auc• in advance of a show. Collectors who Œ‡ip such as David Hockney can †nd that his tion room, both Œsupporting their artists work at auction may have their privileges work from the 1960s commands higher by bidding on behalf of clients and buying withdrawn or †nd themselves excluded prices than his more recent output. work for their stock if it is going for less from the gallerist’s coterie. That may hurt: Primary dealers usually like to keep than expected. And although the interests many of them greatly value the opportuni• quiet about their asking prices. They try to of the two markets sometimes clash, they ty to acquire a potential masterpiece. nudge them up gently so as not to choke o arguably need each other. These days the demand. By contrast, secondary•market resale of contemporary art helps to inject Picking winners dealers, and particularly the auction cash into the primary market. Many more Primary prices are usually lower than sec• houses, have no vested interest in the ca• people buy art, and at higher prices, be• ondary ones, but the collectors who shop reer of any particular artist and simply try cause they know they can sell it on. 7 in this market are not so much bargain• hunters as risk•takers. In a few years’ time their purchase may be worth ten times what they paid for it; conversely, they may not be able to sell it at all. It all depends on the stature of the artist in question. If he or she is Œemergent‹which usually means young, but can also refer to older artists who have only recently signed up with a well•known gallery‹the risk is greater, but so is the potential return. Apart from exhibitions in private galler• ies, the primary market revolves around art fairs. The upper ‡oor at Art Basel in Switzerland, most of the stands at Art Basel Miami Beach in Florida and the entire Frieze Art Fair in London (not to mention many second•tier regional fairs in cities such as New York, Turin, Berlin, Shanghai and Buenos Aires) are important meeting places for the primary market. These fairs proliferated during the boom and still seem to be doing reasonably well in the re• Eye on Art Basel 6 A special report on the art market The Economist November 28th 2009

How to make art history

Validation in the contemporary market

REAT art stands the test of time, After graduation, the biggest hurdle is sculptress aged 97, but has also just exhibit• ŒGgoes the adage. But how exactly is †nding a good dealer to represent you. ed work by Subodh Gupta, 45, a rising Indi• the work tested? Put another way, in a ŒValidation is at the core of our business, an post•modernist. Matthew Marks Gal• world where anything can be art and explains Iwan Wirth, a dealer with galler• lery in New York represents Jasper Johns, where concept is king, how do works by ies in London, Zurich and New York. ŒIt is an American master aged 79, and has just living artists accrue value? The answer lies our expertise. Credibility is what an artist signed Paul Sietsema, a 41•year•old Los beyond the art market, in the broader ter• needs in the long run. When recruiting Angeles•born artist and †lm•maker. rain of the art world where artists and their new artists, the quality of their work is Emerging art galleries often need the oeuvres undergo a complex †ltering pro• most important, but with young artists a approval of prestigious art fairs to be taken cess that insiders call Œvalidation. dealer may have only a few years of work seriously. The four leading fairs, in Basel, Validation is not straightforward. If you to consider. ŒSo you do a risk•assessment London, Miami and Paris, are oversub• are pursuing a career in accountancy, you based on their character, says Mr Wirth. scribed and turn away many applicants. are confronted with a series of hurdles; They rely on rigorous selection commit• clear them all, and you have arrived. For Reputation management tees to impose quality control and do their artists, life is much more complicated. In a A gallery’s credibility rests on its stable of best to avoid any hint of cronyism. Accord• social setting where the oˆcial rule is rule• artists. The location, scale and aesthetics of ing to Amanda Sharp, co•owner of the breaking, the artist who crawls under the a gallery’s exhibition space inspire con†• Frieze Art Fair, ŒFrieze’s number one un• †rst hurdle, knocks over the second and dence, and strong curatorial connections ique selling point is integrity. We try to does a strange scissor kick over the third and monied clients make a di erence. But make decisions in as balanced and in• may ultimately win the greatest recogni• what matters most is a cluster of artistic formed a way as possible. tion. Almost by de†nition, a competent reputations. When recruiting, dealers of• The most powerful validators have a artist is an insigni†cant one. ten act on the recommendations of artists reputation for independence. Paul Schim• Still, there are moments when artists who are already on their roster. It helps mel, chief curator of the Museum of Con• gather endorsement from the disparate lend coherence to the gallery’s programme temporary Art in Los Angeles, says that factions of the art world. Most of those un• and acknowledges that other artists are Œinstitutions validate by doing rigorously der 50 now have a †ne•arts degree. Attend• important arbitrators. researched shows that put aside politics. ing the right art school‹usually, but not al• Established artists lend gravitas to the We maintain our credibility by working ways, in or near a city with a lively art younger artists in the gallery’s stable, with a real variety of artists and curators scene‹is not only a means of acquiring whereas the young provide the frisson of that reveals many points of view. Mr knowledge, but also of establishing a peer the new. Hauser and Wirth, for example, Schimmel prefers the term Œilluminate to group and a network of contacts. represents Louise Bourgeois, a French Œvalidate, explaining that Œmy job as a cu• rator is to make the art matter. Artworks are among the few commod• ities whose status is a ected by their own• ers, so dealers take great care in Œplacing the works. The ideal buyer is a public mu• seum of modern art, but in recent years collectors with private foundations, such as Glenn Fuhrman in New York and Don and Mera Rubell in Miami, have made a big impact on the primary market. In coun• tries where the state shows little interest in contemporary art, the †nancial support of collectors is vital. In Italy, for example, the intelligent curating that accompanies the philanthropic e orts of fashion houses such as Prada and Trussardi and private in• dividuals such as Patrizia Sandretto re Re• baudengo, a collector in Turin, turns their foundations into important trial grounds for young artists. Collectors who sell o their works too quickly risk being seen as collector•dealers Unmistakably Bourgeois or investor•speculators, which detracts 1 The Economist November 28th 2009 A special report on the art market 7

