An exhibition running at the Gagosian London Gallery entitled Crash turns out to be a homage to JG Ballard, not a reference to the trajectory of the art market, post-Lehman. Faster than expected, however, art prices are rebounding. The record $104.3m paid for a Giacometti at Sotheby’s in London last week is emblematic of a broader recovery.
Sotheby’s and Christie’s modern, impressionist and contemporary sales in the past two weeks have matched or exceeded their high estimates, far outstripping last February’s subdued affairs. Day sales of items with five- or six-digit prices have been as robust as the nine-digit evening showpieces. Indices from Art Market Research covering the central 80 per cent of sales by price – so excluding the Giacomettis – suggest prices bottomed out last July-October.
Bankers’ bonuses, even if trimmed after the public backlash, are one factor behind the resurgence. Wealthy buyers, constrained last year by uncertainty and reluctance to splash money around, are spending again. Many see art works, like gold, as an inflation hedge and safer than some asset classes. Just as important is increased supply. Reluctant to release masterpieces into a depressed market 12 months ago, owners have been emboldened by decent auctions late last year.
Old Masters, Impressionists and 20th century art have led the revival, as buyers seek safer bets in established artworks. But contemporary art, which experienced the biggest bubble in 2007-08, will probably follow as investors hunt for tomorrow’s Giacomettis at today’s prices. Investors will hope the various market sectors are back on their long-term annual growth trends of 6-11 per cent. But with plenty of wealth still out there chasing returns in a low interest-rate world, ingredients for another bubble exist. Further aggressive price gains in coming months could make the Gagosian show’s title seem not retrospective but prophetic.
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