2 from their prestige (a fate that has befallen Since Andy Warhol, media exposure lowed by a backlash if enough people feel Britain’s Charles Saatchi). As it happens, has been increasingly important and a that the artist does not deserve it. During those who buy for the sake of the art rather handful of artists are celebrities of sorts. the boom Anselm Reyle, a German artist than for pro†t or to impress their peers are An artist’s work needs to accumulate a who makes large series of decorative ab• often the most in‡uential. Dakis Joannou, body of interpretation and, better still, a se• stractions, was doing well at auction for a an acclaimed connoisseur with his own ries of narratives about the creation of the while, but his museum exposure was limit• museum in Athens, explains that ŒI am not work that brings it to life. Artists’ personal• ed and it was widely felt that his prices had interested in power but engagement. I like ities are important to the marketability of become unduly in‡ated. They have since to put the work in dialogue with other art, their oeuvre. To that end, scathing reviews come down dramatically. to give it the opportunity to speak, to see can be just as useful as good ones. They Ideally, the market follows other mech• whether it can stand on its own feet. suggest the work has touched a nerve, vio• anisms of validation. ŒWhen the prices go Repeated display in di erent contexts lating good taste or established norms. sky•high, artists’ careers can become un• tests the work as well as building an audi• hinged and it can be psychologically diˆ• ence for it. Within a given museum, project You get what you pay for cult for them, says Victoria Miro, a Lon• spaces, group shows and solo retrospec• Auction•house specialists suggest that don dealer. ŒAuction houses have tives o er di erent platforms. And not all there is a strong correlation between quali• enormous short•term in‡uence but it is a museums are equal. The Museum of Mod• ty and price. As Amy Cappellazzo, deputy bad sign if careers are managed there. ern Art in New York used to be the most chairman of Christie’s in America, puts it, Validation is closely linked to the per• important judge, but now institutions such Œa high price can result from two people ceived integrity of artists and the lasting as Tate Modern and the Centre Pompidou feeling emotional about an object in a way truths evoked by their work. It is a compli• have the muscle to ratify artists. Even so, that de†es the natural market. However, cated process in which the art world’s the authority of the institution is no guar• the best is worth more, by a large margin, many di erent constituencies‹artists, antee of success; a poorly received exhibi• than just a nice example. The auction pro• dealers, curators, critics and collectors‹all tion in a renowned museum can be worse cess roots out quality and rewards it. play a part. Unless they all believe in it, the than no show at all. But a high price at auction can be fol• work will not stand the test of time. 7 The Pop master’s highs and lows

Andy Warhol is the bellwether

IGHT ELVISES is a 12•foot painting the three most traded artists. In 2007, at the ŒEthat has all the virtues of a great Superstars 5 height of the boom, auction sales of his Andy Warhol: fame, repetition and the Value of sales at auction, $m work added up to $428m, the highest turn• threat of death. The canvas is also awash over of any artist. In the past two years the 450 with the artist’s favourite colour, silver, and Warhol †gures have dropped steeply and the prol• dates from a vintage Warhol year, 1963. It 400 i†c Picasso has returned to the top spot (see did not leave the home of Annibale Berlin• 350 chart 5), but nobody seems too worried. gieri, a Roman collector, for 40 years, but in 300 Alberto Mugrabi, whose family owns 250 autumn 2008 it sold for over $100m in a Picasso some 800 Warhol works, notes that Œtwo deal brokered by Philippe Ségalot, the 200 years ago we were selling ten Warhols a French art consultant. That sale was a 150 month, now we’re selling two a month, world record for Warhol and a benchmark 100 but we’re selling them for the same price. that only four other artists‹Pablo Picasso, 50 Either we get our price or we don’t sell the Jackson Pollock, Willem De Kooning and 0 painting. The market appears to agree that 1985 90 95 2000 05 09 Gustav Klimt‹have ever achieved. prices for the best Warhols are recession• Source: artnet Warhol’s oeuvre is huge. It consists of proof. Earlier this month a 1962 work, Œ200 about 10,000 artworks made between One Dollar Bills, sold for $43.8m, the sec• 1961, when the artist gave up graphic de• only 20 ŒMost Wanted Men canvases, for ond•highest price for a Warhol at auction. sign, and 1987, when he died suddenly at example, but about 900 ŒFlower paint• ŒWarhol really consists of two mar• the age of 58. Most of these are silk•screen ings. Warhol also made sculpture and 35 kets, explains Brett Gorvy, co•head of paintings portraying anything from Camp• experimental †lms, which contribute Christie’s contemporary•art department. bell’s soup cans to Jackie Kennedy and greatly to his legacy as an innovator. ŒOne market chases ultra•rare, art•histori• Mao Zedong, drag queens and commis• The Warhol market is considered the cally relevant paintings from the 1960s. The sioning collectors. Warhol also created bellwether of post•war and contemporary other is a perfect volume market where 24• Œdisaster paintings from newspaper clip• art for many reasons, including its size and inch Flowers and single Jackies trade like pings, as well as abstract works such as range, its emblematic transactions and the any other commodity. Behind Warhol’s shadows and oxidations. The paintings artist’s reputation as a trendsetter. Since †ne•art market lies an active trade in limit• come in series of various sizes. There are 2002 Warhol has consistently been one of ed•edition prints and, beyond that, a range 1 8 A special report on the art market The Economist November 28th 2009

$100m•worth of Elvises

2 of consumer goods that are licensed to use ŒPicasso and Mozart were incredibly prol• in demand is Marilyn Monroe. Warhol images. The cover of Madonna’s i†c. If the production is good, it doesn’t Warhol made his †rst Marilyn paint• new album of greatest hits features a matter. It damages the market but not the ings in August 1962, shortly after the actress close•up of the pop star as Warhol’s Mari• art. It’s irrelevant to the work itself. Vin• committed suicide. He started with a series lyn Monroe. ŒOne reason why the Warhol cent Fremont, an art adviser who worked of small solo Marilyns known as the Œ‡a• market is so vibrant‹even if it has receded for Warhol from 1969 until his death, says vours and graduated to larger, multiple in this economy‹is that there is something that ŒAndy liked quantity. Ten was usually ones. When a selection of the paintings incredibly cool about Andy, says Larry better than one. Indeed, Warhol was such was exhibited that year, they were pro• Gagosian, a dealer who is active in the a shopaholic that when Sotheby’s auc• nounced Œbeautiful, vulgar, heart•break• Warhol market. ŒHe feels like a living artist. tioned the contents of his home it took ten ing evocations of the Œmyths of our time. He is incredibly present in our culture. days to sell the 10,000 objects. Two years later Warhol made †ve more Warhol’s importance as a symbol is im• Warhol’s death coincided with a boom solo Marilyns in a larger size, which are mense. He is not just famous; he has been a in the art market, and his work did well at now among the most coveted in the War• dominant in‡uence on many of the most auctions in 1988 and 1989. However, with hol oeuvre. They are exquisitely rendered successful artists today, including Je the bust in 1990 sales dropped dramatical• and gained extra allure when an unstable Koons (see box, next page), Damien Hirst, ly, and by May 1993 the Warhol market was member of Warhol’s entourage †red a gun Takashi Murakami and Richard Prince. He pronounced all but dead when 16 paint• at the forehead of ŒBlue Marilyn, punctur• rede†ned the role of the artist as a Œcreative ings came up for auction and only two ing the ŒRed Marilyn stacked behind it. director‹more of an architect than a found buyers. Yet in 1996 Warhol’s status The damage became the stu of legend. craftsman‹who is acutely aware of the was propelled upwards by a single sale Those two paintings are now owned by media resonance of his art. ŒIn future War• that harked back to his †rst solo show. In the two men with the best Warhol collec• hol will be much more important than Pi• 1962 Irving Blum, a Los Angeles dealer, had tions in private hands. Peter Brant, a Con• casso, says Gerard Faggionato, a London exhibited 32 hand•painted canvases de• necticut newsprint magnate, bought the dealer, Œbecause he is more relevant to the picting tins of soup, then acquired the en• blue version in 1967 for $5,000. ŒA Cadillac younger generation. tire series for $1,000, paying Warhol in ten cost $3,500. It was a lot of money back monthly instalments. Blum held on to the then, he says. Philippe Niarchos, a Paris• Enigma variations paintings until 1996 when he sold Œ32 based shipping heir, bought ŒRed at Chris• During Warhol’s lifetime and for a good Campbell’s Soup Cans to the Museum of tie’s in 1994 for $3.6m, a bargain compared while after his death, the art world could Modern Art in New York for $15m. In addi• with the $4.1m which it sold for during the not decide whether the artist was super†• tion to setting a new benchmark price, the 1980s boom. The three other Marilyns in cial or deep, subversive or conservative, sale signalled Warhol’s canonisation. this 1964 series are owned by Samuel I. boring or provocative. The lack of consen• In an oeuvre so vast, what makes one Newhouse, Doris Ammann and Steven sus contributed to his current market dom• Warhol more valuable than others? Rarity Cohen (who bought his for $80m in 2007). inance by keeping his ideas in the air. and aesthetic issues such as the quality of Many connoisseurs think that Warhol’s Warhol’s tendency to make more work the screen, clarity of the †gure, intensity of death•and•disaster paintings, which ap• than his collectors could possibly buy ‡ew the colour and size of the picture are im• propriated newspaper images of car crash• in the face of art•world etiquette. But Bru• portant, but the deciding factor is subject es, race riots and electric chairs, are the no Bischofberger, a Swiss dealer, notes that matter. And the subject most consistently most signi†cant part of his oeuvre. Their 1 The Economist November 28th 2009 A special report on the art market 9

In‡atable investments The volatile art of Je Koons

EFF KOONS is one of the greatest sculp• balls ‡oating in tanks; ŒLuxury and Degra• coloured Œunique versions. The most Jtors of all time, say contemporary•art• dation (1986), whose star work is the coveted have luminous, re‡ective sur• market insiders, undeterred by the vola• stainless•steel ŒJim Beam J.B. Turner faces. ŒThe ‘Celebration’ series made tility of his prices. In November 2007 Mr Train; and ŒBanality (1988), an ultra• Koons the number one contemporary art• Koons’s ŒHanging Heart (Magenta/Gold) kitsch grouping that includes a porcelain ist and pulled up the value of the rest of sold at Sotheby’s for $23.6m, the highest depiction of Michael Jackson and his his work, says Cheyenne Westphal, price ever paid for a work by a living artist monkey, Bubbles. After that, Mr Koons’s chairman of contemporary art at Soth• at the time. Eighteen months later, anoth• art took a more overtly sexual turn with eby’s Europe. er ŒHanging Heart‹this one violet‹ ŒMade in Heaven ‹a series of works in• Mr Koons’s paintings are less popular traded privately for only $11m. spired by pornography and depicting Mr than his sculptures, not least because they Away from the auction rooms prices Koons in action with his then wife, an Ital• tend to illustrate the three•dimensional had got even more in‡ated. In the spring ian porn star nicknamed La Cicciolina. works or underpin their themes. How• of 2008 a collector o ered over $80m for The series added weight to Mr Koons’s ever, a new, as yet unnamed series of the artist’s iconic stainless•steel ŒRabbit reputation as a risk•taker. ŒIt was a way of semi•abstract paintings inspired by Gus• just before the work sold as part of a pack• participating in American media, ex• tave Courbet’s ŒL’Origine du Monde may age deal worth more than $400m from plains Mr Koons. be the †rst two•dimensional Koons pieces the estate of Ileana Sonnabend, a leading The most celebrated series is aptly to stand unquestionably on their own. New York dealer who died in 2007. It is un• called ŒCelebration. These large•scale Mr Koons has a complicated history likely that a Koons will achieve that sort of sculptures and paintings of balloon dogs, with dealers such as Sonnabend Gallery, price again soon. Of four works auctioned Valentine hearts and Easter eggs were Max Hetzler in Berlin and Jérôme de Noir• at Christie’s and Sotheby’s in New York conceived in 1994, but some are still being mont in Paris. The exclusive right to the earlier this month, only two sold well and fabricated. Each of the 19 di erent sculp• primary sale of the ŒCelebration series is one failed to sell. tures in the series comes in †ve di erently held by Gagosian Gallery, his dominant Mr Koons borrows imagery from pop• dealer. The artist is widely collected in ular culture but gives it a twist. Collectors America and Europe, where some a†cio• love his perfectionism, scrupulous edit• nados acquire his work in depth. For ex• ing, durable materials and relatively small ample, Eli Broad, a Los Angeles property output. They also enjoy meeting the artist, developer, has 24 pieces, and Dakis Joan• an otherworldly character who is at ease nou, a Greek•Cypriot construction ty• talking about his work in a black Gucci coon, owns some 38 works from all stages suit. Even better, much of Mr Koons’s art is of the artist’s career. about joy and sex. ŒIt’s not a critique but Elsewhere in the world the devotion is an acceptance of our own cultural his• more selective. ŒMost of the dozen or so tory, he explains. ŒI guess the people who collectors we have in Russia own an easy, are involved with my work feel physically sexy work from the ‘Celebration’ or ‘Pop• and intellectually engaged. eye’ series, says Maria Baibakova, a Since his †rst solo show of ŒIn‡at• young Moscow collector•curator. ŒThe ables in 1980, Mr Koons has made at least more rigorous Koons sculptures, such as 17 series, including ŒEquilibrium (1985), the basketballs and vacuum cleaners, are best known for its sculptures of basket• not in demand here‹yet.

2 harsh imagery counteracts the artist’s rep• and nearly died. For several years he pro• manding higher prices, such as the $17.4m utation as a star•struck commercial painter duced very little art. When he returned to paid at Christie’s for a big blue one by Jo• and distinguishes him from less ambitious work, it was to paint one of the world’s seph Lau, the Hong Kong collector. In early Pop artists such as Roy Lichtenstein and most famous men, China’s Chairman 2008 a Chinese collector o ered $100m for Tom Wesselmann. In the late 1960s and Mao, with a Œvigour and momentum pre• a ŒGiant Mao, but the owner turned it early 1970s they did not sell easily, but now viously unseen, claims Neil Printz, co• down. There are some 200 Maos in a range the auction record for a Warhol, $71.7m, is author of the artist’s catalogue raisonné. of sizes, but only four giants. According to held by Mr Niarchos’s ŒGreen Car Crash, The artist’s †rst series of Maos did not sell James Mayor, the British dealer who repre• which depicts a burning car from which easily. In the early 1970s few collectors sents the owner, that sum would now be one of the passengers has been ejected and wanted an oversized communist in their Œseriously considered. freakishly pinned to a lamp•post. living room. However, with the rise of Warhol’s international appeal is ex• In 1968 Warhol was shot in the chest Asian art•buying Maos have been com• plained partly by the popular roots and 1 10 A special report on the art market The Economist November 28th 2009

2 easy intelligibility of his visual style, but it Nowadays the two dealers who drive repertoire. Since then the Mugrabis have also owes something to the e orts of Mr the Warhol market are Mr Gagosian and been constantly buying and selling and Bischofberger, the Zurich•based dealer Mr Mugrabi. Mr Gagosian started showing have accumulated some 800 works, in• who was the driving force behind the dis• Warhol in the 1980s. ŒAndy was very cluding several masterpieces such as tribution of the artist’s work for many straightforward in business. We’d have in• ŒMarilyn Monroe (Twenty Times). years. Mr Bischofberger’s knack for plac• formal conversations over a tuna sand• Mr Mugrabi and his two sons bid on ing the work in collections across Europe wich, he says. Mr Gagosian gave Warhol Warhol at auction with such regularity makes the markets of other American art• his last New York exhibition before his that they are sometimes accused of ma• ists look parochial. He was also instrumen• death and continues to present the artist’s nipulation. Art•market insiders, however, tal in launching three of the best Warhol works systematically in carefully curated prefer the term Œsupport. As Sandy Heller, collections in private hands. The late shows with scholarly catalogues. a New York•based art consultant, explains, Thomas Ammann worked for Mr Bischof• In spring 2008 Mr Gagosian spent more Œpeople with inventory put their money berger before building up a stellar collec• than $200m on an undisclosed number of where their mouth is. It’s like dollar•aver• tion of Warhols for the Schmidheiny fam• Warhols (insiders suggest between 15 and aging in equities. If you see a work going ily’s Daros Foundation. Mr Bischofberger 20) from the Sonnabend estate. He is said for less than your average cost and you also introduced Warhol’s work to Mr Niar• to have had the †nancial backing of Mr Co• truly believe in an artist, then you buy chos and Mr Brant, whom he had met as hen, the buyer of the $80m ŒMarilyn, and more. As Stefan Edlis, a Chicago collector, teenagers in St Moritz. a Russian oligarch rumoured to be Mikhail puts it, ŒI don’t think you can manipulate Mr Brant, one of the biggest Warhol col• Fridman, owner of Alfa Bank. Mr Gago• such large markets, but you can have price lectors anywhere, started buying in 1967 sian has since sold a few of the paint• leadership. and was a founding shareholder with Mr ings‹a 1965 Campbell’s soup can at Art Ba• Warhol•market insiders are still not Bischofberger of Warhol’s magazine, Inter• sel in June and a car•crash painting to sure where ŒEight Elvises, the $100m•plus view. In May 1970 Mr Brant consigned Richard Prince, an artist. picture, now hangs. But despite the secrecy ŒSoup Can with Peeling Label to Soth• at the very top, volume alone probably eby’s Parke•Bernet. The work sold for a re• To buy, to sell and to keep makes the Warhol market more transpar• cord price of $60,000 to Mr Bischofberger. The biggest number of Warhols are traded ent than that of any other artist, living or When asked how many Warhols he by the Mugrabi family. ŒI don’t know if dead. The vertical reach of the Warhol owns today, Mr Brant replies: ŒI swear to Warhol is important. All I know is that I brand is so vast that it makes the span of you, I have no idea. It’s not about numbers love him, says Mr Mugrabi père, José. Dur• the most successfully di used fashion but quality. He has been trading Warhols ing the downturn of the early 1990s he be• house, from eau de cologne to haute cou• for over 40 years, but says that Œyou need gan buying up Warhols that he felt were ture, seem positively squat by comparison. new collectors for competitiveness and undervalued, such as portraits of Jackie That seems appropriate for an artist who creative juices. Kennedy, an important image in Warhol’s merged high and low like no other. 7 Treasures reclaimed

China is bringing home its works of art

SMALL country auction house is not bank vault. There it lay ket it online to potential Awhere people would normally go to for the next 65 years. buyers in the Far East. sell a rare piece of Chinese art such as the When Lady Di• A look at the visi• handsome 18th•century beast known as ana at last opened tors’ book for the Haz• the Pelham Water Bu alo. The animal had up the box she sent litt showing proves been carved from a single lump of spin• the bu alo, still in that Mr Axford had ach•green jade on the orders of the gran• its original news• the right instincts. dest of the Qing•dynasty emperors, Qian• paper wrapping, to Among the 100•odd long (who reigned from 1736 to 1795), and Woolley & Wallis, a people who came to sits on a gilded stand bearing the four•char• family auctioneer in see the bu alo were acter mark of Qianlong’s reign. Lady Diana Salisbury. The †rm had some of the biggest Miller had inherited the work from her fa• previously sold some fam• names in Asian art: ther, Sackville Pelham, 5th Earl of Yarbor• ily silver for her and she Nicolas Chow, Soth• ough, an English aristocrat who bought it trusted it. Most of all she liked the eby’s principal Chinese in 1938 from a well•known London dealer. young specialist, John Axford, and specialist, who is based in Hong The earl paid £300 for the piece, then a his plan for marketing her Chinese heir• Kong; Richard Littleton and Giuseppe princely sum. To ensure its safety during loom. He told her he would exhibit it at Eskenazi, both leading dealers in Asian art, the second world war, the bu alo was Hazlitt Gooden & Fox, a London gallery with nearly a century’s experience be• wrapped in newspaper, put into a wooden close to Christie’s, during the spring season tween them; and Bruno Eberli, a Swiss• box marked Œporcelain and deposited in a of Asian auctions in London, and also mar• born foreign•exchange dealer who lives in 1 The Economist November 28th 2009 A special report on the art market 11

2 New York and is one of the keenest buyers during the Cultural Revolution, from 1966, Œthey are more aggressive than Europeans of Chinese and Japanese treasures. owning, inheriting or exchanging pre•com• or Americans. Even though economic There was standing room only at the munist works of art was banned in China. growth in China this year may be only 8%, sale in May this year. So many buyers had Thanks to shifts in policy that started un• after 9% last year, it is still far higher than in registered to bid by telephone that the auc• der Deng Xiaoping and continued after most of the rest of the world. China may be tion house ran out of phone lines and Mr him, the Chinese are now catching up in a one of the few places where the number of Axford had to †eld one bidder on his per• big way, following on from the Japanese dollar billionaires has actually increased sonal mobile. The catalogue, which fea• buyers who dominated the market in the in the past year, from 101to 130, according to tured the bu alo on the cover, o ered no 1970s and the Taiwanese and Hong Kong the recently published Hurun Rich List. estimate of the price it was expected to collectors who started buying seriously in fetch; only a coy Œrefer department, which the 1990s. Deep pockets usually means the auctioneer has no idea The mainland Chinese are beginning to Dealers and auctioneers familiar with the what a piece might fetch but hopes that it dominate the salerooms. Prevented for so Chinese market estimate that there are will be a lot. Bidding would open at long from celebrating the achievements of around 150 collectors in Hong Kong and £150,000. Mr Axford thought it might reach their forebears, they have a thirst for their Taiwan who spend at least $1m a year each £500,000. own history, and especially for anything on Chinese works of art, and that their In the event, Daniel Eskenazi, who had that connects modern China with the glo• number is relatively stable. The mainland travelled down on behalf of his father, the ries of its imperial past. The newly has another 150 or so buyers in that catego• London dealer, saw o a Hong Kong tele• wealthy‹such as Xu Qiming, China’s big• ry, and the numbers there are growing rap• phone bidder with his o er of £3.4m. The gest exporter of eels from the port city of idly. More Chinese treasures are now sold Eskenazis’ client was Mr Eberli, who still Ningbo; Lu Hanzhen, an industrialist from at auction in Hong Kong than in New York, holds the record for the price paid at auc• Zhejiang province who became rich by London and Paris. Whereas back in 2004 tion for an Asian work of art: just over selling motorcycles and nylon fabric for Sotheby’s did $10m•worth of business £15.6m for a rare 14th•century blue•and• car tyres; or indeed any businessman or with 70 clients from the mainland in its white porcelain jar bought at Christie’s in civil servant who bene†ted from the recent spring and autumn sales in Hong Kong, the London four years earlier. ‡urry of privatisations‹can a ord to pay, †gure for the same sales this year is seven The big surprise that May day was not and pay they will. times higher and its list of mainland Chi• so much that a provincial British auction Nor are these buyers to be found only in nese buyers has grown to 195. Many more house had beaten the previous record for a the old political and commercial strong• bid through established dealers in Hong sale outside London by a huge margin, but holds of Beijing and Shanghai. There are Kong. ŒMainland China has clearly be• that the bidders from Hong Kong, Taiwan probably seven Chinese cities with popu• come our main land, says Kevin Ching, and mainland China‹who are now the lations of more than 5m, and demand for chief executive of Sotheby’s Asia. principal buyers of Chinese treasures‹had †ne art is as strong in Guangdong, adjacent In 1886 Paul Durand•Ruel, a Paris dealer, been outdone by a Westerner. It may not to Hong Kong, as it is in Sichuan in the west packed his bags with 300 Impressionist happen again. or in more far•‡ung areas. ŒIt’s what I call paintings‹including piles of Renoirs, Pis• ‘natural repatriation’, says Patti Wong, sarros and Sisleys‹to take to America. He Reversing the ‡ow who as chairman of Sotheby’s Asia has was closely followed by a Briton, Joseph Collecting Chinese †ne art and ceramics been watching the Chinese buying wave (later Lord) Duveen, who could see, like was all the rage in the West in the second grow for a decade, Œand it is happening Durand•Ruel, that ŒEurope had the art and half of the 19th and the early 20th century. everywhere. America had the money. Heavy buying by treasure•hunters, as well Having made their money quickly, Chi• Just as European Old Master and Im• as looting of imperial works by the Ger• nese buyers are in a hurry to build their pressionist paintings then began to move mans, Dutch, French and British, brought collections fast and are willing to pay a pre• inexorably westwards across the Atlantic, huge quantities of Chinese †ne art into mium to achieve that. ŒArriving at the buf• now Chinese †ne art and ceramics from Western collections. But in the past decade fet party a little too late, says Mr Chow, America, Britain, France and the Nether• the number of European and American lands are moving eastwards back to China. buyers has dwindled. Not since the heyday of Duveen’s and Du• Mr Eberli is one of a handful still active Have money, will buy 6 rand•Ruel’s exports to America has there at the very top of the market, along with Global sales of Chinese art at auction been such vigorous redirecting of cultural Edward Johnson III, whose father founded Total sales, $bn Average price, $’000 artefacts from one part of the world to an• Fidelity Investments, and the two elderly other as European and American collec• 1.0 100 Zuellig brothers (one of whom died recent• tions are broken up and sold o to the ly), whose Meiyintang collection in Swit• 0.8 80 newly wealthy Chinese. The traˆc is al• zerland is probably the †nest Chinese col• most all one way. lection in private hands. ŒWhen the right 0.6 60 Mainland Chinese buyers made a dra• piece comes along, they are still ready to 0.4 40 matic †rst entrance in April 1999 when two †ght the †ght, says Mr Chow. But most previously unknown collectors, both en• Westerners with an interest in Chinese art 0.2 20 trepreneurs in their mid•30s from Chao• and ceramics today tend to be sellers rath• zhou in Guangdong province, began to er than buyers. 0 0 buy †ne art and ceramics at auction, reviv• 2000 01 02 03 04 05 06 07 08 From 1949, when the Communist Party ing the market after the Asian †nancial cri• Source: artnet defeated the Nationalists, and especially sis two years earlier. They were guided by 1 12 A special report on the art market The Economist November 28th 2009

it up to HK$2.7m ($344,000), seven times the top estimate. A hoard of imperial ware, put together by a London dealer, Hugh Moss, and romantically named the Water, Pine and Stone Retreat Collection, proved a particular draw, with yellow jade and a blue•and•white moon‡ask all making re• cord prices. But the biggest battle was over a Qian• long•period throne made of precious zitan wood and carved with dragons, which was estimated to fetch HK$20m•30m. After heart•stoppingly tense bidding it was bought by a Shanghai businessman, Liu Yi• qian, who owns the Council Auction House in Beijing. He paid just under The new home market HK$86m, a world record for a piece of Chi• nese furniture. 2 William Chak, a Hong Kong dealer who chao, who secured the two pieces for ¤31m has since become a well•known television ($46m), turned out to be an adviser to a Dealers, dealers everywhere personality and is one of the leading †g• Chinese foundation which seeks to re• China’s appetite for its own works of art, ures in the Asian art market in Hong Kong. trieve plundered treasures. He announced together with a national ‡air for commer• Others followed. very publicly soon afterwards that he cial speculation, has helped expand the art The Chinese buy for themselves, but would not pay up. The heads were quietly market all over the country. On the main• they also like to present gifts to valued cus• returned to Mr Bergé. The government has land, auction houses were banned until tomers or even to the government, which since announced that it wants to catalogue 1992. Ms McAndrew of Arts Economics, sees repatriating national treasures as an all the pieces looted from Yuanmingyuan, who made a particular study of the art important issue. The authorities have been which some believe is the †rst step in a business in China last year, estimates that quietly tightening up on the re•export of re• campaign to reclaim them. the country now has 50,000 art dealers patriated artworks. Chinese buyers used Mainland Chinese taste is in‡uenced and more than 2,000 auction houses. The to be able to re•export their treasures for up more by history and tradition than by aes• biggest of these are Poly International, a to two years after they had bought them. thetics. For cultural reasons buyers tend to subsidiary of the Chinese army, and China That period of grace has now been re• shun anything associated with the dead, Guardian Auctions, founded by Yannan duced to six months. so they keep away from tomb pottery and Wang, the daughter of a former Chinese from the Tang horses that used to be rare leader, Zhao Ziyang, who died under The rat and the rabbit and expensive but have ‡ooded Western house arrest about †ve years ago. The sensitivity of the subject was shown markets over the past 20 years. The Chi• Foreigners are still forbidden to own up in February this year when the collec• nese are less interested in the early Song auction houses in China, but the Chinese tion built up by the late Yves St Laurent, a period that has been so alluring to Western are eager to learn from them. Since 2005 French fashion designer, and his partner collectors, instead favouring highly deco• Christie’s, the region’s leading auctioneer, Pierre Bergé was put up for sale. The auc• rative blue•and•white Ming porcelain. Two has had a licensing agreement with For• tion included bronze heads of a rat and a lots of Ming ware in a recent sale at Doyle, ever International Auction Company in rabbit, two pieces that had been looted a small New York auctioneer, were wildly Beijing, which uses the British name and from the imperial palace of Yuanming• bid up, one of them to over 180 times its bene†ts from increased transparency and yuan by French and British soldiers in the high estimate. consumer protection, as well as interna• opium wars in 1860. The heads, part of a se• Mainland Chinese also appreciate tional standards in training and account• ries of 12 †gures which dominated a zodiac seals, lacquerware, antique rhinoceros ing. Neither of the Western auction giants fountain in the palace garden, had not horn, archaic bronzes, carved wooden fur• is yet a household name in the country. even been designed by a Chinese artist but niture and jade, especially the white sort Art•market observers speculate that the by a Jesuit priest from Venice who lived in from Turkestan, carved by the craftsmen of Chinese might one day acquire a leading the imperial capital. All the same, their Khotan for the Qing emperors. The imperi• Western auctioneer, but that could be provenance and history made their sale al association is of crucial importance, es• some way o . controversial. pecially any link with Qianlong and some Still, plenty of other things are happen• The government let it be known that it of the other emperors of the Qing dynasty. ing. Last June, for example, 50 †ne•art deal• did not approve of a public sale of the pre• In Sotheby’s sales of Chinese ceramics ers, a quarter of them from the West, exhib• cious bronze heads in the West and did not and †ne art in Hong Kong last month 19 of ited at the †rst serious antiques fair in want its citizens to take part. Even so, both the top 20 lots were bought by Asian col• China, in Taiyuan in Shanxi province. It the winning bidder and several underbid• lectors, mostly private buyers. American adopted many of the rules of other inter• ders turned out to be Chinese. One, a Lon• collectors were nowhere to be seen. Only national fairs, with a vetting committee don•based businessman, had been plan• one lot, an intricately carved red lacquer made up of Western and Chinese experts ning to present the bronzes to the Chinese bowl, was secured by a European collector, with the power to order the removal of government as a gift. The buyer, Cai Ming• an Austrian, after furious bidding that took items believed to be misattributed or fake. 1 The Economist November 28th 2009 A special report on the art market 13

2 A similar, earlier experiment in Hong Kong ket, the best of which are made in Japan as as China would have liked, and in recent had descended into chaos when dealers well as China. Rising prices fuel the trade weeks its government has said that it will refused to remove fakes from their stands, in fakes and also lead to more grave•rob• tighten up on the movement of cultural rel• but in Taiyuan the vetters were given a free bing. In addition, China has become in• ics out of the country. Its plan is to ban the hand. And the curious crowds queued to creasingly vocal about restricting the trade export of anything made before 1911, the get in, some for hours. in its treasures. After nearly †ve years of end of the Qing dynasty. No matter that China’s new interest in bringing home negotiation the Bush administration in its China is now a member of the World Trade its works of art has caused fears as well as †nal days at last agreed to prohibit the im• Organisation, it still seems to be uncom• satisfaction. Many are concerned by the in• port of a wide range of antiquities into fortable with free trade‹except when it crease in the number of fakes on the mar• America. The agreement was not as strong suits it. 7 A whole new world

Art is becoming increasingly globalised

HEN nations grow richer, their citi• tional collections. Taste in contemporary Wzens become more educated and art, which was so dominated by American have fewer children. Once they reach a cer• artists in the second half of the 20th cen• tain level of a‰uence, they also start to buy tury, will slowly begin to change, and cities art. Their †rst instinct is to seek out the tra• such as Dubai and Hong Kong will eventu• ditional sort made in their own country. As ally come to rival London and New York as they become more con†dent they often centres of the art•buying world. grow more adventurous as well, buying The Greek shipowners who ‡ed politi• unfamiliar work from other countries and cal turmoil at home for the calm squares of less traditional contemporary art pro• London in the 1960s had the money to duced at home that expands the bound• compete for Greek art. They had conserva• aries of taste. tive tastes, seeking out paintings of the This has already happened from Bris• Acropolis and large seascapes. The Lon• bane to Buenos Aires, and is likely to hap• don auction houses were happy to supply pen in many more countries as they be• what they wanted, and the sales of Greek come wealthier. Not only will there be art from the 19th and 20th centuries at more art buyers, but more people will be• Sotheby’s and Bonhams have been hugely come artists too, so the supply is bound to successful. grow. Australia, India and South America The same is true of the sales of South all have their own home•grown art African art which Bonhams launched in worlds, and some of their output has 2007 and which are now held twice a year gained an international following. The over two days. Rich émigré white South O†li’s African apparition best work will †nd its way into interna• Africans who like paintings that remind them of where they grew up compete to Iranian artists were the stars of the spend hundreds of thousands of pounds Saatchi Gallery’s show ŒUnveiled: New on works by Irma Stern, Maria Magdalena Art from the Middle East and Iran in Lon• Laubser and Jacob Hendrik Pierneef. But don earlier this year. There was none of the these are niche markets that depend on sentimentalism that is often found in Mid• nostalgia, and they are unlikely to last. dle Eastern paintings. Instead the works on show were in turn humorous and subver• Expect the unexpected sive, suggesting that life under the mullahs Future growth must come from outside the is far more complex than most people traditional art centres. Two of the most ex• imagine. Shadi Ghadirian’s women may citing newcomers are Iran and Turkey. The be shrouded, with a yellow rubber glove, Istanbul Biennial, founded in 1987, is now an iron or a broom for a face, but there is seen by dealers and collectors as an impor• something about the way the artist por• tant stop•o , catching up with São Paulo trays them that tells the viewer they are not and Venice. Two•thirds of the buyers in drudges. Ramin Haerizadeh daringly Sotheby’s †rst Turkish sale last March were mocked the sexuality of Iran’s clerics by new to the auction house, proof that there manipulating photographs to depict them are opportunities to develop a collector as hairy, fat and e eminate, strutting about base in parts of the world that have not in a state of half•undress. Ghadirian’s face of modern Iran had much of an art market up to now. Even in black Africa, which so far has 1 14 A special report on the art market The Economist November 28th 2009

2 played almost no part in the international art market, things are stirring. Jean Pigozzi, the heir to a French motor fortune, and his curator, Jean Magnin, have been supplying funds and materials to a score of African artists, and in return have been able to buy some of their best work. A few of the art• ists, including El Anatsui, a Ghanaian who uses colourful aluminium bottletops, ‡at• tened and stitched together to make cloths of gold, are known outside their own con• tinent. But most are not, and their work rarely comes up for auction. A showing of Mr Pigozzi’s contempo• rary Africana at the Museum of Fine Arts in Houston, Texas, four years ago proved a Yue Minyun’s demons revelation. Instead of poverty, hunger and ethnic division, the exhibits re‡ected an Now it is beginning to let out its breath. The there, working, in the †rst place. A few de• exuberant Africa bursting with creativity. recent seasonal sales in New York con• cades hence America will still be richer Americans will have another chance to see †rmed what people have been saying all than China, and far, far richer than Africa. the new work being produced in Africa year: there is plenty of money for high• But for every collector who continues to when the Museum for African Art opens in quality work. buy evolving European and American art, Manhattan at the end of next year. Its an increasing number will turn to art from opening exhibition will include an El A multicultural future other parts of the world. Anatsui retrospective. In the short term the art market will follow That shift will take time, but it is on its The most volatile contemporary•art the world economy. But what will it look way. If there is a single sale over the past market is probably that in China. In the †ve like in the long term? Artists throughout year that symbolises the new globalisa• years to 2007 work by such artists as Cai history have created work in response to tion in the buying and selling of art, it was Guoqiang, Zhang Xiaogang and Yue Min• their environment. Many are known pri• Sotheby’s contemporary•art auction in jun broke record after record. ŒMask Series marily for their travels: think of Paul Gau• London on October 16th. The cover lot, 1996, No 6 by Zeng Fanzhi sold for $9.7m, a guin, the Scottish Colourists, the artists ŒAfro Apparition (see previous page), a new high, at Christie’s in Hong Kong in who went on the Grand Tour. Travel used painting of a stylised black couple kissing, May 2008. Some collectors, including to be exotic; now it is commonplace. In a was created by Chris O†li, a Briton of Nige• Western ones such as Baron Guy Ullens, a globalised environment it is possible to be rian origin who now lives in Trinidad. It Belgian who founded the Ullens Centre for a world•class artist anywhere on the plan• was exhibited at the Venice Biennale in Contemporary Art in Beijing, have been et, and many of the most exciting artists 2003. Fatima Maleki, a London•based Ira• buying Chinese contemporary art for de• will be working from places that previous• nian who has been a regular donor to Brit• cades and will continue to do so, but the ly were not even on the art map. That will ain’s Tate, walked out smiling from the auc• speculative investment from the West has start a fresh wave of contemporary art. tion, having bid nearly 40% above the top more or less come to a halt. Collectors follow artists, and the supply of estimate to get the painting. In such a mul• Part of the problem, explains Colin art shapes taste. But the artists have to be tiple melding of cultures lies the future. 7 Sheaf, Bonhams’s deputy chairman and head of its Asian art department, is that O er to readers much of it has been ŒChinese art produced Future special reports Reprints of this special report are available at a The carbon economy December 5th 2009 by Chinese artists who think they’re pro• price of £3.50 plus postage and packing. Social networks January 30th 2010 ducing things to Western taste. And it is A minimum order of †ve copies is required. Financial risk February 13th 2010 bought by Westerners who think they’re Managing information February 27th 2010 Corporate o er Germany March 13th 2010 buying Chinese taste. Mainland Chinese Customisation options on corporate orders of 100 collectors prefer more traditional 20th•cen• or more are available. Please contact us to discuss tury masters such as Chen Chengbo and your requirements. Wu Guanzhong. Once those collectors be• Send all orders to: gin turning their attention to buying con• temporary art, they may look towards the The Rights and Syndication Department global contemporary market rather than 26 Red Lion Square WC1R 4HQ these Œmade for the West pieces, which London Tel +44 (0)20 7576 8148 might then drop in price. Fax +44 (0)20 7576 8492 As record after record fell to the frenzy e•mail: [email protected] of buying during the boom, many art•mar• ket dealers, not to mention buyers and col• For more information and to order special reports Previous special reports and a list of lectors, felt that a correction was due‹and and reprints online, please visit our website forthcoming ones can be found online probably necessary. A year ago the art Economist.com/rights Economist.com/specialreports world gasped as the market plummeted